Comments on: Reader Question: What to Do When Your Employer Doesn’t Offer a 401(k) http://www.mint.com/blog/how-to/reader-question-what-to-do-when-your-employer-doesnt-offer-a-401k-042012/ The blog of the free, simple personal finance solution. Track all your spending automatically, find the best deals, save more money. And save the world. Wed, 06 Feb 2013 11:28:17 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Joseph Perrotta http://www.mint.com/blog/how-to/reader-question-what-to-do-when-your-employer-doesnt-offer-a-401k-042012/comment-page-1/#comment-135342 Joseph Perrotta Tue, 17 Apr 2012 15:05:08 +0000 http://www.mint.com/blog/?p=33181#comment-135342 Great post! While I agree with most of what you have said, I don't think it's fair to make a blanket statement like "stocks should be in your taxable account, bonds should be in your IRA." While I'm sure this was getting into too much detail for the article, purchasing municipal bonds in a taxable account may be a good option, especially with this individuals higher income. The tax-free interest received would obviously keep taxes low, and help diversify holdings. And while stocks/stock funds certainly have tax advantages in terms of realized vs. unrealized gains, they also tend to appreciate at a much higher rate. This may lead to a potential tax burden much greater than that of bonds when the account holder chooses to sell the stock/stock fund at some point in the future (especially not knowing where taxes will be in the future, or whether long-term capital gains rate will even still apply). Again, great points on some of the pros and cons of IRA's vs. taxable, I just think there are a few more considerations to think about. Thanks again! Great post! While I agree with most of what you have said, I don’t think it’s fair to make a blanket statement like “stocks should be in your taxable account, bonds should be in your IRA.”

While I’m sure this was getting into too much detail for the article, purchasing municipal bonds in a taxable account may be a good option, especially with this individuals higher income. The tax-free interest received would obviously keep taxes low, and help diversify holdings.

And while stocks/stock funds certainly have tax advantages in terms of realized vs. unrealized gains, they also tend to appreciate at a much higher rate. This may lead to a potential tax burden much greater than that of bonds when the account holder chooses to sell the stock/stock fund at some point in the future (especially not knowing where taxes will be in the future, or whether long-term capital gains rate will even still apply).

Again, great points on some of the pros and cons of IRA’s vs. taxable, I just think there are a few more considerations to think about.

Thanks again!

]]> By: Matthew Amster-Burton http://www.mint.com/blog/how-to/reader-question-what-to-do-when-your-employer-doesnt-offer-a-401k-042012/comment-page-1/#comment-135230 Matthew Amster-Burton Fri, 13 Apr 2012 22:14:29 +0000 http://www.mint.com/blog/?p=33181#comment-135230 Yep, that's why I called foreign stocks "especially tax-efficient"--didn't want to get too far into the details, but that's exactly why. Self-employed people get the best and worst of the tax code: the most opportunities for deductions, great retirement saving options, high self-employment tax, complicated paperwork, never even get to think about the 1040EZ. Man, I miss the 1040EZ. Best, Matthew Yep, that’s why I called foreign stocks “especially tax-efficient”–didn’t want to get too far into the details, but that’s exactly why.

Self-employed people get the best and worst of the tax code: the most opportunities for deductions, great retirement saving options, high self-employment tax, complicated paperwork, never even get to think about the 1040EZ. Man, I miss the 1040EZ.

Best,
Matthew

]]> By: Mike http://www.mint.com/blog/how-to/reader-question-what-to-do-when-your-employer-doesnt-offer-a-401k-042012/comment-page-1/#comment-135227 Mike Fri, 13 Apr 2012 21:27:21 +0000 http://www.mint.com/blog/?p=33181#comment-135227 Hi, Very nice article. As a self-employed person for many years, I did not realize that W-2 employees are not eligible for an Individual 401K. I would like to point out that an added benefit to holding for example Vanguard's Total International Stock Index Fund in a taxable account is its eligibility for the Foreign Tax Credit which we took advantage of this year. ;-) Happy trails, cowboy Mike Hi,
Very nice article. As a self-employed person for many years, I did not realize that W-2 employees are not eligible for an Individual 401K. I would like to point out that an added benefit to holding for example Vanguard’s Total International Stock Index Fund in a taxable account is its eligibility for the Foreign Tax Credit which we took advantage of this year. ;-)

Happy trails, cowboy Mike

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