NYPD Recruits/Rookies:

[puma2]

Originally Posted by RudyA

is there a difference between the 457 and 401 deferred comp?

also im graduating academy july 2nd - 50% of the 700ish paycheck we get every 2 weeks would be 350 every 2 weeks - i cant pay my bills on that

The 50% is 50% of your base contribution, not of your paycheck. Reread Joey's original post for the exact numbers. At most you will be putting in ~13% of your paycheck (plus the city's contributions).

[RudyA]

Originally Posted by puma2

The 50% is 50% of your base contribution, not of your paycheck. Reread Joey's original post for the exact numbers. At most you will be putting in ~13% of your paycheck (plus the city's contributions).

Oh just saw that - thanks for clearing it up for me

can someone clear up the tax differences with the waiver and the 50/50 - would be appreciated

thanks
rudy

[tommyjk]

Originally Posted by RudyA

can someone clear up the tax differences with the waiver and the 50/50 - would be appreciated

With the waiver your funds are taken from your check pre tax, and your earnings are taxed upon retirement.
With the 50% your funds are put in post tax and are withdrawn tax free, but the interest earned on your 50% funds are still taxed.

Originally Posted by RudyA

is there a difference between the 457 and 401 deferred comp?

You can take money from the 457 at any time after retirement with out a penalty. With the 401k you face a 10% fee if you take money out before age 59 1/2.

[ROS]

Stickied (is that even a word? :confused

[RudyA]

with the defered comp

does anyone recomend a portfolio or to make up my own portfolio(if so which ones)

im 22 yrs old ( will be 23 july 12)

also do you recomend a certain percent?

right now i currently still live at home - i have the ithp waiver and the 50% both sent in

thanks
rudy

[phantasm]

Originally Posted by tommyjk

You can take money from the 457 at any time after retirement with out a penalty. With the 401k you face a 10% fee if you take money out before age 59 1/2.

yes and no. Its taxed if you're less than 59 1/2, unless its taken out in a steady flow, as a retirement. Thats per my tax lady. Say you start taking out 10k/year once you retire, as long as you continue to take out 10k, you won't be hit with the taxes on that money, but if you take out 5k the first year, then 10k, then 8k, you'll be taxed on those monies as if it was income.

[phantasm]

Originally Posted by RudyA

with the defered comp

does anyone recomend a portfolio or to make up my own portfolio(if so which ones)

im 22 yrs old ( will be 23 july 12)

also do you recomend a certain percent?

right now i currently still live at home - i have the ithp waiver and the 50% both sent in

thanks
rudy

Diversify. I think I might have large cap, mid cap, international. I don't remember. Spread your money around though, or go into one of the fixed ones. You have 20 years to go ? its 2008? Go with the 2025 or 2030 fund maybe. Its geared towards people retiring in the year of the name of the fund. More aggressive now, less aggressive as you get near retirement. Speak to a financial planner.

[lax854]

Is anyone bumping up their deferred comp to 50 percent for the retro check????? parts of me want to because of the taxes, but i wouldnt mind acouple of thousand in my pocket :D

[phantasm]

Originally Posted by lax854

Is anyone bumping up their deferred comp to 50 percent for the retro check????? parts of me want to because of the taxes, but i wouldnt mind acouple of thousand in my pocket :D

Its an easy way to quickly bump up your retirement savings, OTOH its a good way to get that extra emergency cash readily accessible for unexpected emergencies or to pay down debt.

http://www.irs.gov/formspubs/article...164272,00.html

Most of us will fall into the 25% federal bracket. 31,850 - 77,100 taxable income for single. Different if married or head of household. I was hired 7/04, and will most likely will not bump up to the 28% federal bracket for taxable income. Standard deduction for 2007 tax year was a little over 5,000, so drop your taxable income by at least that (or raise the limit to 82,000). If with retro you will make over 82,000, and you don't itemize your taxes, than MAYBE you will bump into the 28% bracket. Otherwise you won't be penalized come tax time.

Of course there's other variables too. Pension funds come out pre tax, as does current 401/457, so that will also lower your taxable income.

The 28% bracket (currently) goes up to 160k, so you won't get bumped into the 33% bracket.

NYS taxable income over 20k = 6.85%. Extra income won't raise that.

NYC taxable income 45k-90k = 3.591%, over 90k = 3.648. Won't bump into the higher bracket now.

This round of retro, no extra tax liability that you wouldn't have had. I'm assuming that you would have broken 45k this year w/OT, etc before retro.

Next time around, is it worth having that extra money in your pocket and available to you for the cost of 3% extra in federal tax and 0.1% in city tax?

[lax854]

Originally Posted by phantasm

Its an easy way to quickly bump up your retirement savings, OTOH its a good way to get that extra emergency cash readily accessible for unexpected emergencies or to pay down debt.

http://www.irs.gov/formspubs/article...164272,00.html

Most of us will fall into the 25% federal bracket. 31,850 - 77,100 taxable income for single. Different if married or head of household. I was hired 7/04, and will most likely will not bump up to the 28% federal bracket for taxable income. Standard deduction for 2007 tax year was a little over 5,000, so drop your taxable income by at least that (or raise the limit to 82,000). If with retro you will make over 82,000, and you don't itemize your taxes, than MAYBE you will bump into the 28% bracket. Otherwise you won't be penalized come tax time.

Of course there's other variables too. Pension funds come out pre tax, as does current 401/457, so that will also lower your taxable income.

The 28% bracket (currently) goes up to 160k, so you won't get bumped into the 33% bracket.

NYS taxable income over 20k = 6.85%. Extra income won't raise that.

NYC taxable income 45k-90k = 3.591%, over 90k = 3.648. Won't bump into the higher bracket now.

This round of retro, no extra tax liability that you wouldn't have had. I'm assuming that you would have broken 45k this year w/OT, etc before retro.

Next time around, is it worth having that extra money in your pocket and available to you for the cost of 3% extra in federal tax and 0.1% in city tax?

ok i am soo sorry, but you have just confused the hell out of me?????? :confused: in stupid man terms...this means................what?

[phantasm]

Originally Posted by lax854

ok i am soo sorry, but you have just confused the hell out of me?????? :confused: in stupid man terms...this means................what?

If you want to put a large lump sum into the 457/401, by all means do so, but it most likely won't affect your tax rate by more than 1/10th of 1%. Yes you're going to pay more taxes, but you made more money too. You make 100, you pay $25 in taxes. Now its time for retro. You make 200, you pay $50, or send $100 to 457, and you pay $25 in taxes.

If you usually make 100, you see 75. You get that retro you can now put 100 towards your retirement and not touch it until you're retired/ 59 1/2, and see 75 now, or put nothing towards retirement, and see 150 now, and have 75 more than you would have had, and use that to splurge, or to pay down doubt, or to save for something such as a down payment on a house or other large purchase. Of course I know it is going to be larger than 100, and you make more than 100, but I'm just trying to simplify it. I'm not at a point in my life where I want to put a huge chunk of money into my 457, when I don't yet own real property. If you have a tax person/financial planner, you could ask them what they advise you to do.

[tommyjk]

Originally Posted by phantasm

yes and no. Its taxed if you're less than 59 1/2, unless its taken out in a steady flow, as a retirement. Thats per my tax lady. Say you start taking out 10k/year once you retire, as long as you continue to take out 10k, you won't be hit with the taxes on that money, but if you take out 5k the first year, then 10k, then 8k, you'll be taxed on those monies as if it was income.

As far as I know, the money from the 401k will always be taxed(unless Roth). However it can be taken out without the 10% penalty if you begin to take "substantially equal periodic payments". This must be done in the year you reach 50 or later since we are public safety employees, and these payments must last for 5 years or until you reach 59 1/2 which ever is longer.

[puma2]

There are also other specific conditions under which you can make an early withdrawal without penalty, such as certain education expenses and certain first time home buyers.