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the difference between 401K and IRA?
- Thread starter foreigngirl
- Start date
Look for my PM.foreigngirl said:
foreigngirl
New member
mightymouse69 said:It's really simple to roll it over, I suggest getting the paper work rolling ASAP. You will thank me in the future
thank you and thanks thelion2005
Many big differences.
401(k) is an employee sponsored plan, which basically means that the company owns the plan, not you. That usually doesnt matter, but every now and then you have an Enron situation where the employees lose everything.
Max contribution to a 401 is $15k this year, whereas max to an IRA is $4000. Both are made with pretax dollars and grow tax deferred. You cant begin withdrawls until 59 and 1/2.
If you have a 401k, go for a Roth Ira. You dont want all your retirement savings to be in tax-deferred investments.
401(k) is an employee sponsored plan, which basically means that the company owns the plan, not you. That usually doesnt matter, but every now and then you have an Enron situation where the employees lose everything.
Max contribution to a 401 is $15k this year, whereas max to an IRA is $4000. Both are made with pretax dollars and grow tax deferred. You cant begin withdrawls until 59 and 1/2.
If you have a 401k, go for a Roth Ira. You dont want all your retirement savings to be in tax-deferred investments.
foreigngirl
New member
75th said:
thanks 75th. Bottom line is I have to roll this into IRA
slat1
New member
foreigngirl said:
A Roth IRA!!
A Traditional is not taxed until the money comes out. You have no idea what tax bracket you will be in then. If you play your cards right you will be in a higher one. So they will take more.
A Roth you pay on the way in. When you take your money out it is not taxed. So whats your is yours.
Meet with a financial adviser and have him check your risk tolerance. He will then put you in the appropriate funds. I prefer guys who are independant so they are not tied to certain companies and certain funds!
230lbs
New member
foreigngirl said:
Forgiengirl..
Slat1 is right. I work as a financial agent and this is the situation in a nutshell. You CAN leave your money right where it is, although you can no longer make any future contributions to it. The money will appreciate or deprecciate depending on the funds which you have previously chosen. BUT in general you can no longer make changes to the portfolio. You are stuck where you are. The smartest thing to do is...look at the ROTH IRA. This way you can roll the money from the 401k to the ROTH without paying taxes on the roll over. This will now give you the option to do as you please on the investment side of things. He (slat1) is correct in saying that you will be earning interest on a TAX DEFFERED basis. Meaning you will only pay taxes when you withdraw the money...hopefully not for sometime soon.
IRA stands for Individual Retirement Account. SO, roll the money over to the roth, have an agent in your area help you to pick your investments by using the "prospectus" and make changes as the market moves up and down....
If you have any other guestions you can get me on a private message.
foreigngirl
New member
230lbs said:
Thank you sooooo much. I am new to this country and all confused about these retirement plans. I am not planning to take the money out of my fund at all. I'll shoot you a PM little bit later, cause I have some other questions too.
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