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Replies: 34
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Oculus Spirit [85166]
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What wood Dave Ramsey do
Sep 23, 2015, 4:04 PM
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Company terminated our pension plan. We have an option of cashing it out or rolling it over into our 401K.
If I cash it out, I may end up with $4,000 (after taxes) because they stopped paying into it shortly after my hire.
If I roll it over, it may be worth $100K at retirement age (calculated at an aggressive 8% annual return). BUTT $100K in 30 years is like $48K today.
So is $4k today better than $48K when I'm old???
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Heisman Winner [135504]
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Buy guns, ammo, and Halloween mask.
Sep 23, 2015, 4:06 PM
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If you save a little back from every armed robbery you commit, you'll see your retirement savings really start to pick up quickly!
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Oculus Spirit [85166]
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And if I get caught - INSTANT RETIREMENT***
Sep 23, 2015, 4:07 PM
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Heisman Winner [135504]
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It's win-win, really.
Sep 23, 2015, 4:08 PM
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You're covered either way.
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Oculus Spirit [75683]
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First, find a new company.
Sep 23, 2015, 4:07 PM
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Second, roll that #### or blow it on hookers and blow.
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Oculus Spirit [78876]
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Give me that $4,000.00 today, and I'll turn it into
Sep 23, 2015, 4:08 PM
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$54,000.00 by the time you retire.
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Heisman Winner [135504]
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If he gives me that $4,000.00 today, then I'll turn it into
Sep 23, 2015, 4:09 PM
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$7.00 by the time he retires.
$7.00.
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Oculus Spirit [85166]
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Oculus Spirit [78876]
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Sure, you'll get it back.***
Sep 23, 2015, 4:32 PM
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All-In [43608]
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Roll over
Sep 23, 2015, 4:10 PM
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$15 to Nointro to help him pay off his wife's clothes on layaway that he couldn't afford.
Then tmale Krzy $450 so the poor guy can get down to the keys in Oct after spending 6 weeks on a CA vacation in Sept, then spending $500 on ND tickets also in Sept.
Take the rest and hookers and blow while you light stuff on fire.
PS: And send me $6 to help cover the cost of a HP power supply cord.
YMFW
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All-In [34823]
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Hey, I need a new roof.
Sep 23, 2015, 9:38 PM
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Help a brother out.
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Oculus Spirit [80999]
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He'd tell you to pay taxes and roll into Roth IRA.
Sep 23, 2015, 4:10 PM
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I had a financial planner dude a few years back tell me to do that with my 401K when I quit a job. I was all, well that's going to decrease the amount I roll over by about 40%.
He said "No it won't. You'll just have to pay taxes on that as if its income."
I'm all "where the eff do you think the money to pay the taxes is going to come from?"
Turns out I should have taken the money and burred in my back yard. Had I just hope somehow it would have grown that way, I'd probably have more money now. Or at least, just as much.
and 8%?? I dunno about anyone else, but compounding has not been my friend over the last 8 years or so.
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All-In [31861]
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Heck no he wouldn't! He would never say to give up the....
Sep 23, 2015, 5:39 PM
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earning power of the amount you would pay in taxes.
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Lot o points [163010]
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Depends on your tax rate***
Sep 23, 2015, 7:00 PM
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All-In [31861]
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I really don't think it does....
Sep 23, 2015, 7:06 PM
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assuming you have any tax liability.
If you take out the money and pay taxes on it, you don't enjoy the compound interest that those $'s would have otherwise earned. I think there would be very few limited circumstances where anyone would recommend cashing out a retirement account (without or without the early withdrawal penalty) just to reinvest it in another retirement account.
Now, if you could roll the account over to a personal retirement account without creating a tax burden, then that would be a good thing to do.
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Oculus Spirit [80999]
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the FP at my bank told me to.
Sep 23, 2015, 8:52 PM
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And I've heard Ramsey say that too.
Reasoning? Taxes will only go up in the future, not down.
I'm not making this #### up.
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Lot o points [163010]
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Well, a lot of people did exactly that when Roth IRA's
Sep 23, 2015, 9:13 PM
[ in reply to I really don't think it does.... ] |
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were created. Many took money from their regular IRA's, paid the tax, and now have Roths that won't be taxed.
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All-In [31861]
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Sorry...you're correct...
Sep 24, 2015, 8:53 AM
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I misread your comment...didn't see "ROTH".
Yes, you could tax-out the money and put into a Roth.
For me, it would depend on what other retirement I already had. I have a Roth 401k at work which is my primary retirement. Older 401ks were rolled into an IRA. My plan is to have a bit of a mix at retirement. Probably about 80% Roth and 20% IRA.
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Orange Blooded [4086]
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Re: He'd tell you to pay taxes and roll into Roth IRA.
Sep 24, 2015, 2:09 PM
[ in reply to He'd tell you to pay taxes and roll into Roth IRA. ] |
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You can roll over the 401k from a company you left into a traditional IRA and not pay any taxes on it.
That way, it is under your control and you may have more/better/safer options than your company allowed in the 401k.
You can also roll over into a Roth IRA and pay taxes on the money now since the Roth IRA only has post-tax money in it.
If your tax rate is the same now as when you withdraw the money in the future, then the money you end up with is mathematically equivalent between the traditional IRA and the Roth IRA.
If you think you will be in a higher tax rate when you withdraw the money, then you should do the Roth IRA. If you think you will be in a lower tax rate when you withdraw the money, then you should do the traditional IRA.
If you aren't sure, then maybe do half and half.
Also, there used to be different rules on inheritance between a 401k and a traditional IRA (basis step up and withdrawal requirements) such that it was potentially beneficial to your heirs to inherit the traditional IRA over the 401k. I don't know if that's still true.
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Oculus Spirit [80999]
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I beleive that's limited in amount.
Sep 24, 2015, 2:14 PM
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And I don't have any heirs.
My plan is to die penniless, which from my perspective, is pretty good budgeting.
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Starter [389]
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Re: What wood Dave Ramsey do
Sep 23, 2015, 4:21 PM
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Roll it then contribute an additional $500 per month to the plan. Invest in aggressive growth and growth mutual funds. Should see an average rate of return (over the long term) of 10% +...). You will be well situated in 25 years.
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Oculus Spirit [80999]
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Srsly..what mutual funds are you getting a 10% RR?***
Sep 23, 2015, 4:22 PM
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Hall of Famer [21224]
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Re: Srsly..what mutual funds are you getting a 10% RR?***
Sep 23, 2015, 4:30 PM
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All-In [31861]
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Over the last many yrs...just about any would return 10%...
Sep 23, 2015, 5:36 PM
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10 yr return on my retirement accts is ~14%.
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Oculus Spirit [80999]
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Mine have not.
Sep 23, 2015, 8:50 PM
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I suck.
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Oculus Spirit [79401]
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Take the money and buy a 78 Bronco to turn into
Sep 23, 2015, 4:28 PM
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a monster truck is what I would do.
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Hall of Famer [22718]
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Re: Saw one on one of those FB yard sale groups
Sep 23, 2015, 4:33 PM
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$4000 and the body was in good shape.
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Oculus Spirit [78876]
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Oculus Spirit [79401]
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Yep, don't even worry about buying a winch for the front
Sep 23, 2015, 4:37 PM
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Cause you're going to need that money for penicillin and plan b pills.
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CU Medallion [54758]
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haha...you work for a ###### company!!!
Sep 23, 2015, 5:06 PM
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wait
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All-In [31861]
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If I read correctly you have to pay taxes if you cash out?..
Sep 23, 2015, 5:31 PM
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would you not also have to pay a penalty?
Either way, Dave would say roll-it over...AND...if you have option to roll-it to a personal IRA instead of company 401k, do that.
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Oculus Spirit [83019]
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10% penalty before age 59.5.***
Sep 23, 2015, 7:23 PM
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All-In [25721]
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Re: Bank it and put it away. It's had money anyway***
Sep 23, 2015, 7:35 PM
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CU Medallion [54011]
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Dave Ransey would put it all in envelopes.
Sep 23, 2015, 10:02 PM
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Ask Suzie.
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All-In [49153]
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Rollover to Vanguard index fund that matches
Sep 23, 2015, 10:54 PM
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Your risk tolerance, or similar, your done. Don't know your age, but if you're young and have the money to pay the income tax, convert to a Roth, If not, don't convert. If you roll to a Trad IRA, not a taxable event. DO NOT roll into new 401, don't give up control and options .
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Replies: 34
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50
