Unit 5 DB - Long Term Planning 401 K

Unit 5 DB - Long Term Planning 401 K

Unit 5 DB - Long Term Planning 401 K

Introduction-Choices , Choices , Choices

At the time of this writing , as the old saying goes , some could say it is the worst of times . However , for those who are planning for the long term , this is an excellent time to put money aside , as over time the problems seen today will subside , and the financial markets over the long term have a way of balancing gains and losses . This being said this will focus on the planning

of a 401K over the long term for the best possible outcome

What is the Best Choice and Why

In the case of the researcher , and indeed for other investors who do not have unlimited funds to invest and are looking toward the long term , within a 401K account , the best investment strategy is to first make contributions under the Traditional IRA rules , up to the limit of 5 ,000 annually , and then to make Roth IRA contributions . The reason for this is that the Traditional IRA contributions , again up to 5 ,000 is tax deductible today , providing present day financial benefit as well as the security of retirement income years later . The numbers show this for example , the maximum 5 ,000 Traditional IRA contribution , each year for the next 20 years , will on average provide almost 5 more funds for retirement than the Roth option (Money Chimp IRA Calculator , 2009 It must also be understood , however...