Her Personal Advisor Advice Cost Her $100k #ramseyshow #theramseyshow #podcastclips #financialadvice #ramsey

My financial advisor is advising me to switch from contributing to the company's Roth 401k to a traditional 401k due to basically my income level and the amount of tax savings that I would receive now. - Okay, well, you need to get a new financial advisor that can actually do math. - That was kind of my guess, but I didn't know if there was any specific circumstance where there would be beneficial. - Yeah, so what do you, how old are you? - I'm 40. - Okay, and how much are you gonna be putting in to the 401k? - I'll basically be maxing it out. - Okay, so you're gonna put in how much in dollars? - About 24,000. - Okay, we'll call it $2,000 a month. Okay, if I put that in the retirement calculator, that says that you're gonna have at 65, 3.1 million, okay? - Okay. - And for 25 years, you put in 24,000 dollars, and I'll have to add up what that is. You wanna do that for me? Say, 25 years times 24,000. And so that's gonna be 200,000, I believe. But so, the deal is this, everything above your contribution is taxable. So you're saying, what was the number? - 600,000. - Okay, 600,000. He's telling you to save taxes on 600,000 of the 3.1 million. But for doing that, you get to pay taxes on two and a half million. - Lovely. - You see what I'm doing? - Yep, I know that you're doing. - The growth would be three point. The total amount would be 3.1. Of that, 600,000 you put in, which is tax, you're gonna pay taxes on the whole thing eventually, if it's traditional. But you save on taxes today in present value dollars on the 600,000. So to save taxes on 600,000 for a period of 25 years that you do have to pay back later, you end up paying taxes on two and a half million. It's really bad math. - Okay. - Yeah, now, and here's the other problem. We'll go ahead and take it a step further. If you have a Roth IRA, there's no mandatory withdrawals. I'm 65, I've got millions of dollars in Roth IRAs and 401Ks, okay? And I'm not going to have to draw any of it at 72 and a half on required minimum distributions, RMDs. - Okay. - And when I die, it passes to my heirs with no income tax. If you'd leave this 3.1 million to someone and it's all taxable under the new Biden laws that came in when President Biden was this correct, they will have to pay taxes on the 3.1 million. You don't have to 'cause you died, but you never got around to paying taxes on 'cause you never drew it out. And so an inherited IRA is all taxable if it's traditional and they have to do it within 10 years. So they're gonna pay taxes on 300,000 dollars a year for 10 years, which is crazy for your ares. So it's harder in retirement, it's harder in inherited and you pay light years more taxes. There's no case where this is not gonna happen. Every one of these, any scenario. And so I'm flabbergasted that somebody could be this dumb and call themselves a financial advisor. - Yeah, I think the same thing. We're doing an investing event. We can give you a ticket to hang out at the investment event and learn a little bit more. And maybe we ought to give one to your financial advisor as well. - No, no, no, no, no, I don't want them around. I'll just let they need to stay away.