RAA (or any other Financial Consultants)
#11
As stated above, one of the best things you can do is max out your 401k. The amount generated by your longevity will be impressive. I know, bills to pay, but put in as much as you can afford up to the limits. The payout will be ginormus.
#12
Gets Weekends Off
Joined APC: Sep 2005
Posts: 1,104
32 years old? No need to get complicated or pay someone else to tell you to basically go full steam ahead. Max out the 401k, stay away from the Target Funds and go low fee index. 2/3 Total Us Equity Index and 1/3 International Equity Index. Rebalance every year. Google “Bogleheads” and start reading. When you hit 55 start thinking about going more conservative, when you hit 60 start getting VERY serious.
You’re welcome. I’ll take my consulting fee in the form of scotch whiskey.
You’re welcome. I’ll take my consulting fee in the form of scotch whiskey.
Just as compound interest does wonders over the long run, compound fees have the same effect negatively. 1% fee doesn't sound like much but compounded over time it is an enormous amount of drag on a portfolio. You want max lift with minimal drag on your money.
#13
Gets Weekends Off
Thread Starter
Joined APC: Jul 2013
Position: Guppy CA
Posts: 159
Thanks a lot for all the advice, I’ll have lots of reading to do on my next layover. Anyone have any recommendations on investments outside of the PRAP? I’m looking at 529s, IRAs and the like. Or is maxing out the 401(k) more advantageous? I currently do 5% and plan to increase as my longevity increases. I did speak with Schwab and they helped with balancing. We also have a plan to speak every July around my longevity date.
Sorry for all the questions, I’m a novice when it comes to all this. I didn’t pay close attention to it at my previous jobs and my own prior research left me probably more confused than before I started. But I am grateful for all the advice and will start studying up soon!
Sorry for all the questions, I’m a novice when it comes to all this. I didn’t pay close attention to it at my previous jobs and my own prior research left me probably more confused than before I started. But I am grateful for all the advice and will start studying up soon!
#14
Thanks a lot for all the advice, I’ll have lots of reading to do on my next layover. Anyone have any recommendations on investments outside of the PRAP? I’m looking at 529s, IRAs and the like. Or is maxing out the 401(k) more advantageous? I currently do 5% and plan to increase as my longevity increases. I did speak with Schwab and they helped with balancing. We also have a plan to speak every July around my longevity date.
Ditto for 529s. Depending on your state you may, or may not, also receive a tax benefit.
#15
32 years old? No need to get complicated or pay someone else to tell you to basically go full steam ahead. Max out the 401k, stay away from the Target Funds and go low fee index. 2/3 Total Us Equity Index and 1/3 International Equity Index. Rebalance every year. Google “Bogleheads” and start reading. When you hit 55 start thinking about going more conservative, when you hit 60 start getting VERY serious.
You’re welcome. I’ll take my consulting fee in the form of scotch whiskey.
You’re welcome. I’ll take my consulting fee in the form of scotch whiskey.
Pay yourself first. Don't pay anyone else unless absolutely necessary.
#16
Thanks a lot for all the advice, I’ll have lots of reading to do on my next layover. Anyone have any recommendations on investments outside of the PRAP? I’m looking at 529s, IRAs and the like. Or is maxing out the 401(k) more advantageous? I currently do 5% and plan to increase as my longevity increases. I did speak with Schwab and they helped with balancing. We also have a plan to speak every July around my longevity date.
Sorry for all the questions, I’m a novice when it comes to all this. I didn’t pay close attention to it at my previous jobs and my own prior research left me probably more confused than before I started. But I am grateful for all the advice and will start studying up soon!
Sorry for all the questions, I’m a novice when it comes to all this. I didn’t pay close attention to it at my previous jobs and my own prior research left me probably more confused than before I started. But I am grateful for all the advice and will start studying up soon!
#17
New Hire
Joined APC: Jan 2019
Posts: 2
Let me get this straight. I’m new to United, but have been doing Backdoor Roth IRAs for years, just not 401k’s. I’ve also never had company contributions to a 401k to deal with.
For example: Assume the company puts 16k in my PRAP this year. If I elect to make it “voluntarily post tax”, I can then roll it at the end of the year to my Roth 401k account within the PRAP, without tax implications other than the fact the company has not been withholding for that 16k?
Can I roll previous PRAP contributions that were “traditional” also into the Roth 401k pot? Assuming, I’m willing to pay taxes as regular income on that recharacterization?
Also, some posters said avoid the Schwab Target Date Funds, why?
I know you should never get tax or investing advice from a bunch of pilots on a public forum
Time to call Schwab...
Thanks.
Sent from my iPad using Tapatalk
For example: Assume the company puts 16k in my PRAP this year. If I elect to make it “voluntarily post tax”, I can then roll it at the end of the year to my Roth 401k account within the PRAP, without tax implications other than the fact the company has not been withholding for that 16k?
Can I roll previous PRAP contributions that were “traditional” also into the Roth 401k pot? Assuming, I’m willing to pay taxes as regular income on that recharacterization?
Also, some posters said avoid the Schwab Target Date Funds, why?
I know you should never get tax or investing advice from a bunch of pilots on a public forum
Time to call Schwab...
Thanks.
Sent from my iPad using Tapatalk
#18
Let me get this straight. I’m new to United, but have been doing Backdoor Roth IRAs for years, just not 401k’s. I’ve also never had company contributions to a 401k to deal with.
For example: Assume the company puts 16k in my PRAP this year. If I elect to make it “voluntarily post tax”, I can then roll it at the end of the year to my Roth 401k account within the PRAP, without tax implications other than the fact the company has not been withholding for that 16k?
Can I roll previous PRAP contributions that were “traditional” also into the Roth 401k pot? Assuming, I’m willing to pay taxes as regular income on that recharacterization?
Also, some posters said avoid the Schwab Target Date Funds, why?
I know you should never get tax or investing advice from a bunch of pilots on a public forum
Time to call Schwab...
Thanks.
Sent from my iPad using Tapatalk
For example: Assume the company puts 16k in my PRAP this year. If I elect to make it “voluntarily post tax”, I can then roll it at the end of the year to my Roth 401k account within the PRAP, without tax implications other than the fact the company has not been withholding for that 16k?
Can I roll previous PRAP contributions that were “traditional” also into the Roth 401k pot? Assuming, I’m willing to pay taxes as regular income on that recharacterization?
Also, some posters said avoid the Schwab Target Date Funds, why?
I know you should never get tax or investing advice from a bunch of pilots on a public forum
Time to call Schwab...
Thanks.
Sent from my iPad using Tapatalk
(800) 724-7526
“Post-Tax
At any time, you may elect to contribute from 1% to 100% of your eligible compensation (less your required taxes and deductions) on a post-tax basis. However, no post-tax contributions will be deducted from your paycheck until you have made the maximum possible pretax/Roth 401(k) deferral contribution for the year (for 2019: $19,000 if you are under age 50; $25,000 if you are 50 or older). Once you have reached these applicable limits, post- tax contributions will begin as of the next payroll cycle. As a result, pretax/Roth 401(k) contributions and post-tax contributions will not be deducted from the same paycheck.
The post-tax balances will be held in a separate account within your PRAP from contributions to your regular pretax 401(k) and Roth 401(k). Earnings on post-tax contributions are not taxable until withdrawn. Post-tax balances may be withdrawn at any time without a qualifying financial hardship, at which time the applicable earnings are subject to federal taxes.
Rollover
You are also permitted to roll over contributions from other qualified retirement plans (i.e., from a previous employer) into your PRAP, with certain limitations.
ROTH CONVERSIONS
Balances in any account sources in the PRAP can be converted to a Roth source. This can be the entire account source or just a portion of it. To convert balances from non-Roth to Roth, call Schwab at 866-855-7727. Any amounts converted to Roth that are not post-tax contributions will be subject to tax in the year converted. You will receive a 1099-R for the taxable amount. Therefore, pilots should carefully consider converting their balances, since the conversion of pretax balances in non-Roth accounts to Roth accounts may trigger a substantial taxable liability.“
https://www.alpa.org/ual/-/media/UAL/Files/eLibraries/Communications/committees/retirement-and-insurance/retirement-insurance-ual-benefits-book.pdf
Last edited by APC225; 12-06-2019 at 06:12 AM.
#19
Gets Weekends Off
Joined APC: Apr 2015
Posts: 491
As to the first question, yes. I do that and it’s a single page authorization form to do it. As to the second question, I’d say yes as well, a call to the Schwab rep would be in order. With $10B managed for UAL pilots, they are very responsive. The R&I Booklet is must reading for all this, pages 11-24 in particular.
(800) 724-7526
“Post-Tax
At any time, you may elect to contribute from 1% to 100% of your eligible compensation (less your required taxes and deductions) on a post-tax basis. However, no post-tax contributions will be deducted from your paycheck until you have made the maximum possible pretax/Roth 401(k) deferral contribution for the year (for 2019: $19,000 if you are under age 50; $25,000 if you are 50 or older). Once you have reached these applicable limits, post- tax contributions will begin as of the next payroll cycle. As a result, pretax/Roth 401(k) contributions and post-tax contributions will not be deducted from the same paycheck.
The post-tax balances will be held in a separate account within your PRAP from contributions to your regular pretax 401(k) and Roth 401(k). Earnings on post-tax contributions are not taxable until withdrawn. Post-tax balances may be withdrawn at any time without a qualifying financial hardship, at which time the applicable earnings are subject to federal taxes.
Rollover
You are also permitted to roll over contributions from other qualified retirement plans (i.e., from a previous employer) into your PRAP, with certain limitations.
ROTH CONVERSIONS
Balances in any account sources in the PRAP can be converted to a Roth source. This can be the entire account source or just a portion of it. To convert balances from non-Roth to Roth, call Schwab at 866-855-7727. Any amounts converted to Roth that are not post-tax contributions will be subject to tax in the year converted. You will receive a 1099-R for the taxable amount. Therefore, pilots should carefully consider converting their balances, since the conversion of pretax balances in non-Roth accounts to Roth accounts may trigger a substantial taxable liability.“
https://www.alpa.org/ual/-/media/UAL...efits-book.pdf
(800) 724-7526
“Post-Tax
At any time, you may elect to contribute from 1% to 100% of your eligible compensation (less your required taxes and deductions) on a post-tax basis. However, no post-tax contributions will be deducted from your paycheck until you have made the maximum possible pretax/Roth 401(k) deferral contribution for the year (for 2019: $19,000 if you are under age 50; $25,000 if you are 50 or older). Once you have reached these applicable limits, post- tax contributions will begin as of the next payroll cycle. As a result, pretax/Roth 401(k) contributions and post-tax contributions will not be deducted from the same paycheck.
The post-tax balances will be held in a separate account within your PRAP from contributions to your regular pretax 401(k) and Roth 401(k). Earnings on post-tax contributions are not taxable until withdrawn. Post-tax balances may be withdrawn at any time without a qualifying financial hardship, at which time the applicable earnings are subject to federal taxes.
Rollover
You are also permitted to roll over contributions from other qualified retirement plans (i.e., from a previous employer) into your PRAP, with certain limitations.
ROTH CONVERSIONS
Balances in any account sources in the PRAP can be converted to a Roth source. This can be the entire account source or just a portion of it. To convert balances from non-Roth to Roth, call Schwab at 866-855-7727. Any amounts converted to Roth that are not post-tax contributions will be subject to tax in the year converted. You will receive a 1099-R for the taxable amount. Therefore, pilots should carefully consider converting their balances, since the conversion of pretax balances in non-Roth accounts to Roth accounts may trigger a substantial taxable liability.“
https://www.alpa.org/ual/-/media/UAL...efits-book.pdf
#20
https://www.investopedia.com/articles/personal-finance/063015/roth-401k-vs-roth-ira-one-better.asp
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