Re: 401K (sent from Eudora previously)

[http://dummy.us.eu.org/robert (Robert)]

 > From: http://dummy.us.eu.org/robert (Robert)
 > Date: Wed, 27 Apr 2011 12:32:26 -0700
 >
 >  > From: "http://www.juno.com/~w1few"; <http://www.juno.com/~w1few>
 >  > Date: Wed, 27 Apr 2011 18:16:57 GMT
 >  >
 >  > If you already got this, ignore this one.  Thanks.
 > 
 > Nope, only got this one.
 > 
 >  > I am enrolled in a 401K at work.  They are initially deducting 3% with a 2%
 >  > matching from the boss.
 >  > Questions:
 >  > 1 How much should I contribute (max is 92%)  (matching is up to 4%)
 > 
 > I think you should figure out how much you were intending to take out from
 > AIG and probably contribute around the same amount.  Does that seem
 > logical/rational?
 > 
 >  > 2. Roth IRA vs traditional IRA (ROTH takes taxes now vs later)
 > 
 > You mean Roth 401k vs. traditional 401k?  You'll probably be in a higher
 > tax bracket right now and a lower one later.  So, it seems like doing a
 > Roth one would make more sense.

Sorry for misinforming you -- you're right a traditional IRA makes more
sense now in this case to pay lower taxes now.

 > I personally do both, to hedge against both possibilities.  Maybe doing
 > both for you would make sense, but with more going towards the Roth side
 > of the equation...
 > 
 >  > 3. The investment choices are stocks , bonds, or mix  (I will go with foreign
 >  > bonds if possible and US Bonds)
 > 
 > Yeah, I think the bond concept is good.  Do you get a money market fund,
 > too?  If so, what's its return?  If it's equal or better than the AIG
 > return, then I'd also put some in there, too.

Given that you'll be getting more than you'll need to live on from the
annuity, the aggressive fund makes most sense since you have a cushion for
the next 5 years.

But, of course, you should remember to move into a less aggressive fund
after 5 years.

 >  > Thanks much for your help,
 >  > D