ST Alpha - "401s are like some magical wonderland where there never seems to be a good reason to withdraw your investment no matter what the market conditions." (Reading a Post)

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401s are like some magical wonderland where there never seems to be a good reason to withdraw your investment no matter what the market conditions.

Posted by Loyola Nov 13 '08, 09:45

Bull market; you would be crazy to cash it in now.
Bear Market; you would be crazy to cash it in now.
Sounds like stockbroker chat. Would you have been crazy to cash in your plan in August? "Of course, don't you see, there's never a good reason to cash it in!"

Responses:

the idea is - earn money - agree to put said money away for retirement and don't get taxed on it now - but later when you are in a lower tax bracket - - JenBro Nov 13, 10:15
No one has to have a 401K. You can do your own investments anyway you want, but if you want to invest *pre-tax* dollars there are going to be strings. -- nm - Dano Nov 13, 10:02
i believe that you can *move* your investment into different types of accounts within your 401K. and, the POINT is to save it till you retire. -- nm - Andie - 41 shopping days till X-mas Nov 13, 09:56
what you're failing to realize is that you're looking at a 25- or 30-year horizon or more in a lot of cases... - znufrii Nov 13, 09:50 24
- Jesus. There isn't? -- nm - Loyola Nov 13, 09:57 23
  - you can withdraw funds from it when you retire, otherwise there's tax and early-withdrawl penalties to discourage access your funds - znufrii Nov 13, 09:58
  - IT'S YOUR RETIREMENT MONEY. it's not for 'cashing in', there are other ways to invest your money that you CAN cash out if you need them. -- nm - Andie - 41 shopping days till X-mas Nov 13, 09:58 21
    - Thanks for the caps. Don't think of it so much as your retirement money, not to be touched. Think of it as your money. Period. -- nm - Loyola Nov 13, 10:01 20
      - i don't even have a 401(K), because i'm Canadian, but i'm smart enough to know why they are a good thing for Americans. -- nm - Andie - 41 shopping days till X-mas Nov 13, 10:04
      - If that's you're thinking, you're putting your money in the wrong place. You should be buying regular investments, not 401k. A 401k is configured to - oblique Nov 13, 10:04
      - Who says we don't? I know it's my money, and I choose to keep it in a 401(k). Is that acceptable to you? - Mr. Havens Nov 13, 10:03 17
        
        It's not a question of it being acceptable to me. you do whatever you want with your money, it's your baby. -- nm - Loyola Nov 13, 10:04 16
        
        I'm curious. What type of retirement benefits does the Irish government provide? - znufrii Nov 13, 10:07 11
        
        I believe the Irish have the same kind of thing as a 401(k) but there it's called a Personal Retirement Savings Account -- (link) - Mr. Havens Nov 13, 10:10 1
        
        interesting, thanks! -- nm - znufrii Nov 13, 10:13
        
        Nothing like yours. Although there's talk of some compulsory scheme coming down the line. -- nm - Loyola Nov 13, 10:09 8
        
        I see. so basically, you're on your own when it comes to retiring? fair enough. - znufrii Nov 13, 10:11 5
        
        Well unless you go for a private pension, under the public scheme you get about $240 a week non contributory, and around $300 contributory. -- nm - Loyola Nov 13, 10:16
        
        also, how prevalent are company pensions, still? -- nm - znufrii Nov 13, 10:14 3
        
        I would estimate they're dropping in prevalence. -- nm - Loyola Nov 13, 10:17 2
        
        I know they have been in decline here, for quite some time, as companies opt into offering 401(k) plans instead. -- nm - znufrii Nov 13, 10:21
        
        Couldn't be sure though, might look it up as a matter of interest. -- nm - Loyola Nov 13, 10:18
        
        so, what do you have? -- nm - Andie - 41 shopping days till X-mas Nov 13, 10:09 1
        
        Contributory, and non contributory schemes under the umbrella of PRSI but defined so as not to pass 4% I think at the moment of gross taxable salary. - Loyola Nov 13, 10:12
        
        So why are you getting your panties in a bunch over it? I'm not the one who has a problem with it - Mr. Havens Nov 13, 10:05 3
        
        I think you missed my tone. -- nm - Loyola Nov 13, 10:09 2
        
        If that is the case, then you presented your side very weakly - Mr. Havens Nov 13, 10:10 1
        
        :) gee thanks -- nm - Loyola Nov 13, 10:13
You cash it out when you retire but before that you've gradually moved into stable investments with near-guaranteed yields -- nm - oblique Nov 13, 09:49
It's crazy to cash out a 401(k) before you retire, because then you get hit with an assload of taxes and penalties - Mr. Havens Nov 13, 09:47 15
- Yeah come on Havens, surely you would come out of it financially ahead cashing in in August, suffer the penalties and avoid a large share of the crash -- nm - Loyola Nov 13, 09:49 14
  - you wouldn't even need to cash it out, just move it into more stable cash- and bond-based funds - znufrii Nov 13, 09:54 3
    - Which I don't want to do. I want to be able to put away several thousand dollars a year in a relatively safe and secure place - Mr. Havens Nov 13, 10:07 2
      - nor I. If anything, for me, now is the time to increase my risk profile. -- nm - znufrii Nov 13, 10:09 1
        
        i've actually been putting a few hundred dollars a paycheck into my RSP account the last 6 weeks or so. - Andie - 41 shopping days till X-mas Nov 13, 10:11
  - No, because I was not retiring in August. I'm not concerned with short-term gains or loses -- nm - Mr. Havens Nov 13, 09:50 9
    - It does seem like a vehicle to allow ordinary Americans put away their cash and enact such early withdrawl penalties so as to make any application of - Loyola Nov 13, 09:56 8
      - I think you are thinking a 401(k) is one thing, when it's something completely different - Mr. Havens Nov 13, 10:01
      - You're not tied to the sinking ship here even without invoking the penalties. - Will Hunting Nov 13, 09:58 2
        
        Ok thanks. -- nm - Loyola Nov 13, 10:02 1
        
        he's, like, the 8th person who has said that to you. -- nm - Andie - 41 shopping days till X-mas Nov 13, 10:05
      - it's a mechanism to encourage people to be able to save for their own retirement, and thus be less of a burden on the government or corporate pensions -- nm - znufrii Nov 13, 09:57 2
        
        Just to promote critical thinking, do you think the US government created this scheme out of concern for your financial well being when you reach - Loyola Nov 13, 09:59 1
        
        why do you think it's a scheme? (i know here, in Canada, anything i contribute to my RSP (same sort of thing) i don't pay tax on in that year. - Andie - 41 shopping days till X-mas Nov 13, 10:01
      - you do realize this is only for retirement plans? no-one is saying that about other investments? -- nm - Andie - 41 shopping days till X-mas Nov 13, 09:57

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401s are like some magical wonderland where there never seems to be a good reason to withdraw your investment no matter what the market conditions.

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