query: Help required on estimating SSA benefit amounts

positive: "Some details in case you are interested: Being a defined benefit kind of pension plan, the formula for your Social Security benefits isn't tied directly to FICA contributions, and I'm not aware of any calculator that performs an ROI based on FICA contributions. Rather, how much you'll get in retirement is based on your average indexed monthly earnings.  Here's some information on the Social Security calculation from the Social Security Administration - Primary Insurance Amount (PIA): For an individual who first becomes eligible for old-age insurance   benefits or disability insurance benefits in 2013, or who dies in 2013   before becoming eligible for benefits, his/her PIA will be the sum of:       (a) 90 percent of the first $791 of his/her average indexed monthly earnings, plus       (b) 32 percent of his/her average indexed monthly earnings over $791 and through $4,768, plus       (c) 15 percent of his/her average indexed monthly earnings over $4,768. Here's an example.  Of course, to calculate a benefit in the future, you'll need to calculate projected average indexed monthly earnings; more details here.  You'll also need to make assumptions about what those bend points might be in the future.  The average wage indexing values for calculating the AIME are available from the Social Security Administration's site, but future indexing values will also need to be projected based on an assumption about their inflation.  You'll also need to project the Contribution and Benefit Base which limits the earnings used to calculate contributions and benefits. Also, the PIA calculation assumes benefits are taken at the normal retirement age.  Calculating an early or late retirement factor is required to adjust benefits for another age.  Then, whatever benefits you get will increase each year, because the benefit is increased based on annual changes in the cost of living. Performing the series of calculations by hand isn't my idea of fun, but implementing it as a spreadsheet (or a web page) and adding in some ""ROI based on FICA contributions"" calculations might be an interesting exercise if you are so inclined? For completeness sake, I'll mention that the SSA also provides source code for a Social Security Benefit Calculator."

positive: There has been an abundance of articles in recent years which make it fairly clear that many participants in the Social Security system-- especially those who have started contributing recently, and going forward from that-- will experience negative rates of return. In other words, they will put in more than they will get out. Some examples of such articles: Time Magazine: But it is now official: Social Security is a lousy investment for the   average worker. People retiring today will be among the first   generation of workers to pay more in Social Security taxes than they   receive in benefits over the course of their lives, according to a new   analysis by the Associated Press. That AP piece, referenced by Time: People retiring today are part of the first generation of workers who   have paid more in Social Security taxes during their careers than they   will receive in benefits after they retire. It's a historic shift that   will only get worse for future retirees, according to an analysis by   The Associated Press. A piece which appeared in DailyFinance (includes a helpful graphic summary):  10 Myths About Social Security: Myth 4: Social Security Is a Good Deal for Today’s WorkersEven if   there were no reduction in benefits or increase in taxes—an   impossibility given Social Security’s looming financing   shortfalls—Social Security is an extremely bad investment for most   young workers. In fact, according to a study by the nonpartisan Tax   Foundation, most young workers will actually receive a negative return   on their Social Security taxes— they will get less in benefits than   they paid in taxes. Some studies indicate that a 30- year-old   two-earner couple with average income will lose as much as $173,500.   That actual loss does not even consider the opportunity cost, what   workers might have earned if they had been able to invest their taxes   in real assets that yield a positive return. In fact, a study by   financial analyst William Shipman demonstrates that, if a 25-year-old   worker were able to privately invest the money he or she currently   pays in Social Security taxes, the worker would receive retirement   benefits three to six times higher than under Social Security. Has that answered your question?

positive: The social security administration has a webpage to get your Social Security estimate. It replaces the yearly estimate they used to mail everybody. It shows the amount you paid for social security and medicare and what they estimate you will receive at your retirement age. They also discuss disability benefits. Everybody should do this every year. Though it does take a few months to get the previous years numbers updated into the system. If you notice a problem with the money they think you paid into the system in a particular year, you can send them an old W-2 and get the numbers corrected.

negative: I am by no means an expert in this, but I did a little research and came across this page on the SSA site -- Can You Be Entitled To Benefits Retroactively?   You may be entitled to monthly benefits retroactively for months before the month you filed an application for benefits. For example, full retirement age claims and survivor claims may be paid for up to six months retroactively. In certain cases, benefits involving disability up to 12 months may be paid retroactively. (This is not true of the special age 72 payments (see §§346-348), black lung benefits (see Chapter 22), medical insurance (see Chapter 24), or SSI (see Chapter 21).) SSA Handbook (emphasis mine) Based on this, it sounds like he may be mistaken. I recommend speaking to a SSA rep to get a solid answer on this though. Not everything on the internet is true.

negative: According to this site: You can apply for German benefits at any U.S. Social Security office by completing application form SSA-2490.  So have a look at this form and collect everything you need. But this site also says that you need to have at least 5 years of pay.   Worker-Male or female-Benefits payable at: age 65 with 5 years of coverage... I have found the info of 5 years minimum also elsewhere. So I guess you do not get any money from the Rentenversicherung (i.e. from the normal job) and I doubt that they will change that in the future. You may receive some money from your time as a Beamter and after 5 years as a Beamter it would be quite some money. But on some other site it has the 5 year figure also for the Pension: Die Pension wird für Beamte und Richter nur dann gezahlt, wenn diese mindestens fünf Jahre im Dienst aktiv tätig waren.  They have also numbers to call on the first site, so you may ask them.

negative: If you have a relatively stable income and deductions you can get a fairly good estimate using last year's tax bill. Suppose you paid $12000 of actual taxes last year and you are paid once a month.   If you plan to make a similar amount of money with similar deductions, you need each monthly paycheck to have $1000 of federal income taxes withheld.   I go to a paycheck calculator and find the withholding required to make sure I have that amount withheld every paycheck.

negative: There's nothing much you can do here, and I don't think you'll succeed in placing blame on the lawyers. In order for SSA to have the tax withheld from your benefits, you need to submit form W-4V. Here are the details on how to get it and what to do with it. This form is voluntarily submitted, i.e.: no-one will ask for it, you have to actively send it out on your own. As to repayment of the LTD benefits - since they were not taxable, there's no change in the taxable income on your behalf. What you got wasn't taxed, so what you gave back - doesn't provide any tax benefit. As to why SSA benefits are taxable and LTD benefits are not - this is because SSA is pre-tax, and LTD premiums were (in your case, apparently) post-tax. However, the LTD benefits management company doesn't care or may be even know about this, and they do everything they can to reduce their own liability to you. If you're entitled to SSA benefits, it reduces their liability, that's why they insisted on your claim with SSA. As to the SSA dragging their feet - they want to reduce their (taxpayers', essentially) liability as well. However, once they decided in your favor, you received what was rightfully yours, including back-pay. SSA benefits are taxable, in the year received. So you got a lump sum - taxable as a lump sum. Sorry, but that's the way it is. This is an example where post-tax LTD premiums don't actually pay off...

negative: "I have a couple other important considerations regarding external HSA accounts vs employer sponsored HSA accounts. Depending on your personal financial situation and goals; some people like to use HSA accounts as an extra retirement account (since the money can be withdrawn penalty free in retirement for non-medical expenses, and completely tax & penalty free at any time for medical expenses). If your intended use for the HSA account is an investment vehicle for retirement, then you may find more use/benefit out of an external provider that may provide more or better investment options than your employers HSA investment options. There can be a lot of additional value in those extra investment options over greater periods of time. Another VERY important consideration for FICA taxes (FICA includes Social Security & Medicare) that I don't believe was mentioned before - for those earners who are under the maximum social security wage limit, you are paying 6.2% of each paycheck into social security taxes. As others have mentioned you can ""save"" this tax through your employer’s plan if you set up the account to be funded pre-tax from your paychecks. However, in doing so, you are lowering your overall contributions into social security, which may lower your social security benefits in your retirement years!  If this is ultimately going to lower your SSA benefits in retirement then that is a big future cost that may steer you against the pre-tax employer contributions. Think of social security as part of your retirement plan, not as a tax but instead as an additional check you put away for yourself for retirement every month. Of course, this is only an important consideration if SSA is still going to be around when you retire, but let's assume that it will be. This is not an issue for higher earners, earning well above the max SSA taxable wages. There is no wage limit on the 1.45% Medicare tax withholding's, and there is certainly no harm in saving Medicare taxes because it will not affect future Medicare benefits. So for taxpayers earning well over the max SSA wages, they will just save the 1.45% Medicare taxes without affecting their SSA contributions and resulting retirement benefits.  So again, it all comes down to personal situations. Depending on your earnings and goals, employer plan may or may not be the way to go.  Personally, for my lower earning clients, friends and family, I tend to recommend that they do whatever they can to maximize their social security benefits in retirement. So I would advise them to either use the external provider account, or the employer plan but with post-tax contributions so you don't lower the SSA withholding's but can still claim the income tax deduction on your tax return. YMMV -Dan"

negative: There are no legal reasons preventing you from trading as a F-1 visa holder, as noted in this Money.SE answer. Per this article, here are the things you need to set up an account: What do I need to have for doing Stock trading as F1 student ? Typically, most of the stock brokerage firms require Social Security   Number (SSN) for stock trading. The reason is that, for your capital   gains, it is required  by IRS for tax purposes. If you work on campus,   then you would already get SSN as part of the job application   process…Typically, once you get the on-campus job or work   authorization using CPT or OPT , you use that offer letter and take   all your current documents like Passport, I-20, I-94 and apply for SSN   at Social Security Administration(SSA) Office, check full details at   SSA Website . SSN is typically used to report job wages by employer   for tax purposes or check eligibility of benefits to IRS/Government. I do NOT have SSN, Can I still do stock trading as F1 student ? While many stock brokerage firms require SSN, you are not out of luck,   if you do not have one…you will have to apply for an ITIN Number (   Individual Taxpayer Identification Number )  and can use the same when   applying for stock brokerage account.  While some of the firms accept   ITIN number, it totally depends on the stock brokering firm and you   need to check with the one that you are interested in. The key thing is that you'll need either a SSN or ITIN to open a US-based brokerage account.

negative: The safe harbor provision is based on the tax you or the prior year. So in 2016 this helped you as your tax was substantially increased from 2015. However, by the same token in 2017 your safe harbor amount is going to be very high. Therefore if 2017 is similar you will owe penalties. The solution here is to make estimated tax payments in the quarters that you realize large gains. This is exactly what the estimated tax payments are for. Your estimate tax payments do not have to be the same. In fact if you have a sudden boost in earnings in quarter 3, then the IRS expects that quarter 3 estimated tax payment to be boosted.

negative: Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task.  Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability. One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet.  This is a spreadsheet version of the income tax return form.  It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual.  In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions. The nice thing about it is that it's a spreadsheet.  You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability.  (You may also owe state taxes depending on what state you live in.)  Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in.  Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn).

negative: "Your SSA payments are not IRA contributions, but they're actually a tax that is earmarked to the Social Security Trust Fund.  As such, no, you don't have any ""contributions"" that can be refunded: you paid a tax, and in exchange for having paid that tax you will possibly later have a benefit. However, some foreign nationals are able to convey that benefit into their national savings plan.  The Social Security Administration has a FAQ page on this particular subject.   Unfortunately for you, Pakistan does not have a bilateral agreement according to their list, so you may be out of luck."

negative: "You'd need to talk with an attorney familiar with Social Security, or an appropriately qualified SSA representative to be sure - but all signs point to the idea that unfortunately Social Security does not work the way your father was told it would. And if he doesn't file to receive benefits the reality is actually much worse than ""throwing away free money""! However, this is not due to a complete misunderstanding of the system! Social Security does work the way he thinks in some instances, just that the rules don't apply to his exact situation! First of all, retroactive benefits come in a few forms: File and suspend to get a lump only if you really need it - BEFORE the age of 70 only! In this method you apply for retirement, but you tell the SSA to suspend/delay your benefits. You are entitled to full lump sum of the payments you deferred...but at a cost of getting lower monthly benefits permanently (and that also lowers spousal and dependent children's benefits, too - if those could apply to your dad). But note that at the age of 70, Social Security will stop deferring the payments and start paying you the full maximum retirement benefit monthly, with no lump sum. This is a kind of emergency insurance policy for those who want to try to defer retirement benefits, but who want the opportunity to cash out and get the money they would have been getting ""just in case"". You can get up to 6 months of retroactive benefits, such as if you wait past your exact retirement age to apply for benefits. But no more: ""we cannot pay retroactive benefits for any month before you reached full retirement age or more than 6 months in the past"". As for after-death benefits, an estate can only get benefits that were already due to be paid, which generally means a person died and did not get their benefits for that month, so SSA can re-issue a check to the estate following these rules. But as a person cannot be due a lump sum payment after age 70 (for more than 6 months at most), the estate will only be able to get at most 1-6 months of payments (and 6 months is doubtful - you'll need to ask a lawyer if that much would even be possible). If your father was below 70 and wanted to file-and-suspend, the question of lump on death would be more complex and I don't know that answer - but once you are past 70 this doesn't matter any more as you aren't due a lump anymore. Given the above, we've established pretty clearly that if you don't claim your benefits within 6 months after age 70, any months of payment you would have gotten are just forfeited to the system. But if you claim the benefits and stick them in the bank, can they be taken? Well, if a lawsuit is really a worry, then yes these accumulated funds can required to pay a debt - but this potential for loss can be protected against without forfeiting the benefits entirely! This is not very common, but if your father doesn't need the money now he may be able to deposit some of the money into a special partially-lawsuit protected format of the Roth IRA (which has no age limits) as detailed here. If he never gets sued, that's OK - it's still his money! If he passes away, the value goes to his estate and does not disappear. And he doesn't forfeit any of his earned retirement benefits. Finally, I would like to share one last thing with you and your father. These benefits aren't free - he has been paying a portion of his paycheck for decades into Social Security, and now he is eligible for the maximum amount of benefits per month that he will qualify for - and if he wants to keep working he loses no benefit and the amount could potentially even go up. That's up to him. But not filing for benefits now will mean that all this money he's been paying in for decades will just be lost - they'll basically just be a tax he's paid out to other retirees. His estate (which means you kids) won't get any of it, either. That'd just be a waste for everyone involved. If you have continued doubts or questions, I wouldn't hesitate to consult a specialist lawyer or talk with the SSA directly to make sure this is all correct. It's his money, and he has earned his benefits for many years. I very much hope he gets to enjoy as much of them as he can!"

negative: How do I report this on our income tax return? You should include it on Line 7 of your Form 1040.   Additionally, you should report the extra payment to your employer if it was greater that $20. You can use From 4070 to do this if your employer does not provide you with a form. And finally, you are right, you should Form 4137 to report any tips that you include on your Form 1040 in order to pay the required social security and medicare taxes.   Credit is due to glibdud and Nathan L for constructive feedback! Thanks!

negative: I strongly recommend that you talk to an accountant right away because you could save some money by making a tax payment by January 15, 2014. You will receive Forms 1099-MISC from the various entities with whom you are doing business as a contractor detailing how much money they paid you. A copy will go to the IRS also. You file a Schedule C with your Form 1040 in which you detail how much you received on the 1099-MISC forms as well as any other income that your contracting business received (e.g. amounts less than $600 for which a 1099-MISc does not need to be issued, or tips, say, if you are a taxi-driver running your own cab), and you can deduct various expenses that you incurred in generating this income, including tools, books, (or gasoline!) etc that you bought for doing the job. You will need to file a Schedule SE that will compute how much you owe in Social Security and Medicare taxes on the net income on Schedule C. You will pay at twice the rate that employees pay because you get to pay not only the employee's share but also the employer's share. At least, you will not have to pay income tax on the employer's share. Your net income on Schedule C will transfer onto Form 1040 where you will compute how much income tax you owe, and then add on the Social Security tax etc to compute a final amount of tax to be paid. You will have to pay a penalty for not making tax payments every quarter during 2013, plus  interest on the tax paid late.  Send the IRS a check for the total. If you talk to an accountant right away, he/she will likely be able to come up with a rough estimate of what you might owe, and sending in that amount by January 15 will save some money. The accountant can also help you set up for the 2014 tax year during which you could make quarterly payments of estimated tax for 2014 and avoid the penalties and interest referred to above.

negative: "The translation scheme is detailed in IRS Publication 15, ""Employer's Tax Guide"". For the 2010 version, the information is in Section 16 on Page 37. There are two ways that employers can calculate the withheld tax amount: wage bracket and percentage. Alternatively, they can also use one of the methods defined in IRS Publication 15-A. I'll assume the person making $60k/yr with 10 allowances is paid monthly ($5000/period) and married. Using the wage bracket method, the amount withheld for federal taxes would be $83 per pay period. Using the percentage method, it would be $81.23 per pay period. I don't recommend that you use this information to determine how to fill out your W-4. The IRS provides a special online calculator for that purpose, which I have always found quite accurate. Note: ""allowances"" are not the same as ""dependents""; ""allowances"" are a more realistic estimation of your tax deductions, taking into consideration much more than just your dependents."

negative: "Following up on this, here is what I did. First, I called my benefits provider.  They had documentation of my election over the phone, which then allowed them to retroactively fix the problem. Had they not had this documentation, I would have been out of luck. Second, the next step for ""fixing"" occurred when I received my W-2 for this position. This W-2 mistakenly showed the amount for my medical FSA in box-10 of my W-2 as the same dependent care FSA. This requires calling/emailing my benefits and payroll department to get an updated W-2..."

negative: Its almost always better to pay off loans sooner rather than later.   Being debt free is amazingly liberating.   However, in your case, I'd be reluctant to make significant headway on a loan repayment program.  Here's why: The best investment you can make, right now, is in yourself.  Completing your education should be the top priority.  The next would be to meet the requirements of a job after received after school is complete.  So what I would do is estimate the amount of money it would take to complete school.  Add to that an estimate of an amount to move to a new city and setup a household.   That amount should be held in reserve.  Anything above that can used to pay down loans. Once you complete school and get settled into a job, you can then take that money and also throw it at your loans.

negative: For estimating your take home salary, I suggest using one of the many free salary calculators available over the Internet. I personally use PaycheckCity.com, but there are plenty of others available. To calculate your allowances for the US Federal tax, you can use the worksheet attached to the form W-4.  Similar form (with a similar worksheet) is available for state taxes, on the Illinois Department of Revenue web site.

negative: "IANAL, but no, this is not sound legal advice. There are a few things that stick out to me as fishy. First off: you are calculating the 3% safe-harbor on the 2017 compensation limit of $270k, but limiting yourself to $53k in total contributions which is the 2016 limit. It's hard to tell what tax year you're working in here. If you're planning for 2017, fine, but if you're wrapping up 2016 then you need to use 2016 limits. Secondly (and this is something I think your counsel should know already): you don't take Employer contributions out of gross wages (box 1) on the W-2. They aren't even reported there in the first place! With your base scenario the 2 employees' W-2s would look like this: Employee A's W-2 Gross Wages (box 1) = 280,000 - 14,966.67 = 265,033.33 Employee B's W-2 Gross Wages (box 1) = 280,000 - 0 = 280,000 Elective deferrals are the only thing that should come out of wages. Not the SH 3% or Match. Thirdly: Retirement Plan expenses really aren't an ""above the line"" expense. They are not included in cost of goods sold. Even if you establish a ""pool"" for that expense, it's still not a direct cost attributable to the production of whatever your company sells. Also: Employee B should not have to contribute to the retirement account of Employee A! The only situation I can see where Employee A and B would be required to fund the match equally, were if Employee A & B are both 50% owners and the company has no funds of its own with which to fund the match. The company has obligated itself to fund the match, and if the company doesn't have any money then the money still has to come from somewhere (ie. the owners pony up more funds for the match they promised their employees, it just happens that the employees are also the owners). Even in this situation though, I still stand behind my first 3 points."

negative: Students at college employed by the college are exempt from the FICA taxes (Social Security and Medicare).  You are not exempt from federal and state income taxes, but if you are a part time employee making a small amount of money, you probably aren't projected to be paid enough between now and the end of the year to trigger the withholding.  If you are concerned that your tax burden for the year will require you to send in money at tax time next year, you can estimate what your taxes will be, and if you determine that you will owe too much, you can fill out a new W-4 form with your HR department and request that additional tax be withheld.

negative: "See Publication 505, specifically the section on ""Annualized Income Installment Method"", which says: If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. The publication includes a worksheet and explanation of how to calculate the estimated tax due for each period when you have unequal income.  If you had no freelance income during a period, you shouldn't owe any estimated tax for that period. However, the process for calculating the estimated tax using this method is a good bit more complex and confusing than using the ""short"" method (in which you just estimate how much tax you will owe for the year and divide it into four equal pieces).  Therefore, in future years you might want to still use the equal-payments method if you can swing it.  (It's too late for this year since you missed the April deadline for the first payment.)  If you can estimate the total amount of freelance income you'll receive (even though you might not be able to estimate when you'll receive it), you can probably still use the simpler method.  If you really have no idea how much money you'll make over the year, you could either use the more complex computation, or you could use a very high estimate to ensure you pay enough tax, and you'll get a refund if you pay too much."

negative: You must pay your taxes at the quarterly intervals. For most people the withholding done by their employer satisfies this requirement. However, if your income does not have any withholding (or sufficient), then you must file quarterly estimated tax payments.  Note that if you have a second job that does withhold, then you can adjust your W4 to request further withholding there and possibly reduce the need for estimated payments.  Estimated tax payments also come into play with large investment earnings. The amount that you need to prepay the IRS is impacted by the safe harbor rule, which I am sure others will provide the exact details on.

negative: The IRS no longer requires that employers submit all W4 forms, but they can request a W4 for an employee at any time, and putting false information on your W4 is still a punishable offense.   I agree that having a return is like giving the Treasury Department an interest-free loan for the year, but unfortunately paying the appropriate amount of withholding tax is required.   There is some ambiguous information regarding an employer adjusting the amount of withholding, but it seems to mean that they can withhold more than the estimated rate, but never less than what is calculated using the deductions on your W4. See the link for more details: IRS Tax Withholding

negative: Can you estimate the approximate cost of employing one of each? Would they work as contractors, or employees? Glassdoor can be a great resource for estimating the current market for local labor costs.  If you have a sense for the amount of annual revenue each individual could theoretically produce, you can essentially treat their wages as a fixed cost up to the limit of that revenue, then model the incremental cost and margin impact of bringing on additional headcount.   Is there any additional detail you can provide that might help provide guidance on developing a model?

negative: Credit cards are a basic building block of a stable financial plan.  By using a credit card for every purchase above, say, the price of a coffee you gain a number of material benefits.  You get the free use of the bank's money for about a month.  You reduce the amount of cash you require to almost nothing.  You get a handy budget tracking tool as many credit cards help you assign categories to expenses.  You can typically download your transactions and import them into a budget app for handy record keeping.  Many cards offer benefits such as extended warranties on items purchased, travel insurance, reward points and other benefits. There is only one caveat: Pay the entire balance, in full, every month, on or before the due date.  Don't even THINK about paying anything less and don't EVER be late.

negative: "If the IRS changes your return in any way (including math errors) - they send a letter explaining the change and the reasons for it. You should read that letter, it will answer your question (Usually its a CP12 notice). If you didn't receive it - you can call them and ask to resend it (they're unlikely to answer over the phone, but you can try asking). I'm confused by your using the word ""estimate"". Your tax return is not supposed to be estimate, it supposed to be precise. Why are you considering your tax return ""estimate""? If your filed tax return shows refund of $X and you received $X+$180 - then as I said, a letter of explanation from the IRS is due. If you don't know what the refund amount on your return is and you're trying to ""estimate"" it now - you better get a copy of that return."

negative: ...funds received for the month of death and later must be returned. If the estate is bankrupt, as near as I can tell, the SSA is out of luck. (This applies to payment apart from that covered above.) If you need advice on something other than retirement insurance, a comprehensive list of applicable statutes and rulings is here.

negative: I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number.  Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%.

negative: Defined Benefit - the benefit you receive when you retire is defined e.g. $500 a month if you retire at age 65. It is up to the plan administrators to manage the pension fund, and ensure that there is enough money to cover the benefits based on the life expectancy of the retiree. Defined Contribution - the amount you contribute to the plan is defined. The benefit you receive at retirement depends on how well the investments do over the years.

negative: "First, your employee needs to work out his contribution limit for the year. Because he was eligible for a few months, his limit will be prorated. See this post for details on how to calculate the prorated limit.  Once he determines his contribution limit, you'll know how much needs to be taken out. You (or he) can do an excess contribution withdrawal to remove the extra contribution without penalty. See this post for more details. If he has already spent some or all of the extra contribution, talk to the HSA custodian. They may be able to reclassify some of his distributions as excess contribution withdrawals. You won't get the money back, but it will avoid the penalty. Your employee would then need to add the extra as ""other income"" on his tax return so he can pay tax on it.  You have until April 15 to remove the excess HSA contributions. If you are unable to do it by then, the penalty to your employee is 6% (Source: Pub 969) on the excess that is not removed, in addition to the income tax."

negative: If I get a prepaid debit card for the money I make do I have to report my earnings? How do I go about doing this? Yes you must report this. It doesn't matter if they put it in your bank account, or on a debit card, or cash under the table. You have to report the income. You can count on your employer reporting the income to the IRS.  What is the limit I can make when it comes to working while on social security? The Social Security Administration has all sort of info regarding working and receiving benefits. The exact answer depends on the type of benefit (retirement, disability, survivor) and your age (pre-full retirement age, the year you reach retirement age, post retirement age) I would look at their website: http://www.ssa.gov/retire2/whileworking.htm for examples: You can work while you receive Social Security retirement (or   survivors) benefits. When you do, it could mean a higher benefit for   you in the future. Each year we review the records for all working Social Security   recipients. If your earnings for the prior year are higher than one of   the years we used to compute your retirement benefit, we will   recalculate your benefit amount. We pay the increase retroactive to   January the year after you earned the money

negative: The short answer is that it's never the right time to buy an emerging technology. As long as the technology is emerging, you should expect that newer revisions will be both better and less expensive. With solar, specifically, there are some tax credits to help the early adopters that may help you on the cost/benefit analysis, but in the end, you still have to decide whether the benefits outweigh the costs now, and if not, whether that will change in the near future. For me, part of the solar benefit is the ability to generate electricity when the power goes out. That option does require local battery storage, however. One of the benefits of using Musk's solar tiles instead of actual slate is the weight of the quartz tiles which is much lower than the weight of real slate. In many cases a slate roof is heavy enough to require major reinforcement of the roof trusses before installation. The lower weight also saves significantly on shipping costs. This is where Musk can lower costs enough to be competitive to some of the materials he hope to compete with.

negative: If you've already used TurboTax on your 2015 taxes, you can use the numbers TurboTax gave you as your reasonable estimate.  Line 4 is your estimate of total tax liability for 2015. This would be line 63 of form 1040. This is Federal income tax only, not Social Security tax.  Line 5 is the total of tax payments you made last year. You should be able to read this off your W-2 forms, Box 2. It corresponds to line 74 on the 1040.  Line 6 is the difference between lines 4 and 5. You can't claim a refund on the extension, so if line 5 is more than line 4, enter 0. Otherwise, subtract line 5 from line 4, and enter it in line 6. This is the amount you should send in with the form to minimize any penalty due with your taxes later.  The TurboTax software can generate this extension form automatically, I believe.  Also, don't forget to give a copy of this extension form to your tax preparer. He will need to know the amount you sent in.

negative: To clarify that legality of this (for those that question it), this is directly from IRS Publication 926 (2014) (for household employees): If you prefer to pay your employee's social security and Medicare taxes from your own funds, do not withhold them from your employee's wages. The social security and Medicare taxes you pay to cover your employee's share must be included in the employee's wages for income tax purposes. However, they are not counted as social security and Medicare wages or as federal unemployment (FUTA) wages. I am sorry this does not answer your question entirely, but it does verify that you can do this. UPDATE:  I have finally found a direct answer to your question!  I found it here: http://www.irs.gov/instructions/i1040sh/ar01.html Form W-2 and Form W-3 If you file one or more Forms W-2, you must also file Form W-3. You must report both cash and noncash wages in box 1, as well as tips and other compensation. The completed Forms W-2 and W-3 in the example (in these instructions) show how the entries are made. For detailed information on preparing these forms, see the General Instructions for Forms W-2 and W-3. Employee's portion of taxes paid by employer.    If you paid all of your employee's share of social security and Medicare taxes, without deducting the amounts from the employee's pay, the employee's wages are increased by the amount of that tax for income tax withholding purposes. Follow steps 1 through 3 below. (See the example in these instructions.) Enter the amounts you paid on your employee's behalf in boxes 4 and 6 (do not include your share of these taxes). Add the amounts in boxes 3, 4, and 6. (However, if box 5 is greater than box 3, then add the amounts in boxes 4, 5, and 6.) Enter the total in box 1.


query: As a 22-year-old, how risky should I be with my 401(k) investments?

positive: "At 50 years old, and a dozen years or so from retirement, I am close to 100% in equities in my retirement accounts.  Most financial planners would say this is way too risky, which sort of addresses your question.  I seek high return rather than protection of principal.  If I was you at 22, I would mainly look at high returns rather than protection of principal. The short answer is, that even if your investments drop by half, you have plenty of time to recover.  But onto the long answer. You sort of have to imagine yourself close to retirement age, and what that would look like.  If you are contributing at 22, I would say that it is likely that you end up with 3 million (in today's dollars).  Will you have low or high monthly  expenses?  Will you have other sources of income such as rental properties?   Let's say you rental income that comes close to covering your monthly expenses, but is short about 12K per year.  You have a couple of options: So in the end let's say you are ready to retire with about 60K in cash above your emergency fund.  You have the ability to live off that cash for 5 years.  You can replenish that fund from equity investments at opportune times.  Its also likely you equity investments will grow a lot more than your expenses and any emergencies.  There really is no need to have a significant amount out of equities.  In the case cited, real estate serves as your cash investment. Now one can fret and say ""how will I know I have all of that when I am ready to retire""?  The answer is simple: structure your life now so it looks that way in the future.  You are off to a good start.  Right now your job is to build your investments in your 401K (which you are doing) and get good at budgeting.  The rest will follow.  After that your next step is to buy your first home. Good work on looking to plan for your future."

positive: At 22 years old, you can afford to be invested 100% in the stock market. Like many others, I recommend that you consider low cost index funds if those are available in your 401(k) plan. Since your 401(k) contributions are usually made with each paycheck this gives you the added benefit of dollar cost averaging throughout your career.  There used to be a common rule that you should put 100 minus your age as the percentage invested in the stock market and the rest in bonds, but with interest rates being so low, bonds have underperformed, so many experts now recommend 110 or even 120 minus your age for stocks percentage. My recommendation is that you wait until you are 40 and then move 25% into bonds, then increase it to 40% at 55 years old. At 65 I would jump to a 50-50 stock/bonds mix and when you start taking distributions I would move to a stable-value income portfolio. I also recommend that you roll your funds into a Vanguard IRA when you change jobs so that you take advantage of their low management fee index mutual funds (that have no fees for trading).  You can pick whatever mix feels best for you, but at your age I would suggest a 50-50 mix between the S&P 500 (large cap) and the Russell 2000 (small cap). Those with quarterly rebalancing will put you a little ahead of the market with very little effort.

positive: Current evidence is that, after you subtract their commission and the additional trading costs, actively managed funds average no better than index funds, maybe not as well. You can afford to take more risks at your age, assuming that it will be a long time before you need these funds -- but I would suggest that means putting a high percentage of your investments in small-cap and large-cap stock indexes. I'd suggest 10% in bonds, maybe more, just because maintaining that balance automatically encourages buy-low-sell-high as the market cycles. As you get older and closer to needing a large chunk of the money (for a house, or after retirement), you would move progressively more of that to other categories such as bonds to help safeguard your earnings.  Some folks will say this an overly conservative approach. On the other hand, it requires almost zero effort and has netted me an average 10% return (or so claims Quicken) over the past two decades, and that average includes the dot-bomb and the great recession. Past results are not a guarantee of future performance, of course, but the point is that it can work quite well enough.

positive: At 22yo, unless you have a terminal illness, you have many years to earn and save a lot more that you will have in your 401k right now (unless you have already been extremely lucky in the market with your 401k investments). This means that even if you lost everything in your 401k right now, it probably wouldn't hurt you that much over the long term. The net present value of all your future savings should far exceed the net present value of your 401k, if you plan to earn and save responsibly. So take as much risk as you want with it right now. There is no real benefit to playing safe with investments at your age. If you were asking me how much risk should you be taking with a $10m inheritance and no income or much prospects of an income, then I'd be giving you a very different answer.

positive: Whatever you do, don't take your retirement savings to Vegas. Second, you should also consider investment expenses. Your investments profit after the managers pay themselves. Get the lowest expense ratio mutual funds you can. Third, most active managers do not beat the market. Index funds are your friends. They also tend to have the lower expense ratios.

positive: "+1 on all the answers above. You're in a great position and have the right attitude. A good book on the subject is A Random Walk Down Wall Street - well worth a read. Essentially, go for low tax paying in, low tax taking out approach (in the uk that's a SIPP or ISA), a low cost well diversified unit fund (like a Vanguard LifeStrategy 100), on a low cost platform (""Annual Management Charge"" in be UK). Keep paying a regular amount and let compound interest take care of things. I'd also add that you should think about what lifestyle you would want at specific ages and work out what you need to save to achieve these - even though they are probably a long time in the future, it makes your goals ""real"". Read Mr Money Moustache for some ideas http://www.mrmoneymustache.com"

positive: As a 22 year old planning for your financial life, it is obvious to say that saving as much as you can to invest for the long run is the smartest thing to do from a financial point of view.  In general, at this point, aged 22, you can take as much risk as you'll ever will. You're investing for the very long term (+30/+40 years). The downside of risk, the level of uncertainty on returns (positive or negative), is most significant on the short term (<5years). While the upside of risk, assuming you can expect higher returns the more risk you take, are most significant on the long term.  In short: for you're financial life, it's smart to save as much as you can and invest these savings with a lot of risk.  So, what is smart to invest in? The most important rule is to keep your investment costs as low as possible. Risk and returns are strongly related, however investment costs lower the returns, while you keep the risk. Be aware of the investment industry marketing fancy investment products. Most of them leave you with higher costs and lower returns. Research strongly suggests that an lowcost etf portfolio is our best choice. Personally, i disregard this new smart beta hype as a marketing effort from the financial industry. They charge more investment costs (that's a certain) and promise better returns because they are geniuses (hmmm...). No thanks. As suggested in other comments, I would go for an low cost (you shouldn't pay more than 0.2% per year) etf portfolio with a global diversification, with at least 90% in stocks. Actually that is what I've been doing for three years now (I'm 27 years old).

positive: At twenty-two, you can have anywhere between 100%-70% of your securities portfolio in equities. It is reasonable to start at 100% and reduce over time.  The one thing that I would mention with that is that your target at retirement should be 70% stocks/30% bonds.  You should NEVER have more than 30% bonds.  Why?  Because a 70/30 mix is both safer than 100% bonds and will give a higher return.  Absent some market timing strategy (which as an amateur investor, you should absolutely avoid) or some complicated balancing scheme, there is never a reason to be at more than 30% bonds.   A 50/50 mix of stocks and bonds or a 100% bonds ratio not only returns less than the 70/30 mix, it is actually riskier.  Why?  Because sometimes bonds fall.  And when they do, stocks generally gain.  And vice versa.  Because of this behavior, the 70/30 mix is less likely to fall than 50% or 100% bonds.   Does that mean that your stock percentage should never drop below 70%?  No.  If your portfolio contains things other than stocks and bonds, it is reasonable for stocks to fall below 70%.  The problem is that when you drop stocks below 70%, you should drop bonds below 30% as well.  So you keep the stock to bond ratio at 7:3.   If you want to get a lower risk than a 70/30 mix, then you should move into cash equivalents.  Cash equivalents are actually safer than stocks and bonds either individually or in combination.  But at twenty-two, you don't really need more safety.   At twenty-two, the first thing to do is to build your emergency fund.  This should be able to handle six months of expenses without income.  I recommend making it equal to six months of your income.  The reason being that it is easy to calculate your income and difficult to be sure of expenses.  Also, you can save six months of income at twenty-two.   Are you going to stay where you are for the next five years?  At twenty-two, the answer is almost certainly no.  But the standard is the five year time frame.  If you want a bigger place or one that is closer to work, then no.  If you stay somewhere at least five years, then it is likely that the advantages to owning rather than renting will outweigh the costs of switching houses.  Less than five years, the reverse is true.  So you should probably rent now.   You can max out your 401k and IRA now.  Doing so even with a conservative strategy will produce big returns by sixty-seven.  And perhaps more importantly, it helps keep your spending down.  The less you do spend, the less you will feel that you need to spend.   Once you fill your emergency fund, start building savings for a house.  I would consider putting them in a Real Estate Investment Trust (REIT).  A REIT will tend to track real estate.  Since you want to buy real estate with the results, this is its own kind of safety.  It fell in value?  Houses are probably cheap.  Houses increasing in price rapidly?  A REIT is probably growing by leaps and bounds.  You do this outside your retirement accounts, as you want to be able to access it without penalty.

negative: Theoretically there is limited demand for risky investments, so higher-risk asset classes should outperform lower-risk asset classes over sufficiently long time periods. In practice, I believe this is true, but it could be several decades before a risky portfolio starts to outperform a more conservative one. Stocks are considered more risky than most assets. Small-cap stocks and emerging market stocks are particularly high-risk. I would consider low-fee ETFs in these areas, like VB or VWO. If you want to seek out the absolute riskiest investments, you could pick individual stocks of companies in dire financial situations, as Bank of America was a couple years ago. Most importantly, if you don't expect to need the money soon, I would maximize your contribution to tax-advantaged accounts since they will grow exponentially faster than taxable accounts. Over 50 years, a 401(k) or IRA will generally grow at least 50% more than a taxable account, maybe more depending on the tax-efficiency of your investments. Try to contribute the maximum ($17,500 for most people in 2014) if you can. If you can save more than that, I'd suggest contributing a Roth 401k rather than a traditional 401(k) - since Roth contributions are post-tax, the effective contribution limit is higher. Also contribute to a Roth IRA (up to $5,500 in 2014), using a backdoor Roth if necessary.

negative: "I just opened up the Roth on my own, with some savings. I was then about to roll over the old company 401(k)s, but didn't see ""Roth"" indicated on the statements for those.   All these years I've known that Roth is the way to go, and thought that's how I've been investing.........but apparently, you can only open a Roth personally, whereas the company 401(k)s are standard.   I'm currently not working so I guess that counts as ""low income year""? But we file jointly...........gahhh!"

negative: Since there is no match on the 401k, it seems to me that your first priority should be your IRA (Roth or otherwise). I don't know what your salary is, but most 22 year-olds won't be maxing out both an IRA and 401k on only 10% of their incomes, so the rest of the list may be irrelevant.

negative: "401(k) doesn't have a ""return rate"", because 401(k) is not a type of investment -- it is a vehicle for investment, with certain tax treatments. Just like your money that's not in a 401(k), you can invest it in either the bank, a CD, stocks, mutual funds, bonds, etc., you can similarly (depending on the options given to you by your 401(k) plan) invest the money in the 401(k) in a cash account, buy stocks, mutual funds, etc. Your return is dependent on how you invest your money, not whether it's in a 401(k) or not. Whether it's in a (Roth or Traditional) 401(k) simply affects when and how it gets taxed. (It is true that most 401(k) plans offer little variety in types of investments you can choose; however, this is not a big deal, as chances are that in a few years, you will leave your company, at which point you are able to rollover the 401(k) into an IRA, at which point you will have many, many options for how to invest it.) To make a valid comparison, you should be comparing the same type of investment in both cases. That means, you should assume the same return for both the money outside the 401(k), and the money inside the 401(k), and only consider the taxes and penalties (if you plan to withdraw early)."

negative: In my opinion, the fee is criminal.  There are ETFs available to the public that have expenses as low as .05%. The index fund VIIIX an institution level fund available to large 401(k) plans charges .02%. I'll pay a total of under 1% over the next 50 years,  Consider that at retirement, the safe withdrawal rate has been thought to be 4%, and today this is considered risky, perhaps too high. Do you think it's fair, in any sense of the word to lose 30% of that withdrawal?  Another angle for you - In my working years, I spent most of those years at either the 25% or 28% federal bracket taxable income. I should spend my retirement at 15% marginal rate. On average, the purpose of my 401(k) was to save me (and my wife) 10-13% in tax from deposit to withdrawal. How long does it take for an annual 1.1% excess fee to negate that 10% savings? If one spends their working life paying that rate, they will lose half their wealth to those managing their money.  PBS aired a show in its Frontline series titled The Retirement Gamble, it offers a sobering look at how such fees are a killer to your wealth.

negative: I tried to roll my funds to my new company. But my hr department from my old job would not work with me on getting it straightened out. So I decided to either pull it all out or roll it into a 401 k and use it as a trial for stocks and investments. Simce it isn't a large amount of money to begin with

negative: Your comment regarding your existing finances is very relevant and helpful. You need to understand that generally in personal finance circles, when a strong earning 22 year-old is looking for a loan it's usually a gross spending problem.   Their car costs $1,000 /month and their bar tabs are adding up so the only logical thing to do is get a loan.  Most 22-year-olds don't have a mortgage soaking up their income, or a newborn.   With all of this in mind I essentially agree with DStanley and, personally, and many people here would probably disagree, I'd stop the 401(K) contribution and use that money to pay the debt.  You're still very young from a retirement standpoint, let the current balance ride and forego the match until the debt is paid.  I think this is more about being debt free at 22 quickly than it's about how much marginal money could be saved via 401(k) or personal loan or this strategy or that strategy.  I think at your age, you'll benefit greatly from simply being debt free. There are other very good answers on this site and other places regarding the pitfalls of a 401(k) loan.  The most serious of which is that you have an extremely limited time to pay the entire loan upon leaving the company.  Failure to repay in that situation incurs tax liability and penalties.   From my quick math, assuming your contribution is 8% of $70,000 /year, you're contributing something in the neighborhood of $460/month to your 401(k).  If you stopped contributing you'd probably take home a high $300 number net of taxes.  It'll take around 20 months to pay the loan off using this contribution money without considering your existing payments, in total you're probably looking at closer to 15 months.  You'll give up something in the neighborhood of $3,500 in match funds over the repayment time.   But again, you're 22, you'll resume your contributions at 24; still WAY ahead of most people from a retirement savings standpoint.  I don't think my first retirement dollar was contributed until I was about 29.  Sure, retirement savings is important, but if you've already started at age 22 you're probably going to end up way ahead of most either way.  When you're 60 you're probably not going to bemoan giving up a few grand of employer match in your 20s. That's what I would do. Edit: I actually like stannius's suggestion in the comments below.  IF there's enough vested in your plan that is also available for withdrawal that you could just scoop $6,500 out of your 401(k) net of the 10% penalty and federal and state taxes (which would be on the full amount) to pay the debt, I'd consider that instead of stopping the prospective contributions.  That way you could continue your contributions and receive the match contributions on a prospective basis.  I doubt this is a legitimate option because it's very common for employers to restrict or forbid withdrawal of employee and/or employer contributions made during your employment, but it would be worth looking in to.

negative: Rolling a 401(k) to an IRA should be your default best option. Rolling a 401(k) to another 401(k) is rarely the best option, but that does happen.  I've done it once when I started a job at a company that had a great 401(k) with a good selection of low-cost mutual funds. I rolled the 401(k) from one previous job in to this 401(k) to take advantage of it.  In all other cases, I rolled 401(k)s from previous jobs to my Rollover IRA, which gave me the most freedom of investment options. Finally, with 401(k)-to-Roth IRA rollovers, it's important to decouple two concepts so you can analyze it as a sum of two transactions:

negative: "First, I'd recommend that you separate ""short-term"" assets from ""long-term"" assets in your head.  Short-term assets are earmarked for spending on something specific in the near future or are part of your emergency fund.  These should be kept in cash or short bond funds.   Long-term assets are assets that you can take some risks with and aren't going to spend in the next few years.  Under normal circumstances, I'd recommend 80% stocks/20% bonds or even 70/30 for someone your age, assuming you're saving mainly for retirement and thus have a correspondingly long time horizon.  These portfolios historically are much less risky than 100% stock and only return slightly less.   Right now, though, I think that anyone who doesn't absolutely need safety keep 100% of their long-term assets in stocks.  I'm 26 and this is my asset allocation.  Bond yields are absolutely pathetic by historical standards.  Even ten year treasury yields are comparable to S&P 500 dividend yields and likely won't outperform inflation if held to maturity.  The stock market is modestly undervalued when measured by difference between current P/E ratio and the historical average and more severely undervalued when you account for the effects of reduced inflation, transaction costs and capital gains taxes on fair valuation.  Therefore, the potential reward for taking risk is much higher now than it usually is."

negative: the whole room basically jumped on me I really have an issue with this. Someone providing advice should offer data, and guidance. Not bully you or attack you.  You offer 3 choices. And I see intelligent answers advising you against #1. But I don't believe these are the only choices. My 401(k) has an S&P fund, a short term bond fund, and about 8 other choices including foreign, small cap, etc. I may be mistaken, but I thought regulations forced more choices. From the 2 choices, S&P and short term bond, I can create a stock bond mix to my liking. With respect to the 2 answers here, I agree, 100% might not be wise, but 50% stock may be too little. Moving to such a conservative mix too young, and you'll see lower returns.  I like your plan to shift more conservative as you approach retirement.   Edit - in response to the disclosure of the fees -  1.18% for Aggressive, .96% for Moderate I wrote an article 5 years back, Are you 401(k)o'ed in which I discuss the level of fees that result in my suggestion to not deposit above the match. Clearly, any fee above .90% would quickly erode the average tax benefit one might expect. I also recommend you watch a PBS Frontline episode titled The Retirement Gamble It makes the point as well as I can, if not better.  The benefit of a 401(k) aside from the match (which you should never pass up) is the ability to take advantage of the difference in your marginal tax rate at retirement vs when earned. For the typical taxpayer, this means working and taking those deposits at the 25% bracket, and in retirement, withdrawing at 15%. When you invest in a fund with a fee above 1%, you can see it will wipe out the difference over time. An investor can pay .05% for the VOO ETF, paying as much over an investing lifetime, say 50 years, as you will pay in just over 2 years.  They jumped on you? People pushing funds with these fees should be in jail, not offering financial advice.

negative: "If you're willing to do a little more work and bookkeeping than just putting money into the 401(k) I would recommend the following. I note that you said you chose some funds based on performance since the expense ratios are all high. I would recommend against chasing performance because active funds will almost always falter; honor the old saw:  ""past performance is no guarantee of future returns"". Assuming the cash in your Ally account is an emergency fund, I would use it to pay off your credit card debt to avoid the interest payments. Use free cash flow in the coming months to bring the emergency fund balance back up to an acceptable level. If the Ally account is not an emergency fund, I would make it one! With no debt and an emergency fund for 3-12 months of living expenses (pick your risk tolerance), then you can concentrate on investing. Your 401(k) options are unfortunately pretty poor. With those choices I would invest this way: Once you fill up your choice of IRA, then you have the tougher decision of where to put any extra money you have to invest (if any). A brokerage account gives you the freedom of investment choices and the ability to easily pull out money in the case of a dire emergency. The 401(k) will give you tax benefits, but high fund expenses. The tax benefits are considerable, so if I were at a job where I plan on moving on in a few years, I'd fund the 401(k) up to the max with the knowledge that I'd roll the 401(k) into a rollover IRA in the (relatively) short term. If I saw myself staying at the employer for a long time (5+ years), I'd probably take the taxable account route since those high fund fees will add up over time. One you start building up a solid base, then I might look into having a small allocation in one of my accounts for ""play money"" to pick individual stocks, or start making sector bets."

negative: The vanilla advice is investing your age in bonds and the rest in stocks (index funds, of course). So if you're 25, have 75% in stock index fund and 25% in bond index. Of course, your 401k is tax sheltered, so you want keep bonds there, assuming you have taxable investments. When comparing specific funds, you need to pay attention to expense ratios. For example, Vanguard's SP 500 index has an expense ratio of .17%. Many mutual funds charge around 1.5%. That means every year, 1.5% of the fund total goes to the fund manager(s). And that is regardless of up or down market. Since you're young, I would start studying up on personal finance as much as possible. Everyone has their favorite books and websites. For sane, no-nonsense investment advise I would start at bogleheads.org. I also recommend two books -  This is assuming you want to set up a strategy and not fuss with it daily/weekly/monthly. The problem with so many financial strategies is they 1) don't work, i.e. try to time the market or 2) are so overly complex the gains are not worth the effort. I've gotten a LOT of help at the boglehead forums in terms of asset allocation and investment strategy. Good luck!

negative: T. Rowe is my new 401 k company and they have been pretty professional the problem was they required information from my old employer who refused to give it to them. But I am in touch my my old 401 k account and will be doing some more research into the companies and processes you guys have given me amd try to choose what is best for me

negative: You are kicking butt and taking names, especially compared to most people in your age bracket. I wish I'd had the opportunity (and the sense) to live rent-free and max out my 401(k) when I was 23. Keep doing what you're doing and you'll be able to pull off a Mr. Money Mustache style retirement.  I think you might have misunderstood the question and answer nature of this site. Typically, questions aren't laden with answers, explanations, and suggestions; it should just be the question! You can always ask the question and answer it yourself down below, as some SEers do. To answer your questions towards the end of the post: Good luck, and again, keep doing what you're doing!

negative: Pay the 401(k) loan back as soon as possible.  To be clear, the money from your 401(k) loan is no longer invested and working for you. It doesn't make sense to pull money out of your 401(k) investments and then invest it in something else. If you want to invest for retirement, pay back the loan and invest that money inside your 401(k).  If you leave your job, the 401(k) loan needs to be paid back in full, or else taxes and penalties will apply. If you have put the funds in an IRA, they won't be available to you should you need to pay back the loan early.  Instead of making a monthly payment to the 401(k) loan, pay off the loan and then make a monthly investment to an IRA.

negative: "The same author wrote in that article “they have a trillion? Really?” But that’s what happens when ten   million dollars compounds at 2% over 200 years. Really? 2% compounded over 200 years produces a return of 52.5X, multiply that by 10M and you have $525 million. The author is off by a factor of nearly 2000 fold. Let's skip this minor math error.  The article is not about 401(k)s. His next line is ""The whole myth of savings is gone."" And the article itself, ""10 Reasons You Have To Quit Your Job In 2014"" is really a manifesto about why working for the man is not the way to succeed long term. And in that regard, he certainly makes good points. I've read this author over the years, and respect his views. 9 of the 10 points he lists are clear and valuable. This one point is a bit ambiguous and falls into the overgeneraluzation ""Our 401(k) have failed us."" But keep in mind, even the self employed need to save, and in fact, have similar options to those working for others. I have a Solo 401(k) for my self employment income.  To be clear, there are good 401(k) accounts and bad. The 401(k) with fees above 1%/yr, and no matching, awful. The 401(k) I have from my job before I retired has an S&P index with .02%/yr cost. (That's $200/$million invested per year.) The 401(k) is not dead."

negative: Your question implies that you are 70-1/2, and not employed by this company. (Note - if you remain employed, the mandatory distribution is delayed) The best thing to do is to open an IRA and transfer the 401(k) to it. You then have all the investing choices you can ask for including low risk gov securities, right up to high risk leveraged ETFs (don't buy those, just saying).  Make sure the transfer is direct, so no tax withholding. Make sure you request it goes to a Traditional IRA, not Roth. If you wish to transfer to Roth over time, that's another discussion.

negative: "Your question has a built in faulty premise.  ""ASSUMING a person knows how to use and invest their money wisely"" I'd ask if you were wise enough to beat the investments offered in your 401(k) after expenses, and with respect to the potential tax savings.  Then, since I'm a proponent of ""deposit to the match, even if you have to eat rice and beans to find the cash to do"" I'll extend the question to ask if you can beat the choices taking the match into account.  401(k) - Your $1000 starts as $1500 and has a tax due on withdrawal years later. AeroAccount - You start with $750 (after the tax) and might spend a decade before hitting $1500.  Start your own company? That might be another story. But to invest in the market and still beat the matched 401(k) takes a bit more wisdom than I'd claim to have."

negative: "To answer, I'm going to make a few assumptions. First, the ideal scenario for a pre-tax 401(k) is the deposit goes in at a 25% tax rate (i.e. the employee is in that bracket) but withdrawn at 15%. This may be true for many, but not all. It's to illustrate a point.  The SPY (S&P 500 index ETF) has a cost of .09% per year. If your 401(k) fees are anywhere near 1% per year total, over 10 years you've paid nearly 10% in fees, vs less than 1% for the ETF. Above, I suggest the ideal is that the 401(k) saves you 10% on your taxes, but if you pay 10% over the decade, the benefit is completely negated.  I can add to the above that funds outside the retirement accounts give off dividends which are tax favored, and if you were to sell ETFs held over a year, they receive favorable cap-gains rates.  The ""deposit to get the matching funds"" should always be good advice, it would take many years of high fees to destroy that. But even that seemingly reasonable 1% fee can make any other deposits a bad approach.  Keep in mind, when retired you will have a zero bracket (in 2011, the combined standard deduction and exemption) adding to $9500, as well as a 10% bracket (the next $8500), so having some pretax money to take advantage of those brackets will help. Last, the average person changes jobs now and then. The ability to transfer the funds from the (bad) 401(k) to an IRA where you can control the investments is an option I'd not ignore in the analysis.  I arbitrarily picked 1% to illustrate my thoughts. The same math will show a long time employee will get hurt by even .5%/yr if enough time passes. What are the fees in your 401(k)?   Edit - Study of 401(k) fees - put out by the Dept of Labor. Unfortunately, it's over 10 years old, but it speaks to my point. Back then, even a 2000 participant plan with $60M in assets had 110 basis points (this is 1.1%) in fees on average. Whatever the distribution is, those above this average shouldn't even participate in their plans (except for matching) and those on the other side should look at their expenses. As Radix07 points out below, yes, for those just shy of retirement, the fee has less impact, and of course, they have a better idea if they will retire in a lower bracket. Those who have some catching up to do, may benefit despite the fees."

negative: I'd say that because you are young, even the 'riskier' asset classes are not as risky as you think, for example, assuming conservatively that you only have 30 years to retirement, investing in stocks index might be a good option. In short term share prices are volatile and prone to bull and bear cycles but given enough time they have pretty much always outperformed any other asset classes. The key is not to be desperate to withdraw when an index is at the bottom. Some cycles can be 20 years, so when you need get nearer retirement you will need to diversify so that you can survive without selling low. Just make sure to pick an index tracker with low fees and you should be good to go. A word of warning is of course past performance is no indication of a future one, but if a diversified index tracker goes belly up for 20+ years, we are talking global calamity, in which case buy a shotgun and some canned food ;)

negative: If you plan to continue contributing to a 401(k) and are no longer self-employed, then you need to start a new 401(k) at your new business.  You can't contribute to the old one any more.  About the money in the old one, you have a few options.   If both 401(k) plans have good investment options and low fees, then there's little reason to think one of these strategies is better than the other.  If, like me, at least one of your 401(k) providers has very few available funds and those funds have high expense ratios, then it's a good idea to move your money where the investments are best.  As a rule, IRA's are better than 401(k) plans because most IRA's will allow you to invest in practically anything you want while most 401(k) plans only allow you to invest in the funds that have taken your company's HR people to the best lobster dinners or went to the same school as them.  Most organizations do an absolutely horrible job at selecting a reasonable set of funds because the decision-makers generally have no finance background and no incentive to do a good job.  For that reason I like IRA's.   Of course, some solo 401(k) plans are also very good so just leaving it where it is may be best for you.  This has the added advantage of being ready to go if you end up self-employed again at some point.

negative: Yes because I don't really need my savings at all, also screw me for trying to think ahead and investing in my 401(k).  Government programs made social security into a worthless ponzi scheme, is it time to destroy 401(k) system now?

negative: "Welcome to Money.SE. Your question is similar to a number of others. The ""How do I pay my debt down?"" and ""How do I invest extra money?"" is a bit of a continuum since there's no consensus than one should pay off the last cent of debt before investing.  Oversimplify it for me: the correct order of investing offers a good look at this. You see, Pete's answer on your question is perfectly fine, but, since you make no mention of, say, a matched 401(k), I'd suggest that any answer to a question like yours should first take a step back and evaluate the bigger picture. A dollar for dollar matched 401(k) beats paying off even an 18% credit card.  Absent any tangents, any thought of investing, saving for anything else, etc, my answer is simple, line up the debt, highest interest rate to lowest. Keep in mind the post-tax rate, i.e. a 6% student loan you can deduct, is an effective 4.5% if you are in the 25% bracket."

negative: There's no one answer. You need to weigh the fees and quality of investment options on the one side against the slowly vesting employer contribution and tax benefits of 401k contributions in excess of IRA limits.

negative: he general advice I get is that the younger you are the more higher risk investments you should include in your portfolio. I will be frank. This is a rule of thumb given out by many lay people and low-level financial advisors, but not by true experts in finance.  It is little more than an old wive's tale and does not come from solid theory nor empirical work.  Finance theory says the following: the riskiness of your portfolio should (inversely) correspond to your risk aversion.  Period. It says nothing about your age.  Some people become more risk-averse as they get older, but not everyone.  In fact, for many people it probably makes sense to increase the riskiness of their portfolio as they age because the uncertainty about both wealth (social security, the value of your house, the value of your human capital) and costs (how many kids you will have, the rate of inflation, where you will live) go down as you age so your overall level of risk falls over time without a corresponding mechanical increase in risk aversion. In fact, if you start from the assumption that people's aversion is to not having enough money at retirement, you get the result that people should invest in relatively safe securities until the probability of not having enough to cover their minimum needs gets small, then they invest in highly risky securities with any money above this threshold. This latter result sounds reasonable in your case.  At this point it appears unlikely that you will be unable to meet your minimum needs--I'm assuming here that you are able to appreciate the warnings about underfunded pensions in other answers and still feel comfortable.  With any money above and beyond what you consider to be prudent preparation for retirement, you should hold a risky (but still fully diversified) portfolio.  Don't reduce the risk of that portion of your portfolio as you age unless you find your personal risk aversion increasing.

negative: The other alternative: just invest it in tax-efficient investments. You will have limited tax-deferral options outside of your 401k, but don't let that limit you. You can invest in a variety of ETFs, stocks and mutual funds for growth, and tax-free investments like municipal bonds as you get older and need to draw income.

negative: Bad idea. If you lose your job and need to pay medical expenses, you can withdraw penalty-free. If you lose your job and just withdraw, you will have lower income and lower tax, though you will pay a penalty. If you don't lose your job today, consider your 401(k) an additional protection, just in case you do lose it tomorrow. Just pick the least risky investment option and relax.  Besides, it will diversify your investment and protect you from your own investment decisions. If you are so ready to take a 10% loss, you are likely not so skilled in this area, so it's good to have a backup plan. But of course, do contribute 3% so you get a match.

negative: A savings account is your best bet.   You do not have the time frame to mitigate/absorb risks.  The general guideline for investment is 5 years or more.  As you state you are no where near close to that time frame.

negative: How can I use $4000 to make $250 per month for the rest of my life? This means the investment should generate close to 6.25% return per month or around 75% per year. There is no investment that gives this kind of return. The long term return of stock market is around 15-22% depending on the year range and country.

negative: A few years ago I had been contributing with my employer to a 401(k).  When I then moved abroad, I found it difficult to stay in touch with my 401(k).  The toll-free numbers I had used inside the US, to contact the plan administrators, did not work from overseas.

negative: I decided to open it with funds b/c the checking account I have is used as a savings, and has been stagnant. Doesn't make any noticeable interest, and I'm not tapping into it for now. Figured why not get some of it moving. Especially since I'm not working right now and am not contributing to retirement otherwise.  The old 401(k)s have been sitting still for many years, and aren't that full. Really miss my old deferred compensation fund, that does well even when I'm not contributing!

negative: If you spent your whole life earning the same portfolio that amounts $20,000, the variance and volatility of watching your life savings drop to $10,000 overnight has a greater consequence than for someone who is young. This is why riskier portfolios aren't advised for older people closer to or within retirement age, the obvious complementary group being younger people who could lose more with lesser permanent consequence. Your high risk investment choices have nothing to do with your ability to manage other people's money, unless you fail to make a noteworthy investment return, then your high risk approach will be the death knell to your fund managing aspirations.