AAEC 2104 Lecture Notes - Lecture 19: Ordinary Income, Asset Allocation
23 Apr 2018
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401k, 403b, 457 cont: take home pay drops, but , not as much due to tax savings. Long-term investments: accounts are in individual"s name (cid:523)not couple(cid:524, money is (cid:498)locked up(cid:499) until age (cid:887)9 , with some exceptions. 2 types: traditional, good for people in higher mtb now, roth, good for people in low mtb now. Must have earned income during the year: age must be under 70 . After age 59 : can withdraw however much you want, taxed as ordinary income, don"t have to withdraw anything, until age 70 , required minimum distributions (rmds, based on life expectancy charts. Contribution = 100% of income up to ,500/year (,000 catchup: depends on agi (<120k) Contributions are not tax deductible: no impact on his year"s income taxes, as long as you"ve had the account for > (cid:887) years. Easier access to your principal: can be withdrawn at any time, no penalty, but, don"t touch any of the earnings before (cid:887)9 .
