Then there is the IRS... Don't forget the IRS. They will not forget about you and your money. Say you have $1,000,000 in your IRA. You panic and decide to cash it out. You will write a check to the IRS for $350,000 or more depending on your income bracket...
Most 401k and Traditional IRA's you can move money around inside the account but not take it out.
Roth accounts have a bit different rules but there may be limits.
Some financial firms have Money Market accounts where you can sell off Mutual Funds shares and put them in the ultra conservative MM fund as a holding. They do gain and loose a small amount but not as volatile as the main stream Mutual Funds. But this may effect your dividend payouts.
The money was never taxed so yes you have to pay taxes for n it when you withdraw it. Plus don’t forget the extra 10% if you are under 59 years of age. But there are a few ways to work around that part.
Yes I understand the no tax on the ira going in, I am not a big fan of them mainly because congress can change the taxation rules on them at any time. But, it is just part of a plan. For most people it is a forced savings plan, so kinda good in that respect. I guess when I am 70 we will know what worked best. I am not telling anyone what to do but sell and rebuy the same good old dividend paying stocks has been the best for me. I am pretty much thinking be in cash for elections now, at least at my age. I used to believe the buy and hold forever bs but feel the market has changed too much with electronic trading for that to work. I also feel the buy and hold advice is only given to get you to leave your money on the table while the pro takes it, but thats just me, I could be wrong and often. Happy trading.
