Money Guy Show
Should I Slow Down Saving to Buy a Car?
Dec 18, 2024
A listener seeks advice for their newly married daughter balancing car savings with 401(k) contributions. The hosts break down strategies for optimizing retirement savings while managing immediate expenses. They share insights on Roth conversions and the importance of maximizing employer matches. There’s a humorous glimpse into the production team’s antics and the challenges of handling concentrated stock holdings. Practical advice flows freely, ensuring confident financial decisions for young adults navigating their future.
20:41
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Quick takeaways
- Employers may offer in-plan Roth conversions for 401(k)s, enabling tax-free growth through strategic after-tax contributions and planning.
- Utilizing a systematic approach to sell vested Restricted Stock Units can enhance diversification and reduce risks associated with concentrated investments.
Deep dives
Understanding In-Plan Roth Conversions
Employers may allow in-plan Roth conversions, enabling employees to convert traditional 401(k) funds to Roth funds within the plan. This process can include converting after-tax contributions to Roth, which provides a tax-free event. Individuals interested in maximizing their contributions can invest up to the section 415 limit for after-tax contributions, allowing greater flexibility in savings. Proper planning is crucial, as intertwining pre-tax and after-tax contributions can lead to complexities regarding employer matches and tax implications.
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