Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[ThaVirus]

Originally Posted by DaFace

As others said, it's still a 401k. They probably just change the title in your account to reflect that it's no longer associated with your previous employer.

You can either just leave it alone or roll it over to a different type of retirement account. I'd be a little cautious about continuing to contribute to it without talking to T. Rowe Price about it, though. I'm not sure what the contribution rules are for an orphaned account like that.

I will speak to a rep to be sure, but just to clarify my situation a bit more: it's apparently got a $6000/year limit on contributions. So my dumbass contributed the max $6000 for the years of 2020 and 2021 (or maybe 2019 and 2020, idk). I contributed that money directly from my linked bank account so it's definitely post-tax. If I'm understanding correctly, I will have already paid taxes on that money as it was previously earned and then they will tax it when I withdraw it upon retirement. That's some bullshit.

[lewdog]

Originally Posted by eDave

Basically he was only able to pull this off because he was a accredited investor who had access to shares of his own company before anyone else.

No, the average person cannot pull this off.

This is correct also.

I’m just noting that he pays no taxes on any realized gains in a ROTH while his tax bill in a standard brokerage account would have been huge with these realized gains.

[DaFace]

Originally Posted by ThaVirus

I will speak to a rep to be sure, but just to clarify my situation a bit more: it's apparently got a $6000/year limit on contributions. So my dumbass contributed the max $6000 for the years of 2020 and 2021 (or maybe 2019 and 2020, idk). I contributed that money directly from my linked bank account so it's definitely post-tax. If I'm understanding correctly, I will have already paid taxes on that money as it was previously earned and then they will tax it when I withdraw it upon retirement. That's some bullshit.

If it's got a $6k cap on there, I bet they automatically rolled it into a traditional IRA. It's roughly the same in terms of tax implications, but it has lower caps and obviously doesn't have an employer contributing to it.

A little confusing if they called it a "Rollover 401k" since that's not really a thing, but that almost has to be what's going on. Again, I'd contact them about it.

EDIT: Although the "directly from my linked bank account" part is odd, since that would suggest a Roth instead of a Traditional IRA. That's definitely confusing.

[ThaVirus]

Originally Posted by DaFace

If it's got a $6k cap on there, I bet they automatically rolled it into a traditional IRA. It's roughly the same in terms of tax implications, but it has lower caps and obviously doesn't have an employer contributing to it.

A little confusing if they called it a "Rollover 401k" since that's not really a thing, but that almost has to be what's going on. Again, I'd contact them about it.

Hah. I am a total dipshit.

It is labeled as a rollover IRA. My mistake! Sorry, I wasn't 100% informed on the difference between 401ks and IRAs so I guess I kinda looked at them as interchangeable terms.

I appreciate the help.

EDIT for your edit: Whenever they rolled it over after I left my previous employer, I just let it sit for quite some time, but not too long ago I linked my bank account to it so that I could transfer funds. That's how I contributed the $6k for the two previous years, just moved the money straight from my bank account into the rollover retirement account.. if that makes sense.

[DaFace]

Originally Posted by ThaVirus

Hah. I am a total dipshit.

It is labeled as a rollover IRA. My mistake! Sorry, I wasn't 100% informed on the difference between 401ks and IRAs so I guess I kinda looked at them as interchangeable terms.

I appreciate the help.

The fact that you've been able to contribute directly is a little odd, though. For tax purposes, Traditional IRAs and 401ks are roughly the same, while Roths are pretty different (and I'm pretty sure you would have known about that happening).

But if they converted it to a Traditional, you shouldn't be contributing to it directly. Or at least if you are, those dollars should be tax deductible. At a minimum, you need to confirm what type of an account it is, and if it's a Traditional IRA, I'd dig into whether you can get some tax money back for what you've contributed.

[ThaVirus]

Yep, I will speak to a rep. Thanks for the help, bros.

[eDave]

Originally Posted by ThaVirus

Yep, I will speak to a rep. Thanks for the help, bros.

Bringing this tread back to it's roots.

[-King-]

Originally Posted by eDave

Bringing this tread back to it's roots.

Yeah I don't like it.

Virus, after you talk to the rep, tell them to transfer the entire balance to AMC and Dogecoin.

[Buehler445]

Originally Posted by ThaVirus

Hah. I am a total dipshit.

It is labeled as a rollover IRA. My mistake! Sorry, I wasn't 100% informed on the difference between 401ks and IRAs so I guess I kinda looked at them as interchangeable terms.

I appreciate the help.

EDIT for your edit: Whenever they rolled it over after I left my previous employer, I just let it sit for quite some time, but not too long ago I linked my bank account to it so that I could transfer funds. That's how I contributed the $6k for the two previous years, just moved the money straight from my bank account into the rollover retirement account.. if that makes sense.

Yeah. It will be taxable on withdrawals but you should be able to deduct the contributions from the your taxable income the year you made them. If you did it this year for sure deduct them. Might be worth amending your return if your preparer works cheap.

[Buehler445]

Originally Posted by -King-

Yeah I don't like it.

Virus, after you talk to the rep, tell them to transfer the entire balance to AMC and Dogecoin.

[SupDock]

Originally Posted by eDave

Basically he was only able to pull this off because he was a accredited investor who had access to shares of his own company before anyone else.

No, the average person cannot pull this off.

Exactly


Thiel bought 1.7 million shares of PayPal PYPL, -1.35% in 1999 for $0.001 per share, or $1,700, ProPublica reported.

Not sure how this is relevant to most of the world.

[ThaVirus]

Originally Posted by Buehler445

Yeah. It will be taxable on withdrawals but you should be able to deduct the contributions from the your taxable income the year you made them. If you did it this year for sure deduct them. Might be worth amending your return if your preparer works cheap.

Ya know, I filed my taxes this year and then I contributed the $6k so I wonder if I'm just shit out of luck.

[ReynardMuldrake]

It's possible to convert funds in a 401K to a Roth IRA. I did it myself last year. HOWEVER you will take a hit on tax liability for the entire amount. You will want to set aside some money to cover your next tax return.

[DaFace]

Originally Posted by ThaVirus

Ya know, I filed my taxes this year and then I contributed the $6k so I wonder if I'm just shit out of luck.

If you contributed $6k this year, that will be something you deduct on your 2021 return (that's due in April 2022). You can also amend your 2020 return (that you filed recently), but it'll take a bit of work. Still, if you're in the 24% tax bracket (purely guessing), that's worth roughly $1,440 on $6,000 contributed, so it will likely be worth the hassle.

[ChiliConCarnage]

Originally Posted by DaFace

But if they converted it to a Traditional, you shouldn't be contributing to it directly. Or at least if you are, those dollars should be tax deductible. At a minimum, you need to confirm what type of an account it is, and if it's a Traditional IRA, I'd dig into whether you can get some tax money back for what you've contributed.

The AGI limits for Trad IRA are halfish of Roth IRA. If he wants to claim the deduction, he'll want to make sure he's under the income limit.