User uShare Login | Register
Login
Register

Along with posting photos, videos, and stories, your uShare account lets you post Classified Ads, recipes on What's For Dinner, and Announcements.


63° View Weather Current Conditions Sioux Falls Change Location
Set Weather Options

RADAR LOCATION

TEMPERATURE LOCATION

News

[0] My Saved Articles
Back to all news

Business

Find local businesses
on the KELO Pages!

 

Most Popular Today


Converting To A Roth 401(k)

January 17, 2013, 9:50 PM by Angela Kennecke

Converting To A Roth 401(k)
SIOUX FALLS, SD -

You can thank the fiscal cliff deal for opening up a new option for you when it comes to paying taxes on your retirement savings.

The idea is to raise billions of dollars for the federal government by getting you to pay taxes on your retirement plan now, rather than when you withdraw the money. Financial planners say in most cases, it's a good idea.

"I think very few people even know it's out there," Rob Huber of First Financial said.

About half of companies offer a Roth 401(k) option, but fewer than five percent of employees take advantage of it. With the Roth, all taxes are paid up front.  So, converting your traditional 401(k) plan to a Roth plan means you'd pay the taxes now at your current tax rate.

"We don't know what the tax rates are going to be in the future. We know what the tax rates are now. So it's an unknown," Huber said.

And taxes historically go up; so that rate in the future is likely to be higher than what you'd pay on the money now. But not everyone has a pile of cash to pay those taxes up front. 

"If you can afford it do it; if you can't, don't. If you have money in a pool that is not taxed in the future, I would choose that all day long," Huber said.

But if you're going to be in a lower tax bracket when you retire, you probably won't want to make the conversion.

"If you're not going to make as much money; you get taxed a lower percentage on those first chunks of dollars. So, your first 10,000 gets taxed at like 10 percent and up there, 15, 25, 28 percent," Huber said.

Do check to see if your employer offers a Roth 401(k) and if so and you can't afford to convert now, allocate all new contributions to the Roth plan so you're not facing as large of a tax bill upon retirement.

Previous Story

Next Story


Comments







 
Find Local Businesses on KELO Pages!

View business

You may also like

Former Sioux Falls Executive Investigated For Animal Abuse

8/28/2014 4:15 PM

A former Hot Stuff/Orion Foods President is being investigated for dog abuse in Canada.

Full Story
Westward Ho Country Club Changes Name

8/28/2014 12:56 PM

The Westward Ho Country club in Sioux Falls is changing its name to The Country Club of Sioux Falls.  Members were notified of the change on Thur...

Full Story
Cattle Spooked By LifeLight Noise

8/30/2014 3:58 PM

Farmers say the annual music event is louder this year, and it's causing some problems with their cattle.

Full Story
Sanford And First PREMIER Bank Hosting Concert For Employees

8/29/2014 11:30 AM

Employees from two Sioux Falls employers have an opportunity to see a private concert with two country headliners at the Denny Sanford PREMIER Center.

Full Story
Car vs Bus Crash Injures Two Teens

8/26/2014 6:00 PM

Two Iowa teenagers are hospitalized after colliding with a school bus early Tuesday morning.  It happened just east of Inwood on 240th Street at ...

Full Story | Watch


Events