Entitlements Discussion

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Re: Entitlements Discussion

Postby mdb1958 » Sun Jun 10, 2018 7:02 am

Typical liberal, instead of talking about what is really getting talked about, he redirects, so that he looks smarter than he really is.
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Re: Entitlements Discussion

Postby Zarniwoop » Sun Jun 10, 2018 7:22 am

I don’t think anyone could have explained it any more clearly
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Re: Entitlements Discussion

Postby Mountaineer Buc » Sun Jun 10, 2018 7:41 am

This is why Social Security is important.
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Re: Entitlements Discussion

Postby uscbucsfan » Sun Jun 10, 2018 3:07 pm

Mountaineer Buc wrote:This is why Social Security is important.

That's a terrible reason.
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Re: Entitlements Discussion

Postby Mountaineer Buc » Sun Jun 10, 2018 4:14 pm

uscbucsfan wrote:
Mountaineer Buc wrote:This is why Social Security is important.

That's a terrible reason.

Let the stupid be poor, eh?

It's your compassion for your fellow man that moves me so.
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Re: Entitlements Discussion

Postby Zarniwoop » Sun Jun 10, 2018 4:26 pm

uscbucsfan wrote:
Mountaineer Buc wrote:This is why Social Security is important.

That's a terrible reason.



^
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Re: Entitlements Discussion

Postby The Outsider » Sun Jun 10, 2018 10:32 pm

mdb1958 wrote:
Betsy wrote:My dad was born in 1922(1987) and mom in 1924(1998). So they both lived through the Great Depression.

One thing my dad taught me was not to count on anyone but yourself when it comes to money and don't buy it if you can't pay cash. Meaning don't live beyond your means.

I will retire when I'm 62, 2 and 1/2 years from now and start taking social security at that time. It won't be much, but like I said, I wasn't counting on it being there when I retired.

I'm counting on my 401K and other investments to let me live quite comfortably until I'm old and grey. If that ever happens.

What's that saying? If you can't touch, taste, see, smell or hear it, it doesn't exist.

Count on yourself.



I hate how they dangle that better pay out at 66 1/2. I'm not waiting.



Waiting makes perfect sense if you're in the financial position to do so.
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Re: Entitlements Discussion

Postby mdb1958 » Mon Jun 11, 2018 4:14 am

When I was younger I thought that was a possibility too.
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Re: Entitlements Discussion

Postby Buc2 » Mon Jun 11, 2018 7:01 am

I have no intention to retire before age 70. Now, my employer may have other plans. If so, I'll deal with it then.
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Re: Entitlements Discussion

Postby deltbucs » Mon Jun 11, 2018 7:44 am

At the expense of straying away a little from what mdb is trying to understand, I have an actual 401k/Roth question for you folks. I put the max my employer will match into 401k (which they just actually upped form a 50% match up 6% to 50% match up to 8%) and then any more that I want to put away, I put into a Roth. I've read that this is the better way to do it...to get the taxes out of the way and use the Roth, but I've seen it argued the other way. I was curious to your thoughts on this.
Last edited by deltbucs on Mon Jun 11, 2018 9:53 am, edited 1 time in total.
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Re: Entitlements Discussion

Postby Mountaineer Buc » Mon Jun 11, 2018 8:14 am

deltbucs wrote:At the expense of straying away a little from what mdb is trying to understand, I have an actually 401k/Roth question for you folks. I put the max my employer will match into 401k (which they just actually upped form a 50% match up 6% to 50% match up to 8%) and then any more that I want to put away, I put into a Roth. I've read that this is the better way to do it...to get the taxes out of the way and use the Roth, but I've seen it argued the other way. I was curious to your thoughts on this.


The 401k is a pretax contribution so you will ultimately pay taxes on the income your 401k provides in retirement since you didn't pay taxes up front. The big upside is your employer is effectively giving you 4% matching contributions meaning you get an instant 100% rate of return on the contribution if you put 4% of your pay into the plan.

the Roth uses after tax income that is not taxed when you draw. That's the big upside. The downside is that you're probably not going to get any contributions there other than what you put in and there are limits to the contributions.

Ideally, you'd have both going. A 401k through your employer that gives you a tax break now, and a Roth that you put savings into. If you gotta pick one, it's really a matter of how much money we're talking about. If your 401k ends up paying you less than the standard deduction per year in your retirement years, you won't really be paying taxes on that money anyway. But if you're a high earner, the Roth might be the best bet assuming you don't have tax concerns now.

There really isn't a one size fits all answer.
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Re: Entitlements Discussion

Postby Zarniwoop » Mon Jun 11, 2018 8:16 am

deltbucs wrote:At the expense of straying away a little from what mdb is trying to understand, I have an actually 401k/Roth question for you folks. I put the max my employer will match into 401k (which they just actually upped form a 50% match up 6% to 50% match up to 8%) and then any more that I want to put away, I put into a Roth. I've read that this is the better way to do it...to get the taxes out of the way and use the Roth, but I've seen it argued the other way. I was curious to your thoughts on this.




Do you mean what you should do with any money beyond the 8% they match? And that right now you are putting it into a Roth instead of over-funding your 401k?


If that’s the case, what you are doing is the same I would be doing.
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Re: Entitlements Discussion

Postby Mountaineer Buc » Mon Jun 11, 2018 9:16 am

A little Earned income credit talk....

In his latest annual letter to shareholders, JPMorganChase CEO Jamie Dimon says the US should "dramatically expand" its current earned-income tax credit, a form of negative income tax that pays low-earners instead of asking them to pay income tax.

The idea of negative income tax is novel: In effect, it's a kind of income tax that works in reverse.

For those who earn below a certain amount — like the poverty line — the government pays them. The US already has a program like this that benefits millions of people's health and wallets, and President Donald Trump has proposed expanding it.

Here's what it's all about.
How it's applied today

The largest example of NIT is the Earned Income Tax Credit (EITC), which serves 27 million working families in the US. It was started in 1975, under President Gerald Ford, expanded once by President Reagan, and expanded further by President Clinton.

The EITC functions like a big tax refund. If a family makes below a certain amount each year, the government will refund the tax that was withheld plus an additional amount.


President Trump wants to increase the EITC for couples making under $64,400 a year (or individuals earning below $31,200) to help low-income parents spend on childcare, up to a certain point. Families will also be able to deposit some of that money into a special account, which the government will match up to $1,000 annually.

But it's still important for government "to have eggs in other baskets" when solving poverty, rather than relying exclusively on the EITC, says Russ Whitehurst, senior fellow of economics studies at the Brookings Institution.

"Education programs that increase skill levels among the working-age population have, to date in human history, paid a consistent dividend in the form of higher overall economic activity," Whitehurst tells Business Insider.

A hypothetical NIT, courtesy of the 1960s

Milton Friedman, the influential University of Chicago economist, started talking about NIT in 1968. He saw it as a way to help people economically without reducing their incentive to work.

He proposed a hypothetical. Let's say the lowest income someone could pay tax on was $3,000. For everyone who makes below that, Friedman said the government should give them 50% of the amount between the actual income and the cutoff. So if you earned $2,000, you'd get half of the $1,000 difference, or $500. If you earned nothing that year, you'd get $1,500.

In other words, a family could never earn less than half the threshold, but it also couldn't earn the threshold itself or higher. Friedman said this was essential, because if people could earn the baseline or higher, they'd have little incentive to work at all.

Planning for a future of automated work

The idea resurfaced most recently in Dimon's letter to shareholders.

"It is important to note that large companies generally pay well above the minimum wage and provide health insurance and retirement benefits to all their employees," Dimon wrote. "While this would help small businesses far more than big businesses, large companies should support the expansion of this program because it would foster growth and be great for lower paid American workers."

Dimon's letter echoed his comments at this year's World Economic Forum, in Davos, Switzerland, where leaders took to the idea because robotic automation now looms over a growing number of jobs. Governments may need to find ways to supplement people's wages when employers no longer require the employee's specific type of work.

"I think negative income tax is a big solution for the low-skilled, to give people a living wage and the dignity of a job," Dimon said at a private lunch during the event.

Dimon's vision of the near future is different from how most of us think about earning an income.

In the current system, people earn an income based largely on what skills they can sell in the labor market. Doctors make more than baristas because medicine requires a greater set of skills and draws from a smaller pool of candidates relative to making coffee.

As more jobs become automated, that dynamic could change. More people might work part-time and rely on supplemental income to reach a living wage.

"Maybe one day we'll all be working four days a week and not five or six days a week," Dimon said. "In fact, I think in Europe they're already down to four days a week."

However, the more jobs are automated, the less something like NIT would necessarily help people, says Jesse Rothstein, an economist at UC Berkeley.

"Even the existing EITC doesn't get people to a livable wage," he tells Business Insider. "So you'd need something much more generous to make up for the fact you're only asking people to work two days a week, and to make that a livable amount of money."


Breakdown on the EITC with income limits and max credit.
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts
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Re: Entitlements Discussion

Postby deltbucs » Mon Jun 11, 2018 9:55 am

Zarniwoop wrote:
deltbucs wrote:At the expense of straying away a little from what mdb is trying to understand, I have an actually 401k/Roth question for you folks. I put the max my employer will match into 401k (which they just actually upped form a 50% match up 6% to 50% match up to 8%) and then any more that I want to put away, I put into a Roth. I've read that this is the better way to do it...to get the taxes out of the way and use the Roth, but I've seen it argued the other way. I was curious to your thoughts on this.




Do you mean what you should do with any money beyond the 8% they match? And that right now you are putting it into a Roth instead of over-funding your 401k?


If that’s the case, what you are doing is the same I would be doing.

Yep..That was my question. Thanks for the response.

MB....Thanks for the response and info!
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Re: Entitlements Discussion

Postby Zarniwoop » Mon Jun 11, 2018 9:57 am

Here is why I would almost always prefer the Roth if I were able to qualify for it:

1.) Depending on the broker your company's 401k uses, you are likely to have a much wider choice of investment vehicles for the Roth than the 401k
2.) IF you are young (< 45), the untaxed gains in a Roth are likely to be substantial. The younger you are, the better this is. You can safely say you will double your money in what about 12 years? (probably sooner). If you are young enough to double it again, the tax free gains will far outweigh the tax you had to pay on the original income. For this reason, I would go as aggressive as I could in a Roth...any caution that I need would be done in the 401k.
3.) When you do retire, you can use withdrawls from the Roth to help keep your 401K withdrawls to a minimum and thus your tax liability to a minimum
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Re: Entitlements Discussion

Postby PanteraCanes » Mon Jun 11, 2018 11:29 am

Mountaineer Buc wrote:
deltbucs wrote:At the expense of straying away a little from what mdb is trying to understand, I have an actually 401k/Roth question for you folks. I put the max my employer will match into 401k (which they just actually upped form a 50% match up 6% to 50% match up to 8%) and then any more that I want to put away, I put into a Roth. I've read that this is the better way to do it...to get the taxes out of the way and use the Roth, but I've seen it argued the other way. I was curious to your thoughts on this.


The 401k is a pretax contribution so you will ultimately pay taxes on the income your 401k provides in retirement since you didn't pay taxes up front. The big upside is your employer is effectively giving you 4% matching contributions meaning you get an instant 100% rate of return on the contribution if you put 4% of your pay into the plan.

the Roth uses after tax income that is not taxed when you draw. That's the big upside. The downside is that you're probably not going to get any contributions there other than what you put in and there are limits to the contributions.

Ideally, you'd have both going. A 401k through your employer that gives you a tax break now, and a Roth that you put savings into. If you gotta pick one, it's really a matter of how much money we're talking about. If your 401k ends up paying you less than the standard deduction per year in your retirement years, you won't really be paying taxes on that money anyway. But if you're a high earner, the Roth might be the best bet assuming you don't have tax concerns now.

There really isn't a one size fits all answer.



The other thing that is usually mentioned (and I don't think it was mentioned in here or your other longer post) is that your tax bracket is going to be much lower. So the 401k will be taxed at a lower amount after retirement as your "income" will most likely be a lot less.
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Re: Entitlements Discussion

Postby mdb1958 » Mon Jun 11, 2018 3:39 pm

Zarniwoop wrote:Here is why I would almost always prefer the Roth if I were able to qualify for it:

1.) Depending on the broker your company's 401k uses, you are likely to have a much wider choice of investment vehicles for the Roth than the 401k
2.) IF you are young (< 45), the untaxed gains in a Roth are likely to be substantial. The younger you are, the better this is. You can safely say you will double your money in what about 12 years? (probably sooner). If you are young enough to double it again, the tax free gains will far outweigh the tax you had to pay on the original income. For this reason, I would go as aggressive as I could in a Roth...any caution that I need would be done in the 401k.
3.) When you do retire, you can use withdrawls from the Roth to help keep your 401K withdrawls to a minimum and thus your tax liability to a minimum



I suggest you start growing a forest of $100,000 CD's.
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Re: Entitlements Discussion

Postby Zarniwoop » Mon Jun 11, 2018 3:41 pm

Will do...thanks!!!!!!!!!
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Re: Entitlements Discussion

Postby mdb1958 » Mon Jun 11, 2018 4:02 pm

PanteraCanes wrote:
Mountaineer Buc wrote:
The 401k is a pretax contribution so you will ultimately pay taxes on the income your 401k provides in retirement since you didn't pay taxes up front. The big upside is your employer is effectively giving you 4% matching contributions meaning you get an instant 100% rate of return on the contribution if you put 4% of your pay into the plan.

the Roth uses after tax income that is not taxed when you draw. That's the big upside. The downside is that you're probably not going to get any contributions there other than what you put in and there are limits to the contributions.

Ideally, you'd have both going. A 401k through your employer that gives you a tax break now, and a Roth that you put savings into. If you gotta pick one, it's really a matter of how much money we're talking about. If your 401k ends up paying you less than the standard deduction per year in your retirement years, you won't really be paying taxes on that money anyway. But if you're a high earner, the Roth might be the best bet assuming you don't have tax concerns now.

There really isn't a one size fits all answer.



The other thing that is usually mentioned (and I don't think it was mentioned in here or your other longer post) is that your tax bracket is going to be much lower. So the 401k will be taxed at a lower amount after retirement as your "income" will most likely be a lot less.


You can dip in at 59 1/2 and at 70 1/2 they use a chart to decide your payouts. If you want to eek out your existence, it will probably just be annoying. Go on a tear and burn up a 100,000 grand and they'll be calling you for that tax..

If I'm not mistaken, if you croak off, the person you left it to is now required to receive payments and pay tax on it.
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Re: Entitlements Discussion

Postby The Outsider » Mon Jun 11, 2018 4:07 pm

mdb1958 wrote:When I was younger I thought that was a possibility too.


Oh, I'm not talking out of my ass. I'm literally watching my dad wait, as he doesn't need the money.

See, if you work really hard, get lucky, and have some smarts you can be pretty successful. You can even make MILLIONS of dollars. Crazy, I know. If you happen to be someone like that, waiting to collect on your social security makes perfect sense.
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Re: Entitlements Discussion

Postby mdb1958 » Mon Jun 11, 2018 4:08 pm

Zarniwoop wrote:Will do...thanks!!!!!!!!!



Give em their money, then start a couple more babies.
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Re: Entitlements Discussion

Postby mdb1958 » Mon Jun 11, 2018 4:35 pm

The Outsider wrote:
mdb1958 wrote:When I was younger I thought that was a possibility too.


Oh, I'm not talking out of my ass. I'm literally watching my dad wait, as he doesn't need the money.

See, if you work really hard, get lucky, and have some smarts you can be pretty successful. You can even make MILLIONS of dollars. Crazy, I know. If you happen to be someone like that, waiting to collect on your social security makes perfect sense.



I would like to do a take back on one rollover that I cashed in and blew. I'll leave some but I want to spend some too.
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Re: Entitlements Discussion

Postby mdb1958 » Tue Jun 12, 2018 10:24 am

Zarniwoop wrote:Here is why I would almost always prefer the Roth if I were able to qualify for it:

1.) Depending on the broker your company's 401k uses, you are likely to have a much wider choice of investment vehicles for the Roth than the 401k
2.) IF you are young (< 45), the untaxed gains in a Roth are likely to be substantial. The younger you are, the better this is. You can safely say you will double your money in what about 12 years? (probably sooner). If you are young enough to double it again, the tax free gains will far outweigh the tax you had to pay on the original income. For this reason, I would go as aggressive as I could in a Roth...any caution that I need would be done in the 401k.
3.) When you do retire, you can use withdrawls from the Roth to help keep your 401K withdrawls to a minimum and thus your tax liability to a minimum


OK, for people who wont be disqualified! Could you put the max $5,500 and the $1,000 make up. Then convert say a couple smaller Ira's a year and roll them into the big Roth account? Then in your case since you make to much, why couldnt you take the tax hit on smaller traditional Ira's. Convert a $20,000 Ira and then roll it into a Roth. Do 1 or more every year. That way you have your forest of CD's, ever how many traditional Ira's you want and a big ole fat Roth. There has to be a way to contribute a 1/4 mil of your own money, plus growth into an Ira.

Correction: It wouldnt be a 1/4 mil, because you couldnt always put in that much money.
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