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| Author |
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| 25 new of 96 responses total. |
klg
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response 50 of 96:
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Feb 2 17:20 UTC 2006 |
Gee, Curl thinks that TIAACRF is the greatest thing since sliced bread,
but when President Bush wants to allow employees to choose to do
essentially the same thing with their social security contributions he
goes ballistic.
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marcvh
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response 51 of 96:
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Feb 2 17:25 UTC 2006 |
Re #48: Um, TIAA-CREF is a provider of investments for 403(b) plans.
The private-industry equivalent is a 401(k) plan, and they have been
extremely widely adopted. The investments are normally handled by
general-purpose financial services companies instead of by entities
specific to one profession, but I think that's fine. The idea that
retirement investing for teachers is somehow different from retirement
investing for steel workers and computer programmers is just TIAA
marketing, not reality.
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scholar
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response 52 of 96:
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Feb 2 17:40 UTC 2006 |
marcvh!
did you know that the u.s. spends more on healthcare per capita than any other
industrialized nation, yet doesn't even offer free medical care to its
citizens?!
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rcurl
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response 53 of 96:
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Feb 2 17:46 UTC 2006 |
401(k) plans are late-comers to the mix. But, yes, they would work the same
way.
These retirement plans have nothing to do with Social Security. SS is the "one
size fits all" protection plan in the case all else fails, or the something
elses are not useable for one reason for another. One aspect of TIAA-CREF not
yet mentioned is that it works best for people in above average income
brackets - generally professional. Bush's plans are aimed at essentially the
same groups (he doesn't understand that anyone else exists).
I don't think KLG understands that anyone else exists, either.
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jep
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response 54 of 96:
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Feb 2 17:47 UTC 2006 |
My employer matches contributions 1 for 1 to my 401(k) up to 3% of my
income. The U-M matches $2 for every dollar contributed to their 403
(b) by staff and faculty, with no limit as I understand it. It used to
frustrate the heck out of me, during my 1st marriage, that my ex didn't
contribute much to her retirement fund. I thought she should have put
in her entire paycheck and we should have lived on my income. Had we
stayed together, we could have both retired when I was 50 and lived as
millionaires.
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slynne
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response 55 of 96:
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Feb 2 17:54 UTC 2006 |
One thing that the republicans are supporting that I think might
actually be a part of a workable health care plan are health savings
accounts. They exist now but I think the idea could be expanded.
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marcvh
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response 56 of 96:
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Feb 2 18:00 UTC 2006 |
The government imposes a limit on employee contributions to a 403(b) or
401(k) plan. In 2006 it's $15k. The employer may also impose their own
more stringent limits. And jep, if you feel bad about your match,
remember that some employers (like mine) don't give out any match at
all.
I'm not sure that 401(k) plans have exactly been a rousing success. The
employee is limited to what the employer chooses to offer, which are
often high-cost plans. Because the plan is tied to the job, a large
fraction (something like half) of people end of cashing out of the plan
when they leave their job, which totally defeats its role as a
retirement savings vehicle. Employees at companies facing financial
difficult sometimes find that their employer is making ends meet by
delaying the deposit of their contributions to the account. And so on.
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keesan
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response 57 of 96:
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Feb 2 18:19 UTC 2006 |
Health savings accounts require that you have an insurance plan that pays 100%
after the deductible. Mine pays 70% of the next $10,000 so I am not eligible.
Since I was sick I am not allowed to change plans either. The 100% plans cost
more. So you lost money even if eligible, if you don't get sick. If you do
get sick, you have saved a bit on taxes, but you can also deduct health care
costs above 7% of your income if you itemize taxes. At best, someone might
save 30% of their health care costs if they don't itemize.
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jep
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response 58 of 96:
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Feb 2 18:23 UTC 2006 |
I cashed out of my 401(k) after leaving my last two jobs. There just
wasn't much money to roll over, and it made more sense to me to pay off
bills. Also, my ex was the one in charge of the money and she's not a
long-term planner type of person. When you're in your 20s or 30s,
retirement is a lot more distant than the credit card balance.
I'm doing better at putting money away in my current job, since my
divorce 4 years ago, anyway. I need to get my contributions up some
more, but I'm buying a house now, my wife has a house which is about
half paid off and is getting significant renovation over the next year
or two, and things look pretty good for us. We'll increase our
contributions when we see how the bills shake out after a few months.
Marc, T Rowe Price's WWW page says I can contribute 75% of my income to
my 401(k) pre-tax, then 10% more after taxes. That would be a bit more
than $15,000 if I could actually do it.
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jep
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response 59 of 96:
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Feb 2 18:27 UTC 2006 |
I signed up for a flexible spending account (FSA) one year, and lost
$400 because I didn't use it all in time. I had to spend it all by the
end of the year. I'll be signing up for it again in a week or two
because I have a kid who needs braces this year. It's pretty difficult
to use an FSA real well; it's a gamble to correctly pick the amount of
money you will need.
Are Health Savings Accounts going to be similar to the FSA program?
Who thought up that nutty FSA program, anyway?
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mcnally
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response 60 of 96:
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Feb 2 18:52 UTC 2006 |
re #54:
> The U-M matches $2 for every dollar contributed to their 403 (b)
> by staff and faculty, with no limit as I understand it.
I haven't been employed by them for nearly 10 years now, but at the
time I worked for the University of Michigan that wasn't the way it
worked (and I consider it unlikely that they'd have changed to the
plan you describe.)
When I was there (as recently as 1997) it worked like this:
- if you signed up for their retirement plan, the University
would put in a contribution equal to 5% of your salary,
even if you put in nothing.
- they would also match your contribution on a 1:1 basis, up
to another 5% of your salary.
This is probably where you get the idea that they were doing 2:1
matching -- they were matching, yes, and if you contributed 5%
the university contribution would be 10%, but the ratio was 2:1
only in that exact situation. There was no unlimited matching,
though I wish there were. I used to contribute another 10% of
my salary over and above the matched 5%, so I was contributing 15%
and the university was contributing 10% (5% flat contribution +
1:1 match on my first 5%.) In the situation you described I'd've
gotten an extra 20% (more, probably, because if the deal were
really that sweet I'd've probably put away 50% of my salary.. Why not?)
So whatever lingering pain and regrets you have from your first
marriage, you can safely forget about "I could be a retired
millionaire by now, if only we'd set up our retirement a little
better.."
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nharmon
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response 61 of 96:
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Feb 2 18:58 UTC 2006 |
HSAs are similiar to FSAs, except you don't get that bullshit use it or
lose it crap. In fact, HSAs can be willed to your children after you
die. The only thing is, you have to have a high deductible health
insurance plan to go with it. But those are easy to get.
I think HSAs are the best, or at the least the one good, thing to have
come out of the Bush presidency.
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marcvh
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response 62 of 96:
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Feb 2 19:03 UTC 2006 |
Re #58: T Rowe Price is a good low-cost provider; glad to hear you have
them instead of some gouging crooks like Smith Barney or Principal. The
$15k limit still applies; if you contribute 75% of your income, the
deductions will stop once your contributions for the year hit that
amount (and that's the amount for both pre and post tax contributions
combined.) Note that limit applies only to your contributions, not
matching money from your employer. My plan allows me to put in 50% of
my income, but if I actually did that I would hit the 15k ceiling pretty
quickly.
There are currently two different kind of tax-advantaged savings plans
for medical expenses, FSAs and HSAs. FSAs are the ones with the annual
use-it-or-lose-it provisions. Fortunately, now that FSAs can be used
for things like OTC medication it's easier to use the whole thing.
Worst-case, you just empty the account by buying a bunch of aspirin on
December 31st, then take it all back for a refund on January 2nd. :)
Both plans are of limited practicality, and both are only needed because
of the fact that the medical expenses deduction on federal income tax
has so many restrictions that few people are able to get any benefit
from it.
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jadecat
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response 63 of 96:
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Feb 2 19:28 UTC 2006 |
I just signed up for the FSA program where I work. However, I set the
limit fairly low- and since I have a couple prescription medications
that have to be filled monthly- I should be able to reach that amount
within the timelimit.
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jep
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response 64 of 96:
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Feb 2 19:45 UTC 2006 |
re resp:62: Thanks for the overview! It is unlikely I'll be able to
contribute $15,000 in a single year any time soon.
Is that limit the pre-tax limit? How does it work if you put in money
after taxes? Are you double taxed; once when you earn the money and
then again when you take it out of your 401(k)?
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marcvh
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response 65 of 96:
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Feb 2 19:55 UTC 2006 |
That's the contribution limit; the sum of your pre-tax and post-tax
contributions may not be more than that number. It is adjusted upward
for inflation (one change made by Bush's tax changes which is not terribly
controversial.) Pre-tax contributions are taxed upon withdrawal;
post-tax are not, so there's no double taxing. Pre-tax is better for
most people IMHO.
I'm not sure that I'm enthused about this increase in "speciality"
savings vehicles with tax advantages. Retirement savings I can
understand, but now with special separate accounts for education, for
medical expenses, and so on it makes me wonder what else we'll see.
Roof repair savings accounts? Transmission failure savings accounts?
Bigscreen TV savings accounts?
The wet dream of the Bush admin, of course, is to simply create a single
Lifetime Savings Account (LSA) which has all the tax advantages of the
other account types but has few or no restrictions on withdrawals. The
net result would be, for most people, to eliminate the income tax on
unearned income, which is the real goal anyway.
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tod
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response 66 of 96:
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Feb 2 20:09 UTC 2006 |
We know where Neil went after S&L but where's Marvin Bush?
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gull
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response 67 of 96:
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Feb 2 20:31 UTC 2006 |
Re resp:51: The problem, of course, is that almost no one has enough
money in their 401(k). I saw an article recently that said that
because most people will have to cover their medical bills as well as
their living expenses out of their 401(k) proceeds, people over age 40
should be putting at least 25% of their income into retirement
accounts. Do you know anyone who's doing this? Me either. We're in
for some interesting times.
Re resp:56: My employer doesn't have a 401(k), either. They had one
with no match, for a while, but it was cancelled due to lack of
interest. (I find that totally understandable -- with no company
match, it makes more sense to open an IRA and have more flexibility.)
My previous employer had a Pricipal 401(k). I need to roll my money
out of it and into something with lower fees, one of these days.
Re resp:61: HSAs are a really interesting idea. I'm wondering how
they'll work out in practice. Early results suggest that people who
have HSAs are less likely to spend money on preventative care, so they
could backfire. I also noticed that HSA money can be invested pretty
aggressively; I suspect eventually we'll hear about an Enron-esque
scenario where a bunch of people will lose not only their retirement
money, but their health care money as well. Still, I think there's
potential. For real savings to occur we need more transparency in
health care pricing, though; currently there's no real way for people
to shop around.
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jep
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response 68 of 96:
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Feb 2 20:51 UTC 2006 |
I've never heard this idea of a Lifetime Savings Account mentioned
before. Has it been publicly proposed anywhere?
I can agree to some extent with your disapproval of the targeted tax-
free savings accounts. But to some extent they make sense.
For large investments like education and retirement, or for expenses
which can become large like medical expenses, they encourage people to
think ahead and work toward saving the money they will need in the
future. (There are also child care flexible spending accounts.)
I imagine they also have some beneficial effects on creating money for
financial institutions to use for their investments such as new
factories and homes and such. Americans tend to spend whatever they
have, as quickly as they can, and then borrow to spend more. Targeted
saving is one way to get people to put a little money aside.
When the idea is as badly implemented as FSAs which must be used in the
same calendar year, though, the concept gets unbearably frustrating.
FSAs are a wager system, not unlike buying lottery tickets. It's
inexcusable that you can't even roll the money over from one year to
the next.
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klg
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response 69 of 96:
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Feb 2 20:52 UTC 2006 |
Despite what VH says, $15K is the limit for pre-tax, not pre + post
tax, unless the post tax plan is a Roth 401(k).
The distribution of post tax contributions $$ is not taxable. Earnings
on post tax money are, however, taxable at distribution. There's no
tax benefit if you lose money on your investments.
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nharmon
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response 70 of 96:
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Feb 2 20:59 UTC 2006 |
Re 67: Its important to find out if your HSA is an investment account,
or a regular deposit account. Not all HSAs are FDIC insured and are
subject to investment risks. My advice? Stay the -f- away from HSAs that
are not FDIC insured.
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gull
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response 71 of 96:
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Feb 2 21:11 UTC 2006 |
The HSA my employer offers is not FDIC insured. It's administered by
Wells Fargo. The ability to invest in the stock market was pitched as
one of the benefits of the plan. I didn't take it mainly because I'm
in a domestic partnership, which the IRS doesn't recognize, so my HSA
would be off limits to him.
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marcvh
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response 72 of 96:
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Feb 3 16:31 UTC 2006 |
kludge is correct; if you're talking about some other post-tax investment
like a Roth IRA, the limits are different. I was addressing jep, who
appeared to be talking about a Roth 401(k). He is wrong about taxes,
though. Earnings on a Roth IRA or Roth 401(k) are not taxable at
distribution (or at any other time); if they were then there would be
little point in using one.
LSAs are heavily promoted at www.lifetimesavingsaccount.com. Personally
I think they're a bad public policy idea, although I suppose I would
personally derive some benefit from them.
As for the 25% thing, I don't make a habit of discussing it at length
with friends and relatives, but I don't get the idea that it's typical.
I'm sure the 25% is just a rough guideline anyway; if the biggest
unknown is medical expenses then that's really something which is fixed
rather than dependent on your lifestyle choices. A person with a higher
income may choose a more expensive car or a more expensive home, but
isn't so likely to choose more expensive heart medication.
I personally save about 20% of my gross income in tax-advantaged
retirement vehicles, and I'm not 40 yet. I guess that means I'm doing
OK so far, but I have no illusions that I'm typical.
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keesan
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response 73 of 96:
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Feb 3 16:41 UTC 2006 |
Self-employed people can contribute both to an IRA (I think the limit is now
up to $3500 if you are over a certain age) and a SIMPLE IRA (limit $6000, I
don't recall if you can pay taxes on it before investing or it is like a
regular IRA, whereas ROTH IRAs let you pay taxes and then invest and not pay
taxes on money withdrawn).
HSAs require not just a high deductible but 100% payment by the insurance
company after you reach the deductible. Those of us who got cheaper plans
where they pay 70 or 80% of the next $10,000 are therefore not eligible, and
I can't switch plans because of a preexisting condition, which is costing me
$8000/year, therefore they are not of any use to people who need them most.
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klg
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response 74 of 96:
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Feb 3 17:09 UTC 2006 |
VH is making himself out as some sort of expert on this topic.
Are you an expert, VH?
Where did JPJR indicate he was talking about a Roth?
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