attn: ilyaz and other people with financial wisdom

[Fit of Rage]

drop me some knowledge bombs

401k
Roth 401k
IRA
Roth IRA

Which one do I want and what factors contribute to that decision? I'm going to have to start investing for retirement and I would like to do it as smartly as I can when I'm young. Obviously saving more is better, but what benefits/restrictions can I expect with each one? I looked at the wiki comparison table but it just left me more confused.

[Ilya]

if your company matches any money to your 401k, first the contribute the max of their match to it. for example my company matches 75% up to 9% of my salary, so i donate 9% of my salary. this is the best thing cause you're getting free moneyz from your company + it grows

the rest of it i put away in a roth ira. a max of 5k a year. it has no tax implications now and you wont have to pay taxes on it later. i also really like it cause most places you have a roth ira account in let you trade stocks, so i just have a portfolio of stocks and i trade them with my roth ira money and dont pay taxes. of course if you dont wanna trade theres just funds you can put it in

you get to deduct traditional ira from your taxes now but i don't think it's worth it. you're not paying that much now (relatively) anyway. its better to let the money grow tax-free in a roth ira. also with a traditional ira you'll have to pay income tax when you withdraw the money when you're an old fuck

llater,
ilya goldman

[Soup du Jour]

What about for Canadians?

[MaGi kOz]

That's about the most useful thing I've ever heard on these forums............. ever.

[project dragon]

Well it was posted by a true American hero.



And he has a library card!

[Fit of Rage]

Waiting for the official job offer tomorrow but my understanding is that they do a standard 401k with 100% matching up to 10% of salary. If I contribute the full 10% I will hit the 16.5k annual contribution limit between 8-9 years of working the same job. At that same time, I should have about 150k in 401k.

My understanding is that the difference between a Roth and Traditional IRA is that Traditional you pay taxes on the amount invested in the year that you invest it and Roth you pay taxes on the amount withdrawn in the year you withdraw. If the expected return is approximately 8% and the tax is almost assuredly higher than that, wouldn't it make more sense to pay tax on the lower amount and reap the benefits (ie a traditional IRA). Is there an investment cutoff where it makes more sense to do one or the other?

[Ilya]

dang, 100% on 10% is great. congratz

i think you have that mixed up. with traditional ira, you pay taxes when you withdraw. with roth, you pay taxes now (that is, you cant deduct anything), so you get to forego paying taxes later when you withdraw. say you put 3k in the ira in 2011, you'll deduct that 3k on your 2011 1040. so you paid income tax on it when you earned it through work, but you get it back on your tax return.

a general rule of thumb people will give you is if you think you'll be in a higher tax bracket when you retire, to go with the roth since you wont be taxed later, and vice versa if you think youll be in a lower bracket. but its a crap shoot guess. since the 401k works a lot like the traditional ira in that it defers taxes to when you withdraw, i go with the roth.

really you're good either way though. or, it doesnt matter cause the US is about to default and im gonna get eaten cause i dont have a gun to protect myself

[Ilya]

also there are limitations, i dont remember the one for traditional, but for roth you cant contribute anything if your AGI is over 105k.. traditional is somewhere above that but less than 200k

[Pandagirl!]

But also take into account the time value of money - putting more in now (aka getting it taxed later) will grow a lot more than putting in less now (getting it taxed now). But, then taxes will be higher later since there's more money

[vaped]

Buy ammo,water, and toilet paper.

2012, etc.

Seriously tho -- illya has the right advice going there for ya FoR.

[Crescent Seal]

y ilya not in charge of taking america out of debt instead of obama and boehner, allow da tittyville party 2 lead this nation

[vaped]

I bet Sarah McTits accepts his friend request if/when he becomes president.

[Cops]

What about for Canadians?

get a job in the public sector or get fucking shit on. not really, kind of.

[DoTheFandango]

It doesn't matter because that money will be seized by Chinese debt collectors in 5 days.

[Emaho]

If what ilya says doesnt work, get a gun.