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Posted by on May 7, 2008, 7:02 pm
I am reading that tax deffered account like 401K aren't so great
because you end up paying ordinary income tax rates on the
withdrawls. Is it better then to invest your money directly in stocks
and just pay the long term capital gains tax rate, 15%?
I have already maxed out my 401k and IRA's . Now I want to max out a
SEP for a side-business. But should I just invest the money in stocks
directly? Which is better?
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Posted by Ron Peterson on May 7, 2008, 8:04 pm
On May 7, 6:02 pm, oprah.cho...@gmail.com wrote:
> I am reading that tax deffered account like 401K aren't so great
> because you end up paying ordinary income tax rates on the
> withdrawls. Is it better then to invest your money directly in stocks
> and just pay the long term capital gains tax rate, 15%?
You will end up with more with 401K for the same investment if your
tax brackets don't change. The initial tax deferral helps a lot.
You will later be able to convert the 401K to an IRA and then to a
Roth.
> I have already maxed out my 401k and IRA's . Now I want to max out a
> SEP for a side-business. But should I just invest the money in stocks
> directly? Which is better?
It's good to have direct investments in the stock market for
flexibility and those things that aren't available in a 401K.
--
Ron
.
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Posted by Ernie Klein on May 8, 2008, 6:42 am
In article
oprah.chopra@gmail.com wrote:
> I am reading that tax deffered account like 401K aren't so great
> because you end up paying ordinary income tax rates on the
> withdrawls. Is it better then to invest your money directly in stocks
> and just pay the long term capital gains tax rate, 15%?
>
Politics aside:
At least one candidate for president has said that if he is elected he
will raise the capital gains tax to 28% -- so the present 15% staying
that way is not a sure thing.
--
-Ernie-
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Posted by Rich Carreiro on May 8, 2008, 8:12 am
> At least one candidate for president has said that if he is elected he
> will raise the capital gains tax to 28% -- so the present 15% staying
> that way is not a sure thing.
And given that it's near guaranteed the Bush tax cuts aren't
going to be renewed/extended, that 15% is going to 20% with
virtual certainty in 2010 or 2011 when those tax cuts sunset
(and dividends will go back to being pure ordinary income, too).
--
Rich Carreiro rlc-news@rlcarr.com
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Posted by Elle on May 8, 2008, 10:25 am
>> At least one candidate for president has said that if he
>> is elected he
>> will raise the capital gains tax to 28% -- so the present
>> 15% staying
>> that way is not a sure thing.
Obama in the March debate and elsewhere has said he
"certainly would not go above... 28%." Then the debate
moderator challenged Obama with the oft-repeated claim that,
when CG tax rates drop, tax revenues go up. (There is some
evidence to support this.)
> And given that it's near guaranteed the Bush tax cuts
> aren't
> going to be renewed/extended, that 15% is going to 20%
> with
> virtual certainty in 2010 or 2011 when those tax cuts
> sunset
> (and dividends will go back to being pure ordinary income,
> too).
It is not "near guaranteed," since McCain may very well win
in November, and he supports continuing the rate at 15%.
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
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