[financeboyz] 401 K special
- From: "Radhesh Mohandas" <financerod@xxxxxxxxx>
- To: financeboyz@xxxxxxxxxxxxx
- Date: Wed, 24 Apr 2002 21:29:02 -0700
Boyz,
If your employer does not match your contributions or if you plan to return to
India in the near future, then I would suggest you rethink investing. There is
a 10% penalty for withdrawal before 59 1/2 and if you are putting money into
the plan as an investment rather than your old age saving you are going to pay
this fine. I plan to return to India and I may need a capital, and money is of
no use to me when I am 60.
Hence I did some simple calculation and created my first spreadsheet to
calculate the different scenarios.
The good news is that one ends up saving money even after paying the penalty
but I would reconsider the decision I were to stay less for a period less than
3 yrs.
The spreadsheet was written in gnumeric and I have also exported an xls sheet
for the unfortunate ones who still are stuck with the dark side of the force.
Our 401K rules say that one can invest a month's full salary and then 1/20th
of every month and strategically it makes sense to invest as much as possible
and as early as possible in the year. However our policy is with Goldman Sacchs
and their funds are quite crappy and all the revenue generated goes more or
less to feed the greedy Harward MBA's most of whose salaries are greater than
the GDP's of many third world countries :) You can enter different values for
your salaries and rate of return that you expect on a yearly basis and playing
around, I found that the saving will not be significant for me. If I keep any
investment in US after I have returned, I will have to file tax returns with
IRS which will be a painful hazzle
I would recommend you to play around the sheet and extend it to more than 3 yrs
if your plans are different. There are 2 sets of tables which shows your growth
with and without tax
and the far right end shows the withdrawal scenarios
Let me know if you have any questions
Play Boyz,
Radhesh
See Dave Matthews Band live or win a signed guitar
http://r.lycos.com/r/bmgfly_mail_dmb/http://win.ipromotions.com/lycos_020201/splash.asp
-- Binary/unsupported file stripped by Ecartis --
-- Type: application/msexcel
-- File: 401k.xls
-- Binary/unsupported file stripped by Ecartis --
-- Type: application/x-gzip
-- File: 401.gnumeric
Other related posts:
- » [financeboyz] 401 K special
