That brings up something else. If I die all that money that was taken is gone.

I've said it more than once, if I had that 13 percent that has been paid into the program in my name and put it into an IRA there would be more than one million dollars in there that I could bequeath to my children.



If you do that, the Ponzi scheme does not work!

It works for the other investors. More money for them.

Tax Bracket Tax Rate
$0.00+ 10%
$23,850.00+ 12%
$96,950.00+ 22%
$206,700.00+ 24%
$394,600.00+ 32%
$501,050.00+ 35%
$751,600.00+ 37%

If you're in the 12% bracket, can you put more into retirement by a few thousand more a year or buy an IRA to stay under that. Am I right on that? I probably need to talk to my tax guy. He made the comment you're still in the 12% bracket for now. Guess that's what he was hinting at.

Yep. Not schooled up on any limits to IRA, Roth, or 401K though. That is the whole idea behind tax deferred/ free programs.

A person making $20/hour and investing $5741 (SS taxes) for 50 years at 8% would have $3.5 million at 68 years of age.

Never ever even come close to drawing that much out from SS.

20 bucks an hour isn't much these days. I don't really know any place around here that pays that little.

First thing. The 12% is only for the money earned between $23,850 & $96,950. All earnings between $0.00 & $ $23,850 are taxed @ 10%. Every wage earned pays 10% of the first $23,850 they earn. If you are not covered by a pension plan you can contribute to an IRA. For the 2024 tax year, the maximum IRA contribution is $7,000 if you are under age 50, or $8,000 if you are age 50 or older. In 2024, the maximum spousal IRA contribution limit is $7,000 per individual, or $8,000 if the spouse is age 50 or older. This means that a married couple filing jointly can contribute a total of $14,000 ($16,000 if both are 50 or older). The spousal IRA allows a working spouse to contribute to an IRA for a non-working spouse.


Roth IRA or standard IRA is a total as shown above. You can put some or all of the contribution in either, but the total contribution cannot be more than 7000/8000. 401k's are employer plans that you can contribute too. In 2024, the maximum traditional 401(k) contribution limit is $23,000 for employees under age 50, with an additional $7,500 catch-up contribution allowed for those age 50 and over.

Before you consider a ROTH (a government trick to make you pay more taxes) do the math. Long term you might be better off not paying the tax up front.

For me long term it is best to put as much as I can into a tax deferred plan. Most of us are in a higher tax bracket when we are working. The government wants you to ROTH (pay taxes now at a high rate). After you stop earning you will be in a lower tax bracket. For me it makes sense to pay the taxes then. Do the math. Government didn't create ROTH to save you taxes. They created ROTH to get you to pay more taxes NOW. Then they can use your money to buy vote to keep them in office.

Worth repeating, the government didn't create ROTH to save you money

One other note . Tax bracket is not your income. This is the number after adjustments and standard deduction or itemized deductions.

Just using that as an example that people on the lower wage scale would be millionaires if they had a private account.

The problem with a private account is that 99.99% of the people would cash out their account every time they want an extra dollar or two.

If you really believe that when there is enough money put tax prepaid into Roth IRAs that the feds with keep their promise in the future and not to tax it more you better ask any Native American how well they keep their word. There is already a Net Investment Tax(NIT)(3%) added in addition to income tax to collect more from those that made an effort to invest in their own retirement and not be dependent on SS. Medicare also now has an IRMA surcharge attached to it that is income based so that many have to pay much more for to be on medicare as other recipients. This having to pay more for anything just because you worked and saved harder than others will kneecap this countries productivity faster than anything else. Why work a hundred hours a week on the farm, the factory or office for the same purchasing power as those that barely do. Taking advantage of laws, loop holes, assistance programs or whatever you can IS NOT what has made America Great no matter what color your politics.

How many have ever been subject to the Federal alternative minimum tax(AMT). Swallow that one. There are tens of thousands of pages of current tax code not designed to even start to make taxes fair, if even progressive, for all taxpayers. I'd be thrilled if it was only the higher %= tax that we had to pay for each bracket of wealth we have worked and scraped to achieve. While those that just speculate, manipulate, gain illegally dishonestly pay very little. Have read the constitution many times and never seen it say "All men are created equal to take advantage of each other and whatever they can".

Ebsurveyor, thanks we're both over 50 so we can go either way on the contributions. 401K or IRA. I just have to figure out which one.

Dirt, I did understand that. We're close so an adjustment needs to be made.

Steven 49er I'm not sure where you're at in MN but honestly there aren't many places paying over 20 an hour here unless you're a nurse, skilled trade (but not all) etc. There's only a couple of factories here paying over that. The ads around here are for $12 to $16 an hour for the most part.

When old enough that you have to take the required minimum distribution from your IRA so the feds can tax it, is it best to remove it all and reinvest or take the minimum.

If you take the minimum and have a good amount left in it when you croak, do your heirs pay tax on it?

Just for clarification, you can only do a 401k if your employer offers it.

Thanks

If you have upon death beneficiaries, IRAs can be transferred to beneficiaries as there own IRAs and then they will be taxed when they draw from them. Not sure what happens if they go to probate? Probably can pull the same maneuver.

They do.

Under the new tax laws, yes heirs pay the tax on the IRAs and that is at whatever tax rates they are in and also, heirs have to take out all the monies within 10 years. We are moving a certain amount of our deferred funds into ROTHs each year. We have done this since the tax rates were lowered.

Bryce

Roths are not taxed when transferred to heirs...however, it must be withdrawn from the IRA within 10 years of receiving it. They are hoping for you to spend it or reinvest it into funds that will be taxed in the future.

If you are not covered by a pension plan you can contribute to an IRA.

Not sure what you mean here, Ebsurveyor..? I dont believe the above statement to be true...can you clarify?