Minimum Balance Plan
11-16-2022 | 10:49 AM
#341
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Joined: Mar 2015
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From: ir.delta.com
hillarious.
Do me a favor. Run the numbers on 100k invested pretax with whatever rate of return you want for 10 years. Then withdraw at a 30% tax rate. Then do the same thing with paying 30% tax up front, same growth rate for 10 years. Let me know which is better. I’ll give you a hint it’s exactly the same. You don’t gain anything by investing your taxes if the rate coming out is the same.
Of course there are other factors like capital gains and that’s where assumptions on rates of return and future tax brackets come in. But deferring just to defer is a fools errand.
Do me a favor. Run the numbers on 100k invested pretax with whatever rate of return you want for 10 years. Then withdraw at a 30% tax rate. Then do the same thing with paying 30% tax up front, same growth rate for 10 years. Let me know which is better. I’ll give you a hint it’s exactly the same. You don’t gain anything by investing your taxes if the rate coming out is the same.
Of course there are other factors like capital gains and that’s where assumptions on rates of return and future tax brackets come in. But deferring just to defer is a fools errand.
11-16-2022 | 11:58 AM
#342
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Joined: Oct 2014
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We have always targeted 60% FAE so my income in retirement would be less, 40% less. And I choose when and how much to withdraw, thereby controlling my tax burden. Do you understand why we have an income tax provision and not an income tax expense on our 10-K. It's because paying taxes when they are not due is silly. See also NOL carry forward. Clue: paying taxes is to be avoided until it is due.
11-16-2022 | 12:05 PM
#343
Gets Weekends Off
Joined: Mar 2015
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Likes: 670
From: ir.delta.com
At the end of the day, the goal is to have the most money possible saved. You do this by maximizing growth rate and minimizing tax exposure. Sometimes that means deferring taxes, sometimes that means paying them. You are suggesting deferring is always better, and that’s as wrong as those on here who say that Roth is always better. Everyone’s individual situation, risk tolerance, and financial goals are different. Right now we have a setup that allows us to taylor our savings plan how we want. More options are better, eliminating options would be a step backwards. You are alone on an island here saying that the mbcbp should still be implemented if mandatory, and your refusal to see the validity of other strategies, or even acknowledge that what you want might not be best for everyone is absurd.
Not sheltering an increasing dollar amount above the 401k limit, due to wage growth and increased DC amounts, is a step backwards.
11-16-2022 | 12:11 PM
#344
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Joined: Sep 2016
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sheltering money at 5% is a worse deal than I sheltered money at market returns for most of us. No thank you, you can keep that “step forwards” for yourself. Don’t force me into it
11-16-2022 | 12:20 PM
#345
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Joined: Mar 2015
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From: ir.delta.com
Wouldn't a guaranteed 5% return on a small portion of your retirement savings free you up to be more aggressive in the rest of your portfolio? And ensure tax savings.
11-16-2022 | 12:21 PM
#346
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Can you at least admit that there is a point where post tax money can outperform tax deferred money, depending on rates of return and marginal tax rates?
11-16-2022 | 12:23 PM
#347
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Joined: Mar 2015
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From: ir.delta.com
Yes, but you won't get there without significantly more risk. And even if you do it won't be consistent like a guaranteed return.
11-16-2022 | 12:24 PM
#348
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Joined: Apr 2018
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How many years do you have until retirement? I get it if you have 5 or less you might want to start being more conservative and defer some taxes as well if you think you're going to be in a lower tax bracket in 5 years. You should be able to have the OPTION to do that, but you can't force everyone else to do it too.
11-16-2022 | 12:27 PM
#349
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Joined: Jul 2006
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Anybody else goal is to have more liquid money/assets than you have in retirement accounts? Overall I think too many people focus on retirement in 50s and 60s and not enough on Financial Freedom in the near future. Keep working hard, fill up that 401k but you can't touch it in large amounts until 59 1/2 without massive penalties. It's almost as if it's a vehicle built to shackle folks into working til their old.
This!
filler
11-16-2022 | 12:34 PM
#350
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Joined: Apr 2020
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“Whoever retires with the least number of hours wins” —An old wise airline pilot
I’ll take it one step further, if the goal of this job is to maximize pay for time worked, do what ever it takes to just barely hang on to the job in order to maximize vacation and sick leave. 19+ years is roughly 400 hours. Drop everything else, stay out of the chief pilot’s office, do something else with your time. This is how you squeeze every drop out of the turnip. If you are worried about excess cash (415c) you’re spending too much of your time working for someone else and not maximizing your worth. Seriously, 400 hours of pay without turning a wheel is the goal.
I’ll take it one step further, if the goal of this job is to maximize pay for time worked, do what ever it takes to just barely hang on to the job in order to maximize vacation and sick leave. 19+ years is roughly 400 hours. Drop everything else, stay out of the chief pilot’s office, do something else with your time. This is how you squeeze every drop out of the turnip. If you are worried about excess cash (415c) you’re spending too much of your time working for someone else and not maximizing your worth. Seriously, 400 hours of pay without turning a wheel is the goal.
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