- This topic has 96 replies, 22 voices, and was last updated 8 years, 4 months ago by
Myriad.
-
AuthorPosts
-
December 9, 2015 at 3:46 PM #792403December 9, 2015 at 4:52 PM #792405
an
Participant[quote=flu][quote=plm][quote=cvmom][quote=flu]Employer match is always to a traditional IRA, which currently my employer has at 4% I think.[/quote]
Flu, you gave me a heart attack on this. But I did confirm that my company matches to Roth 401k contributions as well, not only to the traditional one. Just FYI[/quote]
If you don’t mind my question, why do people pick Roth 401k instead of traditional 401k? I thought the whole point was to defer taxes till retirement where the income is lower. Is it maybe to hit the AMT sweet spot but that’s another concept I’m having trouble grasping?[/quote]
Oh shucks. My doesn’t. That sucks.
Plm. Well, in the case of cvmom, it totally makes sense to contribute to a Roth 401k if the employers matches into your account. The employer contribution. Would be tax free and earnings from it would be tax free. As far as why one would contribute to a Roth 401k instead of traditional IRA. Part of me is worried about required minimum distribution that might make my taxable income greater post retirement than now. Also, I believe in the case of a Roth 401k, you can withdraw what you contribute without a tax penalty ( since it was after tax dollars anyways).
The other half of me days who knows what they will do to Roth accounts. And for I need some tax defferals.[/quote]I don’t think the match goes into ROTH. I’ve contributed to Roth in the past and the match part goes to traditional 401k. The reasoning I got is because they don’t know how much to withhold for taxes.
Plm, the reason why I contributed to Roth 401k was because I wasn’t making very much, so I want to take full advantage of the low tax bracket and I expect to be earning more in my retirement. Once I cross a certain threshold, I switch back to traditional.
December 9, 2015 at 5:22 PM #792406plm
Participant[quote=AN][quote=flu][quote=plm][quote=cvmom][quote=flu]Employer match is always to a traditional IRA, which currently my employer has at 4% I think.[/quote]
Flu, you gave me a heart attack on this. But I did confirm that my company matches to Roth 401k contributions as well, not only to the traditional one. Just FYI[/quote]
If you don’t mind my question, why do people pick Roth 401k instead of traditional 401k? I thought the whole point was to defer taxes till retirement where the income is lower. Is it maybe to hit the AMT sweet spot but that’s another concept I’m having trouble grasping?[/quote]
Oh shucks. My doesn’t. That sucks.
Plm. Well, in the case of cvmom, it totally makes sense to contribute to a Roth 401k if the employers matches into your account. The employer contribution. Would be tax free and earnings from it would be tax free. As far as why one would contribute to a Roth 401k instead of traditional IRA. Part of me is worried about required minimum distribution that might make my taxable income greater post retirement than now. Also, I believe in the case of a Roth 401k, you can withdraw what you contribute without a tax penalty ( since it was after tax dollars anyways).
The other half of me days who knows what they will do to Roth accounts. And for I need some tax defferals.[/quote]I don’t think the match goes into ROTH. I’ve contributed to Roth in the past and the match part goes to traditional 401k. The reasoning I got is because they don’t know how much to withhold for taxes.
Plm, the reason why I contributed to Roth 401k was because I wasn’t making very much, so I want to take full advantage of the low tax bracket and I expect to be earning more in my retirement. Once I cross a certain threshold, I switch back to traditional.[/quote]
Thanks for explaining. Makes sense if you will be earning more in retirement. I suppose I’m fortunate to make too much so I want to defer taxes but unfortunate that I still have to pay high taxes!
December 9, 2015 at 11:15 PM #792413exsdgal
Participant[quote=deadzone]
I don’t care because I am not looking for a new job. The poster asked for specifically what he has to do to make 175K. All you guys have confirmed is, yes it is theoretically possible to get that salary. If that is true, how about listing specific companies and job descriptions? Or even better, job announcements for open positions right now?[/quote]I think posting publicly identifiable details to strangers in forums is bordering lunacy 🙂 This thread provides suggestions on the type of opportunities available in SD, and the OP can modify the job/company search for his location.
This said what has been hugely beneficial over the years is the contacts made along the way. If some one is looking to switch or is starting out in a new city it is helpful to go to meetups/study the prospective industry and at the very least identify a highly connected recruiter within the industry.
I have mostly been involved in privately held/startups, and most times there are no official job openings. Last month someone introduced a QCOM guy, and a new position was created.
btw, you did not respond to my query about your industry and typical developer pay scale? tia for the details!
December 10, 2015 at 7:20 AM #792419livinincali
Participant[quote=kev374]what I am saying is based on the complexity I face on a day to day basis on designing and architecting systems (and yes, just because my designation is Sr. Software Engineer does not mean I am not expected to design, re-design, re-factor, deconstruct and re-configure and re-architect crappy existing systems) I should be making MINIMUM of $200,000…
people are crying about increasing minimum wage, what about the rest of us? Every year the wages are going down but workload and complexity is going up, constantly need to learn new stuff… it’s crazy.
Some of these systems are so complex it makes my head hurt… right now dealing with inhouse designed OO javascript framework, this thing has like probably 500,000 lines of code all over the place, designed over a 8-10 year period by various people but i’m expected to walk in and wave my magic wand and fix, design stuff against it? I’ve head to break my head for this and what am I getting paid? $135k? F it, need at least $200k for this crap!
Plumbers are making $135k these days and all they have to do is turn a wrench in the clockwise direction…[/quote]
Sounds like you need to start looking for a new job. Even it’s doing java for the same level of pay at another company. It’s probably better than what you are doing now. It’s always way easier to find a new job when you still have one than when you don’t
December 10, 2015 at 6:36 PM #792441joec
Participant[quote=plm]So for me I should stick with my traditional 401K. I never got good financial advice when I was starting out. Did 401K but just the minimum to get the company match. And my money just went into a checking account instead of investing in stocks. Oh, well I should have time to catch up but its painful to make up for financial mistakes in the past.
Its probably better to get good financial advice than chasing a larger salary. Kind of like all those star athletes that make millions but wind up broke.[/quote]
There is a lot of (or used to be) debates on the vanguard forums about this…Roth 401k or Regular…
I’m a believer in regular myself. For people making a decent salary, taking the tax hit now and forcing paying taxes at your “marginal” (read highest) rate isn’t the best thing IMO.
Most people with decent careers are in the 28% bracket. Add in 10% or so (or more now with those healthcare ones) for state and 40-50% is gone if you are doing a Roth 401k based on income.
The cases where a Roth 401k does make sense is when you know in retirement, you will be making even more or will always be at the super high tax bracket or have a massive pension or some special executive retirement plan.
However, my reasons for not doing this is you never know what the future holds.
I can play with my tax rate in retirement…if things change, I can withdraw more some years or 0 some other years…if I do really well now, I can take a few years off and do IRA conversions every year or volunteer, start a business, you name it…
As someone who has taken time off and done multiple Roth conversions, I think this option is the best since it can actually become tax free as well (very very low income, massively high deductions from mortgage/prop tax).
If the worst case happens where your regular IRA is MASSIVE and you now have millions in retirement, you can just be glad you have such an insane amount. Another option is if you start a company, you can probably roll your regular IRA into the company plan YOU setup and see what makes more sense for you like some deferred plans execs can setup for themselves…
Bottom line is paying your top marginal rate now is just usually not a good idea.
Gov loves it I think…
… that and who knows, they might tax Roth’s as well.
December 10, 2015 at 7:42 PM #792443ParticipantYoung married couple making <$75k combined tax bracket is 15%. It's unlikely you'll pay less than that in retirement. Those are also the people who would be able to take advantage of Roth 401k.
December 10, 2015 at 9:08 PM #792445Participant[quote=joec][quote=plm]So for me I should stick with my traditional 401K. I never got good financial advice when I was starting out. Did 401K but just the minimum to get the company match. And my money just went into a checking account instead of investing in stocks. Oh, well I should have time to catch up but its painful to make up for financial mistakes in the past.
Its probably better to get good financial advice than chasing a larger salary. Kind of like all those star athletes that make millions but wind up broke.[/quote]
There is a lot of (or used to be) debates on the vanguard forums about this…Roth 401k or Regular…
I’m a believer in regular myself. For people making a decent salary, taking the tax hit now and forcing paying taxes at your “marginal” (read highest) rate isn’t the best thing IMO.
Most people with decent careers are in the 28% bracket. Add in 10% or so (or more now with those healthcare ones) for state and 40-50% is gone if you are doing a Roth 401k based on income.
The cases where a Roth 401k does make sense is when you know in retirement, you will be making even more or will always be at the super high tax bracket or have a massive pension or some special executive retirement plan.
However, my reasons for not doing this is you never know what the future holds.
I can play with my tax rate in retirement…if things change, I can withdraw more some years or 0 some other years…if I do really well now, I can take a few years off and do IRA conversions every year or volunteer, start a business, you name it…
As someone who has taken time off and done multiple Roth conversions, I think this option is the best since it can actually become tax free as well (very very low income, massively high deductions from mortgage/prop tax).
If the worst case happens where your regular IRA is MASSIVE and you now have millions in retirement, you can just be glad you have such an insane amount. Another option is if you start a company, you can probably roll your regular IRA into the company plan YOU setup and see what makes more sense for you like some deferred plans execs can setup for themselves…
Bottom line is paying your top marginal rate now is just usually not a good idea.
Gov loves it I think…
… that and who knows, they might tax Roth’s as well.[/quote]
I don’t have enough in my 401K to make me think I will have even more income when I retire so I will stick with traditional 401K. Money outside the 401K I shouldn’t consider since there would not be forced distributions. Since I’m paying significant AMT, my marginal rate should be 28 percent so I’m hoping I’ll be paying less than that when I retire.
December 14, 2015 at 10:20 PM #792542afx114
Participant[quote=deadzone]Still waiting for an example of Engineer making 175K in San Diego.[/quote]
I know one, but they work for one of those “Bay Area Startups” everyone is talking about.
December 15, 2015 at 9:00 AM #792550ParticipantIn general a Roth has only 1 advantage over just saving the money outside of a retirement account. That one advantage is that capital gains are tax free. There are a plethora of drawbacks to that one advantage and they include. The money usually can’t be withdrawn without penalty. The investment options tend to be somewhat limited (For example it isn’t easy to invest Roth funds in a rental property). There’s no guarantee that your investment will grow with significant capital gains. There’s no guarantee that the government own’t change rules about tax rates in the future. So in effect they’ve sold you on this dream that you’re going to take $100K, grow it into $500K that’s all going to be tax free but the odds or you doing that and the money staying tax free might not be that great. Unfortunately nobody knows the answers to those questions.
December 15, 2015 at 9:56 AM #792551
CoronitaParticipant[quote=livinincali]In general a Roth has only 1 advantage over just saving the money outside of a retirement account. That one advantage is that capital gains are tax free. There are a plethora of drawbacks to that one advantage and they include. The money usually can’t be withdrawn without penalty. The investment options tend to be somewhat limited (For example it isn’t easy to invest Roth funds in a rental property). There’s no guarantee that your investment will grow with significant capital gains. There’s no guarantee that the government own’t change rules about tax rates in the future. So in effect they’ve sold you on this dream that you’re going to take $100K, grow it into $500K that’s all going to be tax free but the odds or you doing that and the money staying tax free might not be that great. Unfortunately nobody knows the answers to those questions.[/quote]
That’s not exactly true. Your contribution portion can be drawn without tax consequences because that portion you already paid taxes on. The same idea of how you convert from a traditional IRA to backdoor Roth IRA works on this idea. You can’t qualify for a normal Roth so you co tribute to a traditional IRA and then you immediately roll it over to a Roth with no penalties since you didn’t earn anything in the traditional ira.
There are certain rules that you have to work within
December 15, 2015 at 1:26 PM #792561Participant[quote=flu][quote=livinincali]In general a Roth has only 1 advantage over just saving the money outside of a retirement account. That one advantage is that capital gains are tax free. There are a plethora of drawbacks to that one advantage and they include. The money usually can’t be withdrawn without penalty. The investment options tend to be somewhat limited (For example it isn’t easy to invest Roth funds in a rental property). There’s no guarantee that your investment will grow with significant capital gains. There’s no guarantee that the government own’t change rules about tax rates in the future. So in effect they’ve sold you on this dream that you’re going to take $100K, grow it into $500K that’s all going to be tax free but the odds or you doing that and the money staying tax free might not be that great. Unfortunately nobody knows the answers to those questions.[/quote]
That’s not exactly true. Your contribution portion can be drawn without tax consequences because that portion you already paid taxes on. The same idea of how you convert from a traditional IRA to backdoor Roth IRA works on this idea. You can’t qualify for a normal Roth so you co tribute to a traditional IRA and then you immediately roll it over to a Roth with no penalties since you didn’t earn anything in the traditional ira.
There are certain rules that you have to work within[/quote]
I never did a traditional IRA since there was no tax benefit. But I didn’t know I could qualify to convert the traditional IRA into a Roth IRA even though I don’t qualify for the Roth IRA. Really strange loop hole. So I should fund an IRA before the end of year.
Thanks
December 15, 2015 at 3:59 PM #792568CoronitaParticipant[quote=plm][quote=flu][quote=livinincali]In general a Roth has only 1 advantage over just saving the money outside of a retirement account. That one advantage is that capital gains are tax free. There are a plethora of drawbacks to that one advantage and they include. The money usually can’t be withdrawn without penalty. The investment options tend to be somewhat limited (For example it isn’t easy to invest Roth funds in a rental property). There’s no guarantee that your investment will grow with significant capital gains. There’s no guarantee that the government own’t change rules about tax rates in the future. So in effect they’ve sold you on this dream that you’re going to take $100K, grow it into $500K that’s all going to be tax free but the odds or you doing that and the money staying tax free might not be that great. Unfortunately nobody knows the answers to those questions.[/quote]
That’s not exactly true. Your contribution portion can be drawn without tax consequences because that portion you already paid taxes on. The same idea of how you convert from a traditional IRA to backdoor Roth IRA works on this idea. You can’t qualify for a normal Roth so you co tribute to a traditional IRA and then you immediately roll it over to a Roth with no penalties since you didn’t earn anything in the traditional ira.
There are certain rules that you have to work within[/quote]
I never did a traditional IRA since there was no tax benefit. But I didn’t know I could qualify to convert the traditional IRA into a Roth IRA even though I don’t qualify for the Roth IRA. Really strange loop hole. So I should fund an IRA before the end of year.
Thanks[/quote]
Be very careful about doing this. There are very tedious rules concerning this and you need to understand them.
For starters, it will only work if you do not have any other IRA accounts. When you take a distribution out of an IRA, they consider the distribution taken across ALL of your IRA accounts. You cannot say you are only taking a distribution out of one account. So for exsmpke, if you also have a rollover IRA, and you withdraw $3000 out of your traditional IRA account you just set up, the IRS will treat this as you taking a distribution out of BOTH your rollover IRA and traditional IRA, and you will owe taxes since your rollover IRA is pretax. This backdoor Roth conversion only works if you have no other iras.
Also, the IRS treats 401ks different from iras. So if you have a 401k and no rollover IRA, you can use a traditional IRA to backdoor contribute to a Roth IRA.
There are some workarounds if you have other iras. For example, if you have a rollover IRA, and your existing 401k allows it, you could rollover your rollover IRA into your existing 401k and then you can do a backdoor Roth…but then you have to consider the quality of the 401k plan you have. Some 401ks have funds that just suck.Yeah, its pretty messed up.
For details, talk to a CPA or Google “backdoor Roth IRA” contributions.
December 16, 2015 at 12:13 PM #792590bobby
Participant[quote=deadzone]
You guys can +n all you want but without any details of the job you are providing no value.
…
…All you guys have confirmed is, yes it is theoretically possible to get that salary. If that is true, how about listing specific companies and job descriptions?[/quote]
it’s pretty easy to find an engineer make over $175K and his job description. I can think of one guy off the top of my head.
http://www.wired.com/2012/12/treynor/
http://www.motorauthority.com/news/1028496_google-execs-wife-hits-fiorano-in-her-new-ferrari-fxx-k-video
I met the guy at cars/coffee – engineer. Don’t know his exact detail of his income but he buys several $million+ cars. Not parental money – his money.
My guess is that he makes 5-10million/year, possibly more. I mean blowing $3million on an FXX-K isn’t for the 1%. It’s for the 0.01%December 16, 2015 at 1:57 PM #792599Anonymous
GuestAnother poor example that doesn’t address the topic. This fellow is wealthy from Google IPO money. He is also a VP (i.e. executive level of management which is miles removed from being a code monkey) so probably has a based salary well over 500K.
Based on this article he is also a grade A douchebag. He is exactly the kind if character they like to spoof in the Silicon Valley series on HBO. By the way, if anybody on this thread hasn’t watch that you must check it out.
-
AuthorPosts
- You must be logged in to reply to this topic.