Is 401k worth?

[k2s]

Not worth it bro... take all money and pay tax full to govt...

[phatposts]

2 minutes ago, k2s said:

Not worth it bro... take all money and pay tax full to govt...

Hehe

[WigsandThighs]

It’s either way bro...for ppl who save mandatorily  it’s not worth, but for ppl like me who spends everything and then cc’s it’s worth like a little money 💰 is in savings kind of thing 

[krishna0125]

7 hours ago, devarakonda said:

good morning

401k ela work avuthadi ani idea ledu, join avudam anukuntunna but numbers calculate cheste antha benefit ledu anipistundi, so posting here for clarification

6% with out tax mana daggara nundi teskuntadu

3% is my company matching

we can only take them out at the age of 59 and half or after, ipdu unna position lo manam appudu varaku undatam anedi jarige laa ledu

so before ah age teskovali ante 10% penalty + regular taxes pay cheyali anta

example ga lets say $1000 is in my 401k, $300 will be the match which totals $1300. if worst case some thing happened and we have take the money out

10% penalty tax = 130

30% (estimated) regular taxes on h1b = $350

So hand ki final ga $820 vastunnay, $1000 pedithe.

 

Not sure if this is the right way of calculating 401k, please throw some light. Thanks!

most of the employers will be 25cents for each $1 upto 6% of your total pay which means they are giving almost 25%. 30% tax you have to pay any way eith 401k or not.

and 10% penalty. so you still have 15% left from your employer match and any gain you get in that year and your tax bracket may come down little bit..

[Spartan]

@devarakonda  the numbes u chose for ur example are wrong.

first of all, if there is employer matching, then 401K is always profitable no matter when u take out money.

example 80% matching upto 6K max anuko match from employer , irrespective of base salary.

it means for every 6K u put in 401K, employer will contribute 80% of 6K = 4800$

so at the end of the year you will have 10,800 in ur account.

lets assume u want to take out that amount after 3yrs. 

ur 10,800 are not sitting idle there, they get invested in stocks, bonds, funds whichever u choose. they will get some returns.

lets say average is 5% returns per year.

balance at end of 3 years = 12500 (approx) 

u want to take out 12500, 

taxes u will be paying is  35% of 12500 + 10% 12500 = $5625

so that 5625$ is almost equivalent to ur tax free 6000 which u contributed. 

 

imagine if you had paid tax on that 6000 without investing = ur net in hand for that amount would be 3900$

5625 > 3900 anytime right....? 

this is most basic case, infact returns for 401K are pretty much higher than 5% in market from last 5 years atleast. 

so its always win-win for u if employer is matching significant percentage. 

 

 

[chaikumar]

Thammulluuu....if you can wait until you move back to India for withdrawal, then your US income in that year will be very less with this 401k withdrawal and you need not pay any income tax. Just 10% penalty is all that you pay.

Instead of traditional 401k, if you go for ROTH (pay taxes now), then you can withdraw without penalty anytime (after quitting the current company). Since you had already paid taxes, there is no tax at the time of withdrawal.

So, if you can wait till you go back to India, go for traditional 401k. Otherwise go for ROTH. In any case, you will end up saving more money except when stock market crashes.

[camsam]

Win win situation if your employer contributes, regardless when you withdraw.

My employer deposits 3% of my base salary regardless of my contribution.

If I contribute 6% of my salary, employer deposits additional 3%. 

So for each paycheck, I am saving  12% (-taxes) and ponalty if you withdraw early.

One other good thing as someone already mentioned is that , you are eligible to take loan.

Last year I had an emergency and took a loan of 12k at 5.9% APR, setup fee I paid was $80 . Got money in 3 days when needed. You can chose the term and  interest will also be paid back to my account whatever being charged.

So definitely there are advantages . 

[LadiesTailor]

Matter simple ga entante... if your company is matching some percentage of 401k GO FOR IT.....

dont even think of anything else just put your 6% or 18k max per year (that’s the pre tax max amount) and leave it until you leave it to India....

[Bambam_Bholey]

Also in case of emergency you can take loan on you 401 

[Staysafebro]

45 minutes ago, Bambam_Bholey said:

Also in case of emergency you can take loan on you 401 

Can you take loan to start a business on 401k?

[Vaampire]

47 minutes ago, Staysafebro said:

Can you take loan to start a business on 401k?

U can take personal loan which can be used for any purpose

[FuckU]

401k is good savings..i agree.. but i am not sure taking a loan on your 401k is good idea though..your 401k is pretax money..once you take loan on your 401k then you will repay it with your after tax money with intrest..and after retirement when you withdraw your 401k amount you will be taxed again at normal tax rate on the amount..

Its like your are paying double tax on your money..right? Then how will it be a good idea to take loan on your 401k....

[karna11]

401k  run xhesakaa madyalo break vastee any issue, like match chese company nundi layoff ithee,

 

[Vaampire]

43 minutes ago, karna11 said:

401k  run xhesakaa madyalo break vastee any issue, like match chese company nundi layoff ithee,

 

No issue