Thread by @roncaruthers

1. Your 401k sucks beyond the match because you are postponing paying taxes on it AND on EVERYTHING THAT IT EARNS.

And, you're postponing the calculation of the tax.

So, what should you do instead?

Here are 3 solid options:

2. First, a Roth IRA is a solid choice.

With a Roth, you do not get a current year tax deduction, BUT...

...your money grows tax -free AND after 59 1/2, you can withdraw it tax-free.

Also, you can access what you contributed without penalty or tax at anytime.

3. You can also pull $10,000 from a Roth IRA without tax or penalty for the purchase of your first home, as long as you've had the account for at least 5 years.

And the definition of 'first home' simply means you have not owned a home in 2 years.

4. Another solid option (if it is set up correctly) is cash value life insurance.

Did you know THAT is where Congress got the idea for the Roth IRA in the first place?

Well, now you do!

The wealthy, not-so-wealthy, politicians and corporations have used this for years.

5. It works like a Roth IRA in that you contribute money AFTER tax, but it grows tax free, you can withdraw money tax free, and the death benefit is income tax free.

AND, it has several advantages that a Roth IRA does NOT have.

Here are 3 of them:

6.

-You can contribute as much as you like, although there are some restrictions in HOW you fund it.

But I have clients putting as little as $150 a month into these and as much as $100,000 a year.

The 2nd benefit is you can withdraw money at ANY time without tax or penalty.

7. And the 3rd benefit is that you can get the upside (or most of the upside) of the stock market with NONE of the downside....

..each year, your gains are locked in no matter what the market does the following year.

And, the worst you earn of 'MY' kind of these accounts is 0

8. We use this as an alternative to 401ks all the time in my office for contributions above the match OR for where a client doesn't have a retirement plan through their work.

And, we can create a lifetime tax free income out of these that you literally canNOT outlive.

9. If you've been listening to @daveramsey on this, it's time to stop.

Or at least check out for youself and see what Dave might be hiding from you.

Here is an example of one we set up for a client set side by side with a 401k.

https://twitter.com/roncaruthers/status/1181965345579421697

10. BTW, what I forgot to mention in the thread above is that we 'grossed up' her 401k contribution.

In other words, when I ran the math, I actually had $16,667 going into her 401k vs $12,000 into her life plan since the 401k contributions are pre-tax vs the LI which is after

11. So, the illustration really is a very fair comparison.

Oh, and for those of you that think you're paying less in your 401k, so

mY ExAMplE sUcKS because I used a 1.5% expense ratio, here is a white paper I wrote on the subject showing that that number is probably LOW.

12. Here is the link to THAT monstrosity of a thread (but it's really informative, or so I've been told)

https://twitter.com/roncaruthers/status/1182767278980386822

13. If you want to learn more about how this type of account works, reach out to make an appointment and we'll discuss if this makes sense for you or not.

Hit info at roncaruthers dot com

14. Finally, instead of a 401k, you could open up a good old-fashioned brokerage account.

If you hold individual stocks or growth-style mutual funds, your taxes on your gains there may be 0 also. if you hold them at least one year.

15. Yep, right now there is a '0' long-term capital gains bracket for singles that make $52,400 and Married couples that make up to $104,800.

So, in summary, the government is a TERRIBLE business partner.

They don't help you with your job or business, but they want a cut.

16. And for most of you, having all or even most of your money in Traditional IRA's or 401ks is a terrible place to put your money.

And we didn't even talk about the biggest reason why, besides that taxes you'll pay:

You really don't have access to that money for decades.

17. So, as you review your financial situation for 2020 and 2021, be sure to explore these other avenues to keep what you pay your 'partner' to a minimum...

...or better yet, NOTHING.

/end