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Why is the max yearly contribution so small over there Roth

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Why is the max yearly contribution so small over there


Roth IRA (USA) - $5,500 allowance

TFSA (Canada) - $4,110 allowance

ISA (UK) - $23,000 allowance
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because you usually have an employer 401k first
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>>987328
Because the true redpill is to dump your money into cash value, indexed life insurance
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>>987328
The tax-advantaged limitation is actually $53,000 in the U.S. Although certain accounts have lower limits, you can combine contributions to multiple types of accounts up to the aggregate limit. This includes everything from 401ks, 403bs, IRAs, Roths, Defined Contribution Plans, Cash Balance Plans, Deferred Comp Plans, etc. In addition, you can contribute pre-tax to certain state and federal education accounts, and to HSAs and MSAs.

Also, it should be noted that these limitation are per job. So if you happen to have two independent sources of income, you can double the limits.

So, the real question, UKfag, is ...

Why is the max yearly contribution so small over there?
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>>987328
You can have a roth and an IRA my friend. The Roth isn't even pretax. It is just one way to save for retirement without having capital gains later.
The IRA and 401k are the powerhouses and those have max contributions well into the 30,000 range. (you can even trade stocks and options in an IRA) Then of course there is the SEP-IRA for when you open up a freelance small business.

That is 4 unique retirement funds you can grow each year. 3 of them are tax deductible.

And if you get really bored you can even open up a HSA for when you need serious medical care.

Then you can also pretax your child's college with a 529.

Seriously, there are so many ways to avoid tax in the united states that I find it pretty laughable that UK is only 23k.

I don't use half of these, but I will when I am in my 30s.
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>>987328
Would it be better to try to max out your tfsa before investing into the stock market?

I'm canadian and am wondering what tfsa accounts you guys would suggest for a student. I currently have a BMO TFSA account with $150 going in bi-weekly (which I'm planning to move to $250 next paycheck).
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>>987741
>Would it be better to try to max out your tfsa before investing into the stock market?

No you can use it to buy ETFs and meme stocks.

Just use what you have. Some brokers want you to transfer your account over to them and will even pay for up to $150 of the fees necessary for it. QTrade does that for example.
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>>987510
This is not untrue but is somewhat deceptive. The contribution limits for traditional and Roth 401ks in the US is $18000. You can spread that around any number of accounts you like but the total contribution limit is 18k. If you are age 50 or older you can additionally contribute $6000 among your accounts for a total of $24000.

Where the $53k number comes in is with the employer contribution. Your employer can contribute a maximum of up to $35000 in 2015 or $35500 in 2016, meaning your TOTAL 401k contribution could be, in theory, $53k or $53.5k depending on the year, but good luck finding a company match that good without being classified as a HCE in which case different rules apply to you.

So in reality no one gets to put $53k in their 401k. The limit most people think about is the $18k one ($24k if you are over 50) but it's important to remember that your company match doesn't count towards this.
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>>987764
>in reality no one gets to put $53k in their 401k
I never said they can. Please read posts before replying next time.

As I already explained, there are dozens of different types of tax advantaged accounts, and 401k's are only one of them. When/if you find yourself in a high salary professional position, you will likely find you have access to one or more of these additional options, such as defined contribution plans, defined benefit plans, or deferred compensation plans.

Alternatively, you can be self-employed and go straight to the max in your SEP-IRA.
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>>987510
>So, the real question, UKfag, is ...
>Why is the max yearly contribution so small over there?


ISA (savings account) - $23k
SIPP (pension account) - $60k
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>>988064
>pensions
Oh boy
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>>988076

Yeah, except now you can withdraw your pension like it were any old savings account.
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>>988064
>SIPP (pension account) - $60k
Pensions are unlimited in the US.
Thread posts: 13
Thread images: 1


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