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Message
re: Rolling over a 401 K
Posted on 4/5/23 at 9:02 am to ronricks
Posted on 4/5/23 at 9:02 am to ronricks
leave it alone for 16 more years
I have a friend who cashed in all his stuff to invest more in building houses, and he became a noted general contractor - other than something like that, leave it alone
in fact, I may be wrong, but I think you can avoid the 10% penalty if it's used for housing - not sure if that's "first home" or any other extra home.
I have a friend who cashed in all his stuff to invest more in building houses, and he became a noted general contractor - other than something like that, leave it alone
in fact, I may be wrong, but I think you can avoid the 10% penalty if it's used for housing - not sure if that's "first home" or any other extra home.
0
Posted on 4/5/23 at 9:12 am to ronricks
quote:
still leaning towards rental property.
if you do rental property, do VRBO or AirBnB and let someone manage it for you
the short-term renters on those have a "score" (not sure what it's called) of some kind in regard to what kind of people they are, so that they don't come in and trash the place.
if you do long-term renters instead, and you think you trust them, you're never fully aware of who their sons and daughters and their girlfriends/boyfriends are. Twice I had people renting who I thought I knew, and then here came the meth head family members reeking havoc on the place, not giving a shite if they blow the place up or start a forest fire
Posted on 4/5/23 at 9:29 am to ronricks
quote:
Glad I'm not one of these folks that has a huge mortgage along with an $800 car payment, credit card debt, student loan debt, and no personal savings or retirement savings.
spot on there man
Posted on 4/5/23 at 9:56 am to ronricks
quote:
I don't spend money on anything. There really isn't a way for me to 'save' anymore as far as retirement accounts go
quote:
Why not? We aren't guaranteed tomorrow.
Did the same guy just make both these statements?
Posted on 4/5/23 at 9:58 am to thelawnwranglers
quote:
The target fund will probably beat my rollover performance though
Dollar to dollar it probably won’t.
Posted on 4/5/23 at 10:00 am to ronricks
Why do y’all get so emotional with investing. Investing is not an emotional game. It’s a game of discipline and cycles.
Posted on 4/5/23 at 10:03 am to ronricks
Then move it to a money market. They average money market is paying a yield of over 4% right now and is a cash equivalent. If you want cash at least do that. Then if you want to jump back in then jump back in. If not and need it then make that decision then.
I personally think next year is going to be a fun ride in the market. Starting around the 3rd quarterish to really start.
I personally think next year is going to be a fun ride in the market. Starting around the 3rd quarterish to really start.
Posted on 4/5/23 at 10:08 am to REB BEER
quote:
Did the same guy just make both these statements?
Yes I did. It might be time for me to throw caution to the wind a bit. I could be saving all this for nothing if I don't make it to retirement age. That was my point. I'm doing perfectly fine now and do not really need the other IRA which is why I have been pondering this.
Posted on 4/5/23 at 10:15 am to ronricks
quote:
I could be saving all this for nothing if I don't make it to retirement age. That was my point.
Except you balked at reducing contributions instead lmao. Based on the information you’ve provided, cashing out a 401k before retirement just for the hell of it is retarded.
Posted on 4/5/23 at 10:21 am to JohnnyKilroy
quote:
Except you balked at reducing contributions instead lmao
Because I don't need more cash flow and I like the tax benefits. I can say that and also think about cashing out an old IRA that I literally do not care about. Its just money. This stuff isn't rocket science I am not doing anything different than most of you on here. I just set it and forget it with the retirement accounts and hope it grows. That's nothing special.
Posted on 4/5/23 at 10:22 am to ronricks
quote:
As I said you can only save so much money.
This makes no sense. Maybe you don't need to save more money for your goals but your comment doesn't make sense. You can always save more money and depending on your goals/plan maybe you need to save more.
quote:
It’s perfectly ok to live a little.
Sure, no one here will say otherwise. The issue is you can't even say how you will use the money. If there was a specific goal then maybe you could have a more effective discussion/evaluation. If your general goal is just to increase your lifestyle my recommendation would be to rollover the funds and then just reduce your current contributions. You could effectively increase your lifestyle without sacrificing $15k in penalties. Depending on your current income and where you fall in the income brackets, it could also be a net gain by not paying a higher tax rate on that large lump sum withdrawal.
Posted on 4/5/23 at 10:24 am to ronricks
quote:
I don't 'need' cash right now.
Then why cash out the old account. Roll it over into something you have more control over, and if there is a time where You "need" cash now, you can take it then.
quote:
If I do anything with it other than rolling it over still leaning towards rental property.
Based on your posts in this thread, it appears you are hard set on not having any debt. But, if I am reading that wrong you could still do this without taking out the money by getting a loan. The interest rate you pay on that loan could be a push compared to the taxes & penalties you would incur with the 1 time transaction.
In regards to "you aren't guaranteed tomorrow", I think the posters that are blown away with your carefree attitude towards the penalty is because you have no plans for the money you would be withdrawing. If there was a plan for the funds, and not an "I don't have a need for it", more people would be indifferent to your approach
Posted on 4/5/23 at 10:28 am to ronricks
quote:
Because I don't need more cash flow and I like the tax benefits.
Your plan to cash out is the LEAST tax efficient thing you could do.
Why are tax benefits for contributions important to you if you’re thinking about paying full marginal rates on an old IRA PLUS a 10% penalty on top.
And no, most people on here aren’t considering moving six figs of retirement funds to cash and incurring a high tax liability and a 10% penalty.
quote:
an old IRA that I literally do not care about.
What makes the dollars in this IRA less important than the ones in your current employer 401k?
Posted on 4/5/23 at 10:50 am to ronricks
Genuine question, is this a midlife crisis? What exactly would you do with the money. Gold and bitcoin are other investments of sorts. Plenty of debate on MT about those investment vehicles. Buying Gold and bitcoin aren't interesting or free up the money for anything tangible. Seems like you have something in mind for the money outside of this. You've said you don't need the money, and don't care about it. Why not roll it over to a more flexible account and let it grow. There's something here not making sense.
Posted on 4/5/23 at 11:17 am to WhiskeyThrottle
quote:
You've said you don't need the money, and don't care about it. Why not roll it over to a more flexible account and let it grow. There's something here not making sense.
No mid life crisis I just am looking for something 'different' than the typical boring set it and forget it investing. I'm a big believer in saving and being responsible trust me I'm not looking to take this money out and buy a boat or sports car etc. Just something different and I haven't taken then money out yet for all the reasons you listed I'm not going to do it just to do it. There would have to be a point/purpose otherwise I will just roll it over.
Posted on 4/5/23 at 11:24 am to ronricks
quote:
looking for something 'different' than the typical boring set it and forget it investing.
You are looking to pay a 10% penalty and front load a tax basis because you are afraid the current structure is boring.
Got it. That’s all I needed to confirm. I can move along.
Posted on 4/5/23 at 11:30 am to ronricks
quote:
There would have to be a point/purpose
If your point and purpose is to pay about $58k in penalties and taxes go for it
Posted on 4/5/23 at 11:56 am to ronricks
quote:
Because I don't need more cash flow and I like the tax benefits.
You really dont seem to grasp the tax math. Dollar for dollar you offset the tax benefit of 401k contribution with withdrawal. Then there is the extra 10% penalty on top. Any withdrawal above your 401k contribution will increase taxes further possibly bumping into a higher bracket for a portion of the withdrawal than your current tax rate.
Why on earth would you invest a dollar to differ income tax just to simultaneously withdraw a dollar pay tax and penalties. Instead, take the dollar you would contribute and invest it as your whims desire. You will have 10% more to invest with.
This post was edited on 4/5/23 at 12:06 pm
Posted on 4/5/23 at 12:03 pm to TorchtheFlyingTiger
You could look into Self Directed IRAs (SDIRA) if your objective is to invest in other assets. They allow for real estate and other more diverse investments. I'd be concerned about fees and finding a reliable custodian to set it up. Nerdwallet SDIRA
Posted on 4/5/23 at 12:49 pm to TorchtheFlyingTiger
quote:
You really dont seem to grasp the tax math. Dollar for dollar you offset the tax benefit of 401k contribution with withdrawal. Then there is the extra 10% penalty on top. Any withdrawal above your 401k contribution will increase taxes further possibly bumping into a higher bracket for a portion of the withdrawal than your current tax rate.
Why on earth would you invest a dollar to differ income tax just to simultaneously withdraw a dollar pay tax and penalties. Instead, take the dollar you would contribute and invest it as your whims desire. You will have 10% more to invest with.
At this point I'm pretty sure the guy just said some dumb shite based on doomer logic and instead of owning up to the dumb shite just dug in harder without realizing the more he types the dumber he appears.
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