ST Alpha - "because time and time again it has been shown that defering on a pretax basis will result in a greater account balance in the long run" (Reading a Post)

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In response to "LIR: 401k matching. Put in up to what they match and no more. Why put your money into a program with restrictions on what you can and cannot" by oblique

because time and time again it has been shown that defering on a pretax basis will result in a greater account balance in the long run

Posted by decline (aka Decline) Aug 30 '10, 09:24

plus those restrictions are actually extremely beneficial in preventing people from frivolously spending their assets.

Responses:

Account balance isn't the only determining factor. You are hedging your bets on the tax situation in the future. Granted, you're probably right - oblique Aug 30, 09:30 1
- Unless you're putting money away for the shorter term, it really is a much better option to put it in pre-tax. - pmb Aug 30, 09:34
can't you guys put your own money into a a 401K (or equivalent) to get the tax break without doing it through work>? - Andie Aug 30, 09:28 7
- not on a pretax basis we can't . -- nm - decline Aug 30, 09:29 6
  - Yes you can. It's an IRA. Though there are different styles of IRA, some of which are pre-tax and others of which aren't. -- nm - pmb Aug 30, 09:31 2
    - true, but if you contribute to an 401k plan, you lose the tax deductibility of the IRA phases out as your income increases -- nm - decline Aug 30, 09:34 1
      - hmm, kind of garbled. Traditional IRA's are tax deductible (essentially making them pre-tax) but only 100% if you are not coved by a 401k - decline Aug 30, 09:35
  - wow, that's kooky. -- nm - Reagen Aug 30, 09:30
  - what if you are self employed? -- nm - Andie Aug 30, 09:29 1
    - if self employed you can have what is called a SIMPLE plan (which is kind of like a mini-401k) -- nm - decline Aug 30, 09:31

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