Tag Archives: 401k

Should You Invest in Your Crappy 401(k) Plan?

We don’t have very much experience with 401k’s, but Lauren’s work just set one up. I was amazed how horrible our options were. Most funds had a front end load of 5% and the manager wanted 1% of our wealth per year for his “advice.”

Unfortunately, despite the lack of options 401(k)’s are usually worth it. Between a company match and tax advantages you’ll probably recover a lot of those fees. It’s just a shame we have to pick the lesser of two evils.

Links:
Should You Avoid Your Company’s 401k (Jim Collins) – http://goo.gl/SOiCRI
How to Campaign for a Better Plan – https://goo.gl/JnJZF7
Funds Can’t Beat the Market – http://goo.gl/QdplTr
Jack Bogle on Fees – https://goo.gl/FVz03k

Should the Government Force People to Save for Retirement?

The United Kingdom is phasing in a new law that requires business owners to automatically enroll their employees in a retirement plan. Do you think there should be something similar in the United States?

In this video we discuss the pros and cons of auto-enrollment, the longevity of social security, and the psychological barriers of investing in the stock market.

Further Reading:
Why Saving Money is So Hard – http://goo.gl/ImK4cD
Small Business Stats – https://goo.gl/tWidzy
NPR Article – http://goo.gl/50j91a
Bankrate Survey – http://goo.gl/OM9yf8

Retiring Before 59.5 – What About Penalties?

Ever wonder how you can access your retirement accounts without paying the 10% penalty? In this video we share our plan for avoiding IRA and 401k penalties by setting up a Roth Conversion Ladder.

Credit is due to the MadFientist who introduced us to the idea. Basically you rollover your old 401k into a traditional IRA, then convert that to a Roth IRA. The converted funds are considered “income” and therefore “contributions” so you may withdraw them at any time (after 5 years has passed) without tax or penalty.

More information can be found on his website:
http://www.madfientist.com/after-tax-contributions/
http://www.madfientist.com/retire-even-earlier/

Interestingly, President Obama’s 2016 budget proposal might close that loophole despite the IRS just putting out notice 2014-54 which seemed to confirm this is a viable and lawful strategy.

Link to the IRS Notice 2014-54:
http://www.irs.gov/pub/irs-drop/n-14-54.pdf