Hi,
I just started a job around 3 months ago. I finally got through my probationary period and now qualify for the companies 401K program. I have never had a 401k before so i am somewhat in the dark regarding several things.
I have been told by several people that since it is close to the end of the year i would be better off just waiting until January to sign up - something about to avoid having to turn anything from it in on my tax return from this year. Is this a good idea?
Does it really matter? Would it make a difference if i signed up now, or just waited 2-3 months?
Thanks!
2007-10-23 17:01:08 · 7 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
A 401(K) is a retirement account and as such any gains or losses in the account are exempted from taxes (under normal circumstances) until you begin withdrawing from the account. Most 401(K)'s have restrictions as to when you can begin participating so you really should begin at the first opportunity. Besides the sooner you start the sooner your money can start working for you.
Good luck.
2007-10-23 17:12:08 · answer #1 · answered by BD in NM 6 · 1⤊ 0⤋
Start now. The sooner you start saving for retirement, the better off you will be. The people you've been talking to may be thinking of the distribution of dividends by mutual funds, which typically takes place near the end of the year. Investors that buy into the mutual funds late in the year are responsible for paying taxes on those dividend distributions if they invest in taxable accounts. But a 401(k) is tax sheltered until you take the money out. So this wouldn't be a problem for any 401(k) account you open now.
2007-10-23 20:08:56 · answer #2 · answered by Uncle Leo 5 · 1⤊ 0⤋
1. Start now
2. Put in as much as you can afford as it is all pre-tax money, and will reduce your income taxes.
3. Study the investments, and pick them wisely.
4. Also consider starting a Roth IRA, you might be able to have both. Check with Scottrade. This is for tax free gains.
5. Start 2 other accounts, a spill fund to save up for large purchases, and an emergency fund. So that you won't be tempted to dip into your retirement accounts in hard times.
2007-10-24 01:26:52 · answer #3 · answered by Feeling Mutual 7 · 1⤊ 0⤋
You can open a tax-decutible IRA or you can open a ROTH ira Choose a discount broker like Charles Schwab or Fidelity Investments. I would do a lump sum a year, not small monthly payments since these companies require minimums such as $2,500 to open an account..
2016-05-25 08:45:56 · answer #4 · answered by antoinette 3 · 0⤊ 0⤋
start it NOW, the more you save for the future the better. if you are just saving and aren't taking money out there is NOTHING you have to do on your tax return. and depending on your age 2-3 months is a lot of time when it comes to saving for the future.
2007-10-23 17:16:57 · answer #5 · answered by Nicole D 4 · 1⤊ 0⤋
If you can start now, the sooner the better. If you have other questions regarding investing and personal finance I would highly recommend anything and everything written by Dave Ramsey (Total Money Makeover).
2007-10-23 17:11:25 · answer #6 · answered by The Mighty Quinn 2 · 1⤊ 0⤋
Start it now. There's nothing that goes on your tax return.
Be sure to put the max amount your company will match, if you have company matching.
2007-10-23 18:43:22 · answer #7 · answered by bdancer222 7 · 1⤊ 0⤋