employer matches up to 4% of salary into 401k, vests after 3 years
what would stop me from contributing 4%, leaving shortly after that vests, and early withdrawing (10% penalty, that's it? still less than 2x) and effectively getting "free money" from company that's not locked up until age 59.5?
>10%
Lol
Probably wouldn't be able to use that company as a reference anymore for one
it costs 3 years of your life to do this, plus most dont start matching until half a year or so
401k is a scam. Take your hard earned money and put it into a vanguard fund without muh 60 year old penalty. Literally the same investments minus penalty
Nothing is free. It's "4%" that you could get and invest by yourself, instead given to some jews to "hold" for you. If you even want to take your "own money" from the jew, you'll also pay a fine.
And you guys get angry when we call you guys are the most jew-cucked nation in the world
To clarify, I like my employer and I'll be working here for a few years anyway.
I'm asking if they match 401k contributions, even if I don't want to wait until age 60, why couldn't I withdraw my 401k after I leave 5 years from now or 10? the 10% early withdrawal fee is still lower than the free matching, and why would the company care or how would they even know if I withdrew right after I left
>paying more capital gains tax
Ok sport
Nothing...that's what your'e supposed to do. Like that's what the "vesting period" is for.
Has nobody on Jow Forums held a fucking job?
>lol who cares about having money when you're 60 I'm going to kms if I don't make it by 30 fucking Jews put that 4% in Link
t. 80 year old Walmart greeter living in a pissed filled section 8 apartment that has to take the bus to work and has only eaten cat food for the last decade
It’s baked into your compensation. They’ve thought about this.
Wouldn't you need to pay tax as well as the 10% early withdrawal fee?
The 10% penalty you pay is quite an initial hit and it is worth quite a bit of money in the future. For example, if you have $100,000, you pay $10,000 in penalty. If you are able to compound at 8% annually, that $10,000 has a nominal value of $210,000 in 40 years.
Furthermore, just because you take out the money now and pay the penalty doesn't mean you're exempt from capital gains or dividend taxes.
The above point is actually quite important. Even if you do not do any trading, your dividends will be taxed the year they are paid out. This reduces the compounding effecting on your dividends and it could end up being a large amount of money. Related to trading, if you decide to trade a bit (if you get good enough to know when to sell off if there is a bubble), you will pay capital gains taxes immediately whereas you will not pay the capital gains in a tax-advantage account.
As an example, Let's say you have $100 and any gains are taxed at 20%. For the sake of illustration, let's assume there are two periods during which you make a trade after having doubled your money. If you have a tax-advantaged account, you have $400 at the end of the period and you would lose $80 to taxes upon withdrawal for a net of $320.
On the other hand, if you trade, $100 becomes $200 and you immediately pay 20% which nets you $160. Your second double turns $160 into $320 which, after 20% of $64, gives you $256 net.
You're looking at $320 (IRA) versus $256. And remember, it doesn't have to be a trading situation. If you have dividends, you must pay taxes in an account that's not tax-advantaged. Furthermore, some funds have a large amount of turnover which results in capital gains that are taxed, too.
The only real risk of the tax-advantaged accounts is that Congress passes some law in the future that levies special taxes on tax-advantaged accounts. However, realize that the people with large, tax-advantaged accounts are typically wealthy and have political influence.
I screwed up the second compounding example. You start with $100 and after the first double have $200 of which $100 is gains. Thus, you pay 20% of $100 profit and net $180. The $180 then doubles and you have a gross of $360 of which $180 is profit. 20% of $180 is $36 so you end up with a net of $324.
So my argument is blown up. In the example shown, you actually come out ahead by being in a regular, non tax-advantaged account. I'm too lazy to figure out if the numbers hold up with more trading and assuming same rate of return.
So you have
God damn it. I'm still wrong since I didn't calculate the total return of the tax-advanted account. In the tax-advantage account example, you have $400 after two doubles of which $300 is profit. You pay 20% of $300 in taxes and thus pay $60 leaving you with $240 net profit plus your original $100 principal. Thus, you have $340.
Thus, the tax-advantaged account is actually better and the more trades you make, the worse off you are in the non tax-advantaged account.
You would pay income tax on top of that and you’re a brainlet for not wanting to save for retirement.
>I’m not gonna live past 60 so what’s the point of saving for retirement! Tax advantages don’t matter! YOLO
Why are zoomers this retarded?
Had a 401k at my 3 month long internship. Forgot about it. 1 year later got a check in the mail for the balance minus fee. You need to be able to roll that over into a new one I'd guess
Yeah you could do that or you could leave it in your 401k and not throw away 10% plus taxes you fucking retard
What the fuck are you talking about ? I withdrawal every year and it nets out to about 63% return after taxes and fees on my contribution.
Your employer has nothing to do with your personal retirement account outside of getting a deal with a brokerage and signing a check. They don't even get to see anything about these accounts it is personal information.
It would be like your employer being able to monitor your bank transactions .
FUCK I HATE BEING GERMAN
We can earn 800 bucks from capital before paying tax lol and no 401k or Roth for us
move to switzerland
Switzerland taxes you on 2% of your total wealth every year.
>vests after 3 years
>free money
wew
25% flat tax for anything above 801 Euro
and yes, our equivalent to the Roth IRA is the Riester-Rente which is a fucking scam of course
I've talked to a financial advisor. He said there is a loophole that allows me to pay into the Riester-Rente and put the money into ETFs. But still, that money is locked until I'm 63.
Fuck this shit 2bqh senpai! When I am 60 my life is over anyway and I won't need that money anymore, since having fun past age 35 is hard but having fun past age 45 is near impossible
Now that I read the Amis have to wait until they're 60 to withdraw their money, satisfies me a little.
I am saving for retirement in a hedge fund, outside of the shitty actively-managed mutual funds available in the plan
>HURRRRRR THANK YOU GOVERNMENT FOR LOCKING MY MONEY AWAY UNTIL I'M 60
>DO YOU ALSO WANT TO LOCK MY COCK UNTIL I'M 60? THANK YOU GOVERNMENT!
t. retards in this thread
dont listen to this idiot, has 0 fucking clue about finance and life in general
>Letting money compound for 40 years tax free is retarded.
I have 55k saved at 23 by the time I'm 60 it will be worth millions of tax free income. And yes people still enjoy life at 60. If they have money that is.
>yay I get to be a millionaire on my deathbed
>when user is at age 59 the government decides to change the laws
>all his money needs to be cashed out and taxed at 45%
investing into the government is a stupid idea since they are free to change the rules however they want and there's nothing you can do about it
Having a 401k doesn’t mean you have to wait until 60 to live a good life and quit the rat race. You can be 40 with enough money in taxable accounts to hold you over until you’re 59.5, then you get the tax advantaged 401k funds when you cross that threshold. For people who want to retire young it’s best to have a mixture of account types.
If this scenario happened everyone would likely end up screwed. I doubt you’d be safe in your non 401k account.
I did a version of this last year. It wasn't originally my intention to do so but i got passed over for a promotion, concluded job was dead end, switched to a part time position for same employer. I had paid in to the pension plan for just under four years at that point.
Now, Canadian law on this is a bit different. I couldn't cash out the whole thing, penalty or no. About 70% had to go in a locked IRA which i manage (no withdrawal until i'm 50), remaining 30% i took out in cash minus tax.
There's no particular drawback to this if you leave company on good terms. Quit 'to pursue new opportunities' works fine.
Pensions are for brainlets.
>give money away to pay for existing boomers drawing their pensions
>expect the same ponzi scheme to be sustainable by the time you are retired in a country with fund manager gets paid $500k+ salary for loading RebalancePortolfio.js once a quarter
LMAO.
This thread shows how dumb most of Jow Forums truly is.
If you keep your funds in 401k/TIRA, you don't get taxed for any gains inside that account. So, it's better to just roll over your funds into a TIRA and ride the capital gains/dividends. Seriously, do none of you guys understand the power of compound interest?
What the gobberment gonna do about my XMR lol?
How are you going to buy a house with your XMR?
for one you don't even have to leave. unless you have an active investment plan with the money it's a higher risk investment than letting it accrue interest. why do you ask op? whats your endgame? I for one recommend that you do withdrawal it well withdrawal isn't the right term. Rollover your 401k plan from whatever your company provides into a ROTH IRA with Vangaurd and get to trading.
We are still early adaptors.
Once these boomers rollover their tax sheltered accounts to tax sheltered crypto retirement funds the real bullrun begins. There are trillions and trillions of $ stuck in these boomer funds loaded with overhead, commisions and middlemen just begging to be put into bitcoin instead.
This. Wish I started in my teens or early 20's. Even a wagecuck at 60 could be sitting fat. Employer match is free fucking money, creditors can't even touch it if you file for bankruptcy, it's the most surefire retirement nest egg out there since social security is just a slap in the fucking face and doesn't give a shit about inflation but 401k is more or less saving at the present rate of the economy, not based on how much you make. Even the 2008 crash didn't hurt my 401k much. Shit bounced right back up. Plus my employer's contributions helped pull me out of that mess as well. And 60 will be the new 40. I plan to be fit as fuck at 60 vacationing in southeast asia, eating, drinking good and fucking 18 year old pussy all day.
These anons are correct. You want to all or as much of the pension money as possible directly in to a self directed IRA to avoid the tax ding. In my case i wanted to take the 30% in cash because the plan was to take the tax hit on that early while the dollar amount was relatively small, mive it in to TFSA (tax free gains) and trade it aggressively with the option to withdraw at any time. Like i said Canada is a slightly different set of rules to wiggle around.
Now, there is a whole other issue with capital gains in the TFSA i won't get in to. You're not necessarily supposed to use the tfsa as a trading business. If you're regularly withdrawing from it, the tax man may come after you. Government refuses to clearly define the rules about this... It's a long story.
People still uphold very high quality of life at 60 and even into your late 70s. It's reasonable to assume that 40 years from now that quality will be even higher and last longer. If you have money that is.
>not being able to afford cybernetic augmentations to your body
>not being able to afford an elite white community away from the rapidly expanding minority population
>Not being able to afford space travel and lifelike sex dolls
The reason age limits are there is for your own benefit, not the governments. They'd love if you paid taxes and penalty money immediately, and the Roth is almost too good to be true. The age limit is there to stop people from doing something retard, like cashing out your money and buying Bitcoin at the ATH, or buying a luxury car. Sadly most Americans are so retarded they need protected from themselves.
I feel your pain fren
Yes put all your wealth into one basket. Great idea
>Yes, total scam. Don't take the free money your employer gives you and stick it to the man!
I can be a clueless zoomer too
This thread is a good example of why zoomers are broke as fuck
You have done a great service to a clueless board, user. I for one appreciate your breakdown. Everything else is nullified beyond your thread and no one realizes it.
what vid on the left
what the fuck kind of fun are you having? what is it not fun being financially stable when you shouldn't have to be working anymore? do you have to go out and do normie shit in order to have fun? by taking out 1k monthly for food utilities etc. I would still have like 150 throw around money to eat out go to the movies buy a new videogame day trip fuck are you on user?
Imagine being such a zoomer that you unironically want to ruin your life financially.
No one is talking about a pension mouthbreather that's why they dont exist as prolifically as they used to. A 401K or IRA is for a financially intelligent person can self fund their own retirement.
The irony of the “boomer 401k” meme is that boomers are notoriously stupid and reckless with their money and most never saved for retirement in the first place (at least not until it was too late). They’re doing alright despite their financial retardation simply because they lived in the greatest bull run in human history and saw their houses appreciate by massive unsustainable amounts, but many boomers never saved for retirement and are very poor with sub 100k net worths outside of their houses because like zoomers they live a lifestyle of hyper consumption.