What's your 401k asset allocation?

[mentos]

I don't have a dog in this fight but I find the logic "you became millionaire because you had unlimited overtime back then" quite amusing. Honestly, how many people are willing/ able to work more than 40 hours a week? I know I wouldn't. Working that many hours requires lot of dedication and it's not that easy. I worked 7 days straight once (most of them 12 hour shifts) and I was beyond exhausted.

Never again!

That's a typical overnight schedule. It's rare that I get to work overtime on my weeks off. No one wants to pay time and a half.

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[Monsterdaddy]

You can still backdoor it if he wishes after a rollover, nothing stops you from that. Whether it's worth it depends on how much in taxes he would be paying. But most importantly, if you can get better returns from an IRA than a 401(k) that will outweigh any tax benefits. My IRA returns were x5 higher than my 401(k).

Besides, I think he mentioned he already has an IRA.

 

[Chrish]

That's a typical overnight schedule. It's rare that I get to work overtime on my weeks off. No one wants to pay time and a half.

I am talking about day shifts. Night shifts are different as you probably would get some downtime and time to sit-down. It would be far more doable than day-shifts.

 

[Chrish]

I feel like lot of single people would do that. I wish I was single I wouldnt mind working like crazy for couple years. And yeah back then time was different and now time is different. Also, now I dont think lot of people can get over time even thought they want to work extra hours.

Good in theory but with few exceptions, no one does it because it's hard work and can lead to burn-out.

 

[owlegrad]

Good in theory but with few exceptions, no one does it because it's hard work and can lead to burn-out.

This seems false to me. I knew plenty of OT hogs at CVS. Heck I was one.

 

[footfairy]

Good in theory but with few exceptions, no one does it because it's hard work and can lead to burn-out.

Truth, I worked a lot of OT early on when it was available but in my 30 store district back then only 5 or so RPH ever really worked OT without being begged. In fact my first full year as an RPH I grossed more than I do now even though my pay rate is ~10% higher.

Even if it was available I'm not sure how much OT (time+$5/h or whatever nonsense it is now) i could even pick up now a days with every company only having 12h shifts and my staunch refusal to pick up weekend OT unless it's for a friend.

 

[Chrish]

This seems false to me. I knew plenty of OT hogs at CVS. Heck I was one.

Good for you. In my personal experience, 8 out 10 rphs would opt out of working crazy hours regardless of their personal life status. Have seen few people doing this on a regular basis over the course but far from "plenty".

 

[owlegrad]

Good for you. In my personal experience, 8 out 10 rphs would opt out of working crazy hours regardless of their personal life status. Have seen few people doing this on a regular basis over the course but far from "plenty".

Ah we might be be arguing semantics then cause I think 1 in 5 RPHs being willing to work crazy hours is plenty.

 

[Farmgurl20]

You can still backdoor it if he wishes after a rollover, nothing stops you from that. Whether it's worth it depends on how much in taxes he would be paying. But most importantly, if you can get better returns from an IRA than a 401(k) that will outweigh any tax benefits. My IRA returns were x5 higher than my 401(k).

Besides, I think he mentioned he already has an IRA.

So I wanted to rollover my 401 K to IRA, since my 401 K was with vanguard. I initiated that process within my vanguard account. I had to wait couple days for all this to process so I log back in and I don’t see anything. They opened up my IRA account but balance is 0. It shows withdrawal transaction with amount I had in 401K. Do you know anything about this?

 

[mentos]

I picked up as much OT as possible until my student loans were paid off. There really wasn't much available though, it was mostly last minute sick calls.

 

[Monsterdaddy]

So I wanted to rollover my 401 K to IRA, since my 401 K was with vanguard. I initiated that process within my vanguard account. I had to wait couple days for all this to process so I log back in and I don’t see anything. They opened up my IRA account but balance is 0. It shows withdrawal transaction with amount I had in 401K. Do you know anything about this?

It's the holiday weekend. I would wait and check on Monday.

 

[Farmgurl20]

I picked up as much OT as possible until my student loans were paid off. There really wasn't much available though, it was mostly last minute sick calls.

Did you have to go through scheduler when you were picking up OT? I heard this days you had be really nice to your scheduler to get hours. Plus you have to be the first one to respond once they send out email to cover sick calls. lol so one had to sit on their email all days to see if they can get extra hours. Plus,sometime they don’t even pay for gas if you were to go out of your district to cover.

 

[mentos]

Did you have to go through scheduler when you were picking up OT? I heard this days you had be really nice to your scheduler to get hours. Plus you have to be the first one to respond once they send out email to cover sick calls. lol so one had to sit on their email all days to see if they can get extra hours. Plus,sometime they don’t even pay for gas if you were to go out of your district to cover.

This was 4-5 years ago but they would typically call or text whoever wasn't working for a sick call, first one to get back to them would get the shift. Occasionally the scheduler would email out available shifts ahead of time but not often.

 

[Momus]

Easy to hit 3M if you live with your mother and do your own haircuts, I suppose.

But at what cost

I wanted to reply hours ago but Darksouls 3 is kicking my ass. That JP1985 guy got banned again before I can quote him.

Naw, I have 0 family in the states. No immediate or extended family at all. I wish I could freeload off my relatives.

Absolutely true on hair cuts. I have been cutting my own forever.

 

[footfairy]

Absolutely true on hair cuts. I have been cutting my own forever.

And judging by the magnificent mane in your profile picture, you do an amazing job!

 

[redfish955]

I moved to a lcola. Purchased a 1500 sq. foot condo in a nice neighborhood for 120k. It's nicer than the local apartments and I am renting a room to a friend.
15 year loan. I am going to sell it and use it to get a into a mega house one day.
$500 a month in tenant rent, $6000 a year, enough to max a Roth ira. Making a good friend in the process.
Then I drive a used Lexus hybrid. It's basically a Prius but stiffer suspension and I enjoy driving it.
I regret living at my parents and saving when I was younger, wish I had done this earlier.
Now, I'm completely set until I have a toddler and need to get a yard.
I can still date, save, party, and everything else.
You can literally do the above on a 60k a year salary while tossing another 10k a year into your 401k.
Eat out at nice restaurants.
Take trips
etc.
Then ten years later you have a wife and a baby on the way. Sell the condo and collect your $75k in equity. Put 15k into your emergency fund and 60k toward the down payment of a 300k home to raise a family in.

 

[pezdispenser]

You can still backdoor it if he wishes after a rollover, nothing stops you from that. Whether it's worth it depends on how much in taxes he would be paying. But most importantly, if you can get better returns from an IRA than a 401(k) that will outweigh any tax benefits. My IRA returns were x5 higher than my 401(k).

Besides, I think he mentioned he already has an IRA.

A Roth is way better than a traditional IRA when you have large returns. For a traditional IRA, you still have to pay full income tax on the entire amount of your withdrawals including your original investment, whereas a Roth is completely tax free.

 

[mentos]

A Roth is way better than a traditional IRA when you have large returns. For a traditional IRA, you still have to pay full income tax on the entire amount of your withdrawals including your original investment, whereas a Roth is completely tax free.

This. Listen to anything pez says, he knows his stuff.

 

[iamapharmacist]

Kind of off topic. I just started a new job at an indie. I used to get 401k matched at my old pharmacy but this new one doesn't. What would be the best alterative option then? Just ROTH IRA?

 

[NITRAS]

Kind of off topic. I just started a new job at an indie. I used to get 401k matched at my old pharmacy but this new one doesn't. What would be the best alterative option then? Just ROTH IRA?

You will have more options in your ROTH IRA.

If you have good options in your 401k, then it is often simpler to use the 401k. The limits for IRA’s are a lot lower than 401k.

I’m a super big fan of ROTH, so I would prefer to use a ROTH IRA rather than a transitional 401k (though most 401k‘s now have ROTH options).

 

[Monsterdaddy]

A Roth is way better than a traditional IRA when you have large returns. For a traditional IRA, you still have to pay full income tax on the entire amount of your withdrawals including your original investment, whereas a Roth is completely tax free.

pez and my fellow pharmacists please listen to me because the above statement is factually inaccurate and you could compromise your lifetime returns if you acted on this with the wrong assumptions.

What the above statement misses is: 1) the returns you could get on the deferred taxes; 2) efficient tax strategies on investments (capital gains, step up in basis); and 3) potentially lower tax bracket when you retire. Let's go through a hypothetical:

You are in the 25% tax bracket and are eligible for a full tax deferral from a Traditional IRA. You can decide to put $6,000 in either a Roth or Traditional and if you do a Traditional you will invest the tax deferral of $1,500 in a taxable account. And let's say your only investment strategy is buy and hold SPY the S&P 500 ETF and let's assume the annual return is 10% in capital appreciation and 1.5% in dividends.

In 20 years, both the Traditional and Roth IRA have the same value = $6,000 * (100% + 10% + 1.5%)^10 years = $52,924. The taxable account would have to pay 25% taxes on the 1.5% of dividends so after 10 years the value grows from $1,500 to $12,369.

First off, notice the buy and hold strategy is very tax efficient. The $1,500 would have grown to $13,231 if you didn't pay any taxes so not much of a loss over 20 years.

Now let's assume you retire at the end of the 20 years and have to start taking RMDs from the Traditional IRA and your tax bracket is now 15%. For simplicity's sake let's just assume you can take it all out and pay 15% on it. That nets you $44,985. And now you selloff your taxable account for a long term capital gains tax of 15% and that nets you $10,513. Together that is $55,498 which is about 5% more than the Roth IRA.

You want even more tax efficiency? Then never selloff the taxable account and hold until you die for step up in basis 0% taxes. That yields about 8% more than a Roth IRA. And you could juice your taxable account returns by using margin. And so many more ways to play this out. And if affordability is a problem then, for example, if you were tight on cash, $6,000 in a Traditional should beat $4,500 in a Roth.

Don't get me wrong, a Roth IRA is great but if you can get a tax deferral with a Traditional IRA the answer just isn't so cut and dry.

P.S. And sometimes lowering your AGI with a Traditional IRA leads to other benefits you might otherwise miss out on, i.e. lower your student loan payment.

 

[PharmDBro2017]

in b4 pez

 

[lord999]

This seems false to me. I knew plenty of OT hogs at CVS. Heck I was one.

Ad hominem: Says the guy who no longer works at the CVS store division anymore.

But agreed. Even now, I know some 25 year veteran pharmacists who voluntarily work 70 hours for lack of a better idea of how to use their time. And then there's the people where money doesn't matter, something else does like validation or power or domination. What depresses me was the total collapse of people who had to work excessively be cause they never could budget properly.

 

[pezdispenser]

You can decide to put $6,000 in either a Roth or Traditional and if you do a Traditional you will invest the tax deferral of $1,500 in a taxable account.

You don't get an extra $1,500 to invest from 'tax deferral' so the rest of your post is pretty much irrelevant. If you put $6,000 in a 401k (or traditional IRA but most RPh are over the income limit to deduct contributions), that's $6000 from your pre-tax income and NO taxes are paid up front.

 

[pezdispenser]

pez and my fellow pharmacists please listen to me because the above statement is factually inaccurate and you could compromise your lifetime returns if you acted on this with the wrong assumptions.

What the above statement misses is: 1) the returns you could get on the deferred taxes; 2) efficient tax strategies on investments (capital gains, step up in basis); and 3) potentially lower tax bracket when you retire. Let's go through a hypothetical:

You are in the 25% tax bracket and are eligible for a full tax deferral from a Traditional IRA. You can decide to put $6,000 in either a Roth or Traditional and if you do a Traditional you will invest the tax deferral of $1,500 in a taxable account. And let's say your only investment strategy is buy and hold SPY the S&P 500 ETF and let's assume the annual return is 10% in capital appreciation and 1.5% in dividends.

In 20 years, both the Traditional and Roth IRA have the same value = $6,000 * (100% + 10% + 1.5%)^10 years = $52,924. The taxable account would have to pay 25% taxes on the 1.5% of dividends so after 10 years the value grows from $1,500 to $12,369.

First off, notice the buy and hold strategy is very tax efficient. The $1,500 would have grown to $13,231 if you didn't pay any taxes so not much of a loss over 20 years.

Now let's assume you retire at the end of the 20 years and have to start taking RMDs from the Traditional IRA and your tax bracket is now 15%. For simplicity's sake let's just assume you can take it all out and pay 15% on it. That nets you $44,985. And now you selloff your taxable account for a long term capital gains tax of 15% and that nets you $10,513. Together that is $55,498 which is about 5% more than the Roth IRA.

You want even more tax efficiency? Then never selloff the taxable account and hold until you die for step up in basis 0% taxes. That yields about 8% more than a Roth IRA. And you could juice your taxable account returns by using margin. And so many more ways to play this out. And if affordability is a problem then, for example, if you were tight on cash, $6,000 in a Traditional should beat $4,500 in a Roth.

Don't get me wrong, a Roth IRA is great but if you can get a tax deferral with a Traditional IRA the answer just isn't so cut and dry.

P.S. And sometimes lowering your AGI with a Traditional IRA leads to other benefits you might otherwise miss out on, i.e. lower your student loan payment.

I now realize you made a huge straw man argument. The original question from @Farmgurl20 was never about 401k/Traditional IRA vs Roth IRA. It was about whether she should rollover her 401k to a traditional IRA, and the consensus was no, because that would prevent her from doing a backdoor Roth in the future.

Note that most people, including me, recommend maxing out your pre-tax 401k BEFORE doing a Roth IRA. This is because a pre-tax 401k (which has the same taxation as a traditional IRA) is indeed a little bit better than a Roth IRA or Roth 401k. After you have maxed out $19500 in your 401k and you still want to invest more, the next best tax advantaged account is the backdoor Roth IRA, so it's important to keep that option open by not having a rollover IRA.

Once you have built up a decent amount in your 401k and Roth IRA, you should start to think about tax efficient asset placement. This is totally independent and has nothing to do with the debate on whether you should CONTRIBUTE to a traditional or Roth. Simply put, you should place your investments with the highest expected growth or lowest tax efficiency, like a brokerage account, in your Roth IRA to maximize your tax benefits. (Which is what I said before but it was in the wrong context).

 

[Farmgurl20]

I now realize you made a huge straw man argument. The original question from @Farmgurl20 was never about 401k/Traditional IRA vs Roth IRA. It was about whether she should rollover her 401k to a traditional IRA, and the consensus was no, because that would prevent her from doing a backdoor Roth in the future.

Note that most people, including me, recommend maxing out your pre-tax 401k BEFORE doing a Roth IRA. This is because a pre-tax 401k (which has the same taxation as a traditional IRA) is indeed a little bit better than a Roth IRA or Roth 401k. After you have maxed out $19500 in your 401k and you still want to invest more, the next best tax advantaged account is the backdoor Roth IRA, so it's important to keep that option open by not having a rollover IRA.

Once you have built up a decent amount in your 401k and Roth IRA, you should start to think about tax efficient asset placement. This is totally independent and has nothing to do with the debate on whether you should CONTRIBUTE to a traditional or Roth. Simply put, you should place your investments with the highest expected growth or lowest tax efficiency, like a brokerage account, in your Roth IRA to maximize your tax benefits. (Which is what I said before but it was in the wrong context).

Thanks Pez, so I ended up calling vanguard and they said I have option to move to traditional IRA or Roth IRA. Wait, now I logged back in and it says my funds are now in IRA. what should I do now? And what you mean by I can’t do backdoor ROTH in future?

 

[footfairy]

Thanks Pez, so I ended up calling vanguard and they said I have option to move to traditional IRA or Roth IRA. Wait, now I logged back in and it says my funds are now in IRA. what should I do now? And what you mean by I can’t do backdoor ROTH in future?

You end up getting taxed a lot more based on the total amount of money in your IRA, it's called the Pro-Rata rule.

I dont know it well enough to fully describe it but this site (below) has a pretty good explanation, Pez might be more useful when he responds as well.

Roth IRAs and The Pro-Rata Rule | Rodgers & Associates

Here’s what to know when using the pro-rata rule, an IRS calculation that helps distinguish pre-tax and after-tax funds.

rodgers-associates.com

 

[Monsterdaddy]

You don't get an extra $1,500 to invest from 'tax deferral' so the rest of your post is pretty much irrelevant. If you put $6,000 in a 401k (or traditional IRA but most RPh are over the income limit to deduct contributions), that's $6000 from your pre-tax income and NO taxes are paid up front.

pez, in order to put $6,000 in a Roth IRA you would need $7,500 -- $6,000 for the Roth IRA and $1,500 to pay the taxes. So the extra $1,500 is valid.

My above reply wasn't to farmgurl, it was to your assertion that a Roth IRA is always superior to a Traditional IRA which it is not. Everything else you said re: farmgurl I agree pretty much agree with for most people. But some folks like me can trade for much better returns in a Traditional IRA than the "safer" options found in 401(k)s including making returns on the "deferred taxes." Of course, I never got the chance to do backdoor Roth because I had started an IRA 10 years before they came into existence and it never made sense for me to pay the taxes to rollover to a Roth.

There is one other advantage to placing your tax deferred monies in a taxable account I am realizing. I have 5 kids and 3 have started getting a little income of their own. I am pulling money out to put into my kids' Roth IRA every year as a gift. (Their tax rate is like 0% so of course Traditional makes no sense for them). Every parent should be encouraging their kids to earn $6,000 a year and do this for them.

 

[pezdispenser]

Thanks Pez, so I ended up calling vanguard and they said I have option to move to traditional IRA or Roth IRA. Wait, now I logged back in and it says my funds are now in IRA. what should I do now? And what you mean by I can’t do backdoor ROTH in future?

You should just leave the rollover in a traditional IRA. If you convert it to a Roth IRA you would have to pay taxes on it at your current tax bracket (24%?)

Hopefully your next employer will allow you to roll-in your traditional IRA to their 401k plan, because this will allow you to do a backdoor Roth again.

Doing a backdoor Roth requires you to not have any pre-tax money in a traditional IRA because of the IRS 'pro-rata' rule. It means that if you have, for example, $30k pre-tax in a traditional IRA and then do a $6k non-deductible contribution to try to do the backdoor Roth, the IRS makes you pro-rate it so you have to convert 30k/36k x 6k = $5k from the pre-tax amount and 6k/36k x 6k = $1k from the non-deductible contribution. You will then have to pay taxes on the $5k, which defeats the purpose of the backdoor Roth.

 

[redfish955]

Let's deep dive in how to build wealth while still having fun.
For me.
125k condo in a nice neighborhood.
Rent 1 room for $500 a month.
15 year mortgage.
2nd hand lexus-bullet proof reliability.
Max 401k.
rent goes into roth ira.
Take a few trips, eat out a few times a week. Purchase premium groceries.
Save the rest. Anyone else have a good approach while still having some fun?

 

[mentos]

You should just leave the rollover in a traditional IRA. If you convert it to a Roth IRA you would have to pay taxes on it at your current tax bracket (24%?)

Hopefully your next employer will allow you to roll-in your traditional IRA to their 401k plan, because this will allow you to do a backdoor Roth again.

Doing a backdoor Roth requires you to not have any pre-tax money in a traditional IRA because of the IRS 'pro-rata' rule. It means that if you have, for example, $30k pre-tax in a traditional IRA and then do a $6k non-deductible contribution to try to do the backdoor Roth, the IRS makes you pro-rate it so you have to convert 30k/36k x 6k = $5k from the pre-tax amount and 6k/36k x 6k = $1k from the non-deductible contribution. You will then have to pay taxes on the $5k, which defeats the purpose of the backdoor Roth.

That's why I suggested leaving her old 401k alone or rolling over into her new 401k, so she can do backdoor Roth.

 

[pezdispenser]

pez, in order to put $6,000 in a Roth IRA you would need $7,500 -- $6,000 for the Roth IRA and $1,500 to pay the taxes. So the extra $1,500 is valid.

My above reply wasn't to farmgurl, it was to your assertion that a Roth IRA is always superior to a Traditional IRA which it is not. Everything else you said re: farmgurl I agree pretty much agree with for most people.

That's the straw man argument because this should not be a comparison between traditional and Roth. I already said 401k/traditional is a little bit better so I recommend that people max out their 401k first, before doing a Roth IRA. But you will eventually be doing both so you don't have to choose one over the other.

But some folks like me can trade for much better returns in a Traditional IRA than the "safer" options found in 401(k)s including making returns on the "deferred taxes." Of course, I never got the chance to do backdoor Roth because I had started an IRA 10 years before they came into existence and it never made sense for me to pay the taxes to rollover to a Roth.

Everyone's financial situation is different but generally what I'm recommending is to put $19500 in your 401k and $6000 backdoor Roth IRA. After a few years, you should have a decent amount in the Roth to trade to your heart's content, and the best part is it's completely tax free. It's a bit unfortunate that the tax laws didn't line up for you to take advantage of the Roth, but this is exactly why we are telling people to avoid doing rollovers to an IRA so that you can still do a backdoor Roth.

 

[Farmgurl20]

That's why I suggested leaving her old 401k alone or rolling over into her new 401k, so she can do backdoor Roth.

Thanks Mentos, should have asked that question here before doing it. I completely forgot I could ask that question on SDN. Lol

 

[NITRAS]

I now realize you made a huge straw man argument. The original question from @Farmgurl20 was never about 401k/Traditional IRA vs Roth IRA. It was about whether she should rollover her 401k to a traditional IRA, and the consensus was no, because that would prevent her from doing a backdoor Roth in the future.

Note that most people, including me, recommend maxing out your pre-tax 401k BEFORE doing a Roth IRA. This is because a pre-tax 401k (which has the same taxation as a traditional IRA) is indeed a little bit better than a Roth IRA or Roth 401k. After you have maxed out $19500 in your 401k and you still want to invest more, the next best tax advantaged account is the backdoor Roth IRA, so it's important to keep that option open by not having a rollover IRA.

Once you have built up a decent amount in your 401k and Roth IRA, you should start to think about tax efficient asset placement. This is totally independent and has nothing to do with the debate on whether you should CONTRIBUTE to a traditional or Roth. Simply put, you should place your investments with the highest expected growth or lowest tax efficiency, like a brokerage account, in your Roth IRA to maximize your tax benefits. (Which is what I said before but it was in the wrong context).

There are real disadvantages of leaving a 401k/403b in an old plan.
1. Having to deal with multiple accounts from old employers.
2. Lots of employer sponsored plans are very conservative, and will underperform.

The ROTH vs. traditional would be really easy, if you knew your retirement and working tax rates. . . . But we don’t. As I’m maxing out all my qualified retirement options, with ROTH, I’ve investing more (effectively) than using traditional.

High income earners could easily have high 7 or even 8 figures in retirement accounts.

In full disclosure, I’m waiting one year to roll my wife’s 403b plan over because I want to convert it to ROTH and want to ensure I have the money for the taxes.

 

[mentos]

There are real disadvantages of leaving a 401k/403b in an old plan.
1. Having to deal with multiple accounts from old employers.
2. Lots of employer sponsored plans are very conservative, and will underperform.

Those don't sound like disadvantages at all. My old 401k has been sitting in Vanguard in a large cap index for years. I check it like once a year, no maintenance at all. Every 401k has a large cap index with low ER. It performs the same as the large cap index in my current 401k.

 

[StockPharmD2020]

Those don't sound like disadvantages at all. My old 401k has been sitting in Vanguard in a large cap index for years. I check it like once a year, no maintenance at all. Every 401k has a large cap index with low ER. It performs the same as the large cap index in my current 401k.

My spouse had a small 401k from a previous job. Had like 12k in it. We never looked at it.

We did recently
About 25% of the account was in bonds. Too bad we didn't check into it in March.

 

[khydroxide]

If you are doing well then why do you need the money?

ive been doing well trading but most of that money is in my ira which i rolled over from cvs. best decision i made in my life lol.

 

[khydroxide]

Cash out and dump it all to PLTR and NIO like mentos. That's his recommendation.

I'm waiting for screen shots.

I want khydroxide to cash out and dump it all to NIO. YOLO.

Still waiting for his screenshot.

wallstreetbets life. ngl i rolled my ira over and went all in tesla 2022 leaps. have some pltr and psth call options as well.

 

[Momus]

wallstreetbets life. ngl i rolled my ira over and went all in tesla 2022 leaps. have some pltr and psth call options as well.

How much the premium for 2 yrs call?

 

[khydroxide]

Let's pretend for this example that the 2020 tax rates are permanent, the 10% early withdrawal penalty doesnt exist, and you live in a no income tax state.

If you withdrawal 1 million dollars from your 401k all at once, you are looking at a 33% effective federal tax rate, or 330k total in taxes. If you withdrawal 100k a year for 10 years you would be paying a 15% effective rate, or $150k total in taxes.

So in this best case scenario, you are looking at paying $180k more in taxes to withdrawal your money in a lump sum instead of over a decade. When you factor in the 10% early withdrawal penalty, that's another $100k. If you live in a state with progressive state income tax, you're adding another couple 10s of thousands of dollars in taxes by doing lump some.

So If you want to withdrawal all your money and YOLO it on a lambo and escorts, you do you, but it's about the worst way to manage your portfolio.

thank you for this

 

[khydroxide]

How much the premium for 2 yrs call?

i got 300c (1500 pre split) for 44.89 currently sitting at 303.87 also holding 400c and 500c for 2022 all up and a 100 shares.

 

[lane one]

Let's deep dive in how to build wealth while still having fun.
For me.
125k condo in a nice neighborhood.
Rent 1 room for $500 a month.
15 year mortgage.
2nd hand lexus-bullet proof reliability.
Max 401k.
rent goes into roth ira.
Take a few trips, eat out a few times a week. Purchase premium groceries.
Save the rest. Anyone else have a good approach while still having some fun?

Was this post-crash real estate market or are you just in a low cost area? Those numbers do not compute in my market.

 

[redfish955]

Was this post-crash real estate market or are you just in a low cost area? Those numbers do not compute in my market.

Those are todays numbers. I chose to move in a low cost of living midwest city.

 

[Splenda88]

Let's deep dive in how to build wealth while still having fun.
For me.
125k condo in a nice neighborhood.
Rent 1 room for $500 a month.
15 year mortgage.
2nd hand lexus-bullet proof reliability.
Max 401k.
rent goes into roth ira.
Take a few trips, eat out a few times a week. Purchase premium groceries.
Save the rest. Anyone else have a good approach while still having some fun?

Could not agree with that more... I will always have a lexus as 'spare' car.

 

[rickyroxy]

What's everyone's thought on Roth 401k? Especially in situation of early retirement. I am afraid that traditional 401k will become too big where it becomes problem in retirement and push me into higher tax bracket along with social security and RMDs?

Currently I have $480k in Traditional 401k. About 50K in Roth IRA for me and spouse with 12K/yr max contribution as backdoor roth(can't do mega backdoor). There is no way I can contribute more in to Roth IRA. So was thinking if I put half in Roth 401k and half Traditional 401k to have more tax diversification.

Other option is to just put all in Traditional 401k to reduce tax now and do Roth conversion ladder to access 401k before 59.5.

 

[pezdispenser]

What's everyone's thought on Roth 401k? Especially in situation of early retirement. I am afraid that traditional 401k will become too big where it becomes problem in retirement and push me into higher tax bracket along with social security and RMDs?

Currently I have $480k in Traditional 401k. About 50K in Roth IRA for me and spouse with 12K/yr max contribution as backdoor roth(can't do mega backdoor). There is no way I can contribute more in to Roth IRA. So was thinking if I put half in Roth 401k and half Traditional 401k to have more tax diversification.

Other option is to just put all in Traditional 401k to reduce tax now and do Roth conversion ladder to access 401k before 59.5.

Do the traditional 401k. Then when you retire early you won't have a salary so you can do the Roth conversion ladder in the lower tax brackets. You'll also need access to other money in taxable accounts to live off during this time, and it will be easier if you have low expenses, e.g. mortgage already paid off.

 

[StockPharmD2020]

Do the traditional 401k. Then when you retire early you won't have a salary so you can do the Roth conversion ladder in the lower tax brackets. You'll also need access to other money in taxable accounts to live off during this time, and it will be easier if you have low expenses, e.g. mortgage already paid off.

Never heard of a roth conversion ladder.

I just started putting small amount into my 401K roth because I figured I may need it some and it wouldn't change my tax rate. Should I just got back to a standard 401k?

 

[pezdispenser]

Never heard of a roth conversion ladder.

I just started putting small amount into my 401K roth because I figured I may need it some and it wouldn't change my tax rate. Should I just got back to a standard 401k?

The Roth conversion ladder is to get money out of your 401k before 59.5 yrs, but you still have to wait 5 years after each conversion to avoid the 10% penalty, and you still pay taxes when you convert so ideally you want to be in the lower tax brackets.

Traditional 401k is better than Roth if you think you'll be in a lower tax bracket when you make withdrawals, and if you retire early with no more salary then you'll have many years to space out your withdrawals in the lower tax brackets. So I recommend maxing out your traditional 401k first, then you can do an additional $6k backdoor Roth for tax diversification. You can also withdraw your original contributions to the Roth at any time tax and penalty free so that gives you some flexibility.

 

[StockPharmD2020]

The Roth conversion ladder is to get money out of your 401k before 59.5 yrs, but you still have to wait 5 years after each conversion to avoid the 10% penalty, and you still pay taxes when you convert so ideally you want to be in the lower tax brackets.

Traditional 401k is better than Roth if you think you'll be in a lower tax bracket when you make withdrawals, and if you retire early with no more salary then you'll have many years to space out your withdrawals in the lower tax brackets. So I recommend maxing out your traditional 401k first, then you can do an additional $6k backdoor Roth for tax diversification. You can also withdraw your original contributions to the Roth at any time tax and penalty free so that gives you some flexibility.

Ok. I do roth plus 401k. I'll just make my 401k all pretax

 

[Momus]

I just noticed my small/mid cap allocation in 401k jumped from 32% to 36% in under 3 months, beating large cap by a lot (I set large/small 50/50%). It becomes the best performing in my allocation. I will rebalance if it becomes 40%, let it run a bit.

401k set portfolio: 36%int/32small/32large