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Old 12-30-2012, 05:09 AM  
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Retirement Plans

Obviously I do have a long way to go before I retire, but I was thinking about this during the weekend, and I was thinking, is having too many retirement accounts a good or a bad thing?

Which one do you use? Traditional? Roth? Salary Deferral Contribution to your 401(k)?

Any recommendations as to have a healthy retirement nest egg?
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Old 12-30-2012, 11:12 AM   #16
Buehler445 Buehler445 is offline
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A big part of my plan is owning farmland.

I also have a 401(k) I rolled into a traditional IRA. I'm going to start at Roth also.
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Old 12-30-2012, 11:29 AM   #17
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Roth IRA's are bit tricky.
First, if you make over 120,000 a year, your not eligible for a Roth.
Second, converting a conventional IRA to Roth is going to cost you, tax penalties etc.
2013 is going to have some challenges. I would look at the bond market. It's not sexy, but you will have some protection.
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Old 12-30-2012, 11:34 AM   #18
La literatura La literatura is offline
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Quote:
Originally Posted by Buehler445 View Post
A big part of my plan is owning farmland.

I also have a 401(k) I rolled into a traditional IRA. I'm going to start at Roth also.
Good with the other options. Young farmers have only known rising land prices, but it's cyclical. Older farmers can tell you all about the 1980s.
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Old 12-30-2012, 11:37 AM   #19
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Old 12-30-2012, 11:45 AM   #20
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Quote:
Originally Posted by Tits McGee View Post
Roth IRA's are bit tricky.
First, if you make over 120,000 a year, your not eligible for a Roth.
Second, converting a conventional IRA to Roth is going to cost you, tax penalties etc.
2013 is going to have some challenges. I would look at the bond market. It's not sexy, but you will have some protection.
Well, if you make only a little over 120k, funding a 401k could bring you down to being eligible.

As for bonds, interest rates are very, very low. They eventually will have to rise. When that happens, look out. Investing in bonds means you think interest rates will stay low for a while, but I'm steering clear.
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Old 12-30-2012, 12:02 PM   #21
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General rule of thumb, keep in mind that all of these retirement options have annual limits, so I won't mention the limit over and over again:

1) If you have a 401k/403b option, and if your company has a match, fund it at least to the level where you get all of the match.

2) At that point, if you are in the marginal 25% tax bracket (or higher), continue to fund the 401k/403b option (if you have the option of a roth 401k, stick with the traditional 401k) or if you don't have a 401k/403b, fund a traditional IRA, until your income drops into the marginal 15% tax bracket.

3) If you are in the marginal 15% tax bracket, or you funded a 401k/403b to the point where you drop into the 15% bracket, then if you are eligible to fund a Roth IRA (or if you have a Roth 401k option), start putting money into that, up to the max.

4) If you had funded a traditional 401k/403b and switched to the Roth IRA when you hit the 15% bracket and funded that to the max and you STILL have extra money to invest, then go back to the traditional 401k/403b and fund that to the max.

5) If you have maxed out all tax-advantaged retirement options and you still have money left to invest, then put it into a regular investment account. (or you could try real estate, or some complicated exotic things like over-funding a full life policy and borrowing from it later, which has its own risks)

Very, very few people are ever going to have more money hitting the 25% marginal tax rate in retirement than while working unless they are rich (and if you are rich, you aren't reading Chiefsplanet for investing advice). Even if your marginal top bracket in retirement is 25%, more than likely less of your money will be in that bracket because the levels of each bracket go up every year. So, in my opinion, for money that would be hitting the 25% bracket today I'm betting at least some of that money would be taxed less later so the traditional option is more attractive, and for money that would be hitting the 15% bracket, it'll either be a tie or the money would be taxed more in retirement, so the Roth is more attractive.

As for what investments to buy? That is a whole different question.

edit: If you are in a super-high income tax state and plan to retire in a super-low income tax state, or if you are in a super-low income tax state and plan to retire in a super-high income tax state, that could screw up what I mentioned above. (ie, if you plan to retire in a low income tax haven, that makes the traditional option that much more attractive than the Roth)
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Last edited by alnorth; 12-30-2012 at 12:10 PM..
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Old 12-30-2012, 01:47 PM   #22
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I guess what I am wondering is, I have a ING account, and it just seems to me that it grows very slowly, and I also have a TSP and the employer contribute to it as well, and that one is growing pretty nicely, so, I guess I was wondering if I should consider the notion of opening another retirement plan as well?
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Old 12-30-2012, 02:00 PM   #23
Buehler445 Buehler445 is offline
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Quote:
Originally Posted by Coach View Post
I guess what I am wondering is, I have a ING account, and it just seems to me that it grows very slowly, and I also have a TSP and the employer contribute to it as well, and that one is growing pretty nicely, so, I guess I was wondering if I should consider the notion of opening another retirement plan as well?
It won't hurt anything, but the limits are the same no matter whether you invest it in 1 account or 50.

Just keep an eye on the fees. I'm not really knowledgable to help you in that regard.
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Old 12-30-2012, 02:02 PM   #24
Buehler445 Buehler445 is offline
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I started a similar thread and got some fair advice.

Also got some PM advice from some members here on account of this thread.

http://www.chiefsplanet.com/BB/showthread.php?t=257681
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Old 12-30-2012, 02:03 PM   #25
Buehler445 Buehler445 is offline
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Good with the other options. Young farmers have only known rising land prices, but it's cyclical. Older farmers can tell you all about the 1980s.
By the time I retire, I won't care about land prices. My intention is to not sell any of it. I intend to live on the income for retirement.

But yeah, Dad and I have talked extensively about the 80s.
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