Yea I’d say this is fairly basic stuff that you can handle yourself, but if you do go with a financial planner make sure they are a fiduciary.
Ok. It's legal to have 2 active 401ks at the same time. You are just subject to the total amount for the year for the two combined. Depending on the fees and funds available in the 401k it would depend on how much to use it over filling up an IRA/HSA. And I agree with the others above, you shouldn't need a financial advisor. If you still want one, I'd go with Vanguard PAS or something. It's about as low of a fee as you'll find.
If your current company offers no match, I’d max out whatever you’re dad’s company’s max amount is, and then deposit the rest in whichever has the best investment options in the 401k. Outside of that just follow the investment priorities that billdozer posted earlier.
Tepid take, contributing to a non matching 401k is not a good idea. Especially if your income qualifies for IRA’s. You’re likely passing on a smaller tax rate for a higher one decades from now. Plus that money isn’t easily/freely accessible like it would be in a brokerage account.
I don’t think anyone would disagree with prioritizing IRA space above 401k space in many situations. But assuming your 401k has reasonable low-cost index funds and you’re already maxing IRA, then it should definitely fall ahead of a taxable account in the funding priority imo.
If the market continues this downward trend the next two days I'm gonna finish the year negative double digits.
You talking double digit dollars or percentages? Either way, I feel like you're doing well if you're only down single digits YTD.
Yeah, the S&P is down over 20% on the year. I'm down ~16% at this point. I did meet my goal of saving at least 50% of my gross income though.
Putting $16.5k into 401k in 2022 and having the end of year balance be lower than the 2021 end of year balance is really something
Looks like next year will be the first year I can max out all tax advantaged retirement accounts for us. 1. Our HSA 2. Wife's 457 3. My 401k No IRAs for us, due to married filing separately filing status (PSLF reasons for my wife. She makes significantly less than I do, and maxing her 457 brings her AGI down to a level where her payments are $0, as long as we filing separately. Her loans should be completely forgiven in 5 years.) I guess the plan will be to chuck any extra cash into an after tax account? Not tax advantaged, but I guess it will be kind of nice to have some liquidity other than a HYSA.
I hadn’t max contributed for 2021 because I was paying off my house so I did that before 4/15/2022. Paid off the house 12/21.
You can still do Roth IRAs. The backdoor method, as long as you don't have an existing traditional IRA. https://www.investopedia.com/how-to-set-up-a-backdoor-roth-ira-4584775 Also, have you verified that your 457/401ks don't allow after tax conversions?
You guys are too focused on the value and not the hoarding of shares. In 5-10 years you'll be thankful for the 2022.
Just got an email from my Accountant that I need to write our wonderful government a $25k check for 2022 tax estimates. Merry Christmas to me.
Just out of curiosity, what do you do in the event that you do have a traditional IRA? Are you just prohibited from ever doing a backdoor roth at that point?
Depends if that's your only tax payments. Mine is in addition to the already crazy amount of tax I've paid on my W2 throughout the year.
Definitely still look at it positively because hey, discounts. But it does sort of suck seeing it all lower at this time last year. Feels like a goddamn money pit even if we all obviously know that this is ultimately a good thing.
I'm a big dummy, and have a fairly large (six figure) traditional rollover IRA. My previous employer didn't allow out of plan roll ins into their 401k, but looking at my new 401k, it does allow for roll ins from outside IRAs. Thanks for the heads up! Looks like I can empty that rollover IRA into my 401k, contribute to the traditional IRA, then do a Roth conversion on that contribution? The income limits for Roth contributions for married filing separately don't apply to Roth conversions? Am I thinking about this right? The 457 and 401k don't allow after tax conversions, but I can contribute Roth dollars to my 401k. I was kind of torn on this, because my state + Federal tax is ~30% and was thinking it made more sense to take the tax break now vs in the future.
If your IRA balance is small, just convert it to a roth and pay the taxes on the conversion. If the IRA balance is large, then probably not worth the conversion and you wouldn't want to do the backdoor roth at that point.
It’s only $5k. The only reason it’s there is because I started a Roth a few years ago and of course that’s the year my wife got a huge raise. Ended up having to do a recharacterization. Been meaning to look into it more but I may just put the would-be Roth money into my brokerage account and save myself the headache.
Man, I'd probably just convert the $5k and pay the tax bill, honestly. Between you and your wife, $12k of roth space every year moving forward is pretty freaking valuable.
Convincing my wife to invest more aggressively is another conversation entirely. I'll definitely reach out to Schwab though to get some more information. Thanks
My uncle retired early this year, and he always says, "I made most of my money by not selling or dropping 401k contributions between 2008-2012. Even more so than a super high savings rate."
Omnibus bill signed. Here's the 529 to Roth info: Spoiler (Limited) 529-to-Roth IRA Transfers Allowed After 15 Years One of the provisions of SECURE Act 2.0 that has grabbed a disproportionate percentage of headlines in financial media is the introduction of the ability, beginning in 2024, for some individuals to move 529 plan money directly into a Roth IRA. This new transfer pathway, created by Section 126 of SECURE Act 2.0, will be an intriguing option for some individuals, but it also comes with a number of conditions that must be satisfied for the transfer to be valid and that limit the ability to take advantage of (or abuse) the provision. The conditions include: The Roth IRA receiving the funds must be in the name of the beneficiary of the 529 plan; The 529 plan must have been maintained for 15 years or longer; Any contributions to the 529 plan within the last 5 years (and the earnings on those contributions) are ineligible to be moved to a Roth IRA; The annual limit for how much can be moved from a 529 plan to a Roth IRA is the IRA contribution limit for the year, less any 'regular' traditional IRA or Roth IRA contributions that are made for the year (in other words, no doubling up with funds from outside the 529 plan); and The maximum amount that can be moved from a 529 plan to a Roth IRA during an individual’s lifetime is $35,000. Example 3: Helena is the beneficiary of a 529 plan account that has excess funds she will not need for school, and the account has been open for more than 15 years. In 2024, Helena contributes $4,000 of her own earned income to a Roth IRA. As such, assuming the IRA contribution limit for 2024 remains at the $6,500 limit for 2023, the owner of Helena’s 529 plan could transfer up to another $6,500 - $4,000 = $2,500 into her Roth IRA for the year. Nerd Note Author Avatar Nerd Note: The legislative text of this provision leaves a lot to be desired. For instance, it’s not entirely clear whether a change in the 529 plan’s beneficiary will trigger a new 15-year 'seasoning' period before those funds can be transferred to a Roth IRA. Initial indications from Congress seem to point to the 15-year period being unaffected by a change in a beneficiary, but written guidance from Congress or the IRS will be needed to confirm (or reject) that assumption. Such treatment would seem to make sense, though, if Congress is trying to nudge parents and other interested parties concerned about the “What if they don’t go to college?” question to make 529 plan contributions. For instance, if a parent contributed to a 529 plan account for the benefit of their child (and maintained ownership of the account) but the child did not need nor use the 529 plan money, it appears that the parent would be able to change the beneficiary to themselves and transfer the 529 plan’s account value to their own Roth IRA (subject to the aforementioned restrictions). While as described above, there are a number of restrictions on the ability to move 529 plan money to a Roth IRA, Section 126 of SECURE Act 2.0 also offers an advantage of 529 plan-to-Roth IRA transfers compared to ‘regular’ Roth IRA contributions. More specifically, individuals are generally prohibited from making regular Roth IRA contributions once their Modified Adjusted Gross Income (MAGI) exceeds an applicable threshold. Transfers of funds from 529 plans to Roth IRAs, authorized by SECURE Act 2.0, however, will not be subject to the same income limitations. PLANNING OPPORTUNITIES WITH THE NEW 529 PLAN-TO-ROTH IRA TRANSFERS It is likely that most individuals will use the new ability to transfer up to $35,000 from a 529 plan to a Roth IRA (starting in 2024) for its congressionally intended purpose: allowing money that was earmarked for educational purposes to be repurposed as retirement savings in the event those funds are not needed for education after all. However, for a small cross-section of higher-net-worth families, this new technique could be used to 'prime the retirement pump' for children, grandchildren, and other loved ones. For example, at the time a child is born, a meaningful contribution could be made to a 529 plan for their benefit. Later, after the child turns 16 (and the account has been in existence for over 15 years), the account’s funds could begin to be moved to a Roth IRA for the child’s benefit in the amount of the maximum IRA contribution amount for each year (although notably, the transfer rules require that the child have compensation - such as from a summer or part-time job - in order to make the transfer, such as would be required for them to make a 'regular' Roth IRA contribution). With proper planning and continued annual transfers until the $ 35,000 lifetime transfer limit is reached, the child’s Roth IRA balance at age 65 could easily approach, or even exceed, $1 million.
I tried my hand at tax loss harvesting some total market etfs the past few days. Heres to hoping i did everything correct.
There's something cathartic about getting rid of losers. Just wish I didn't have so many of them . . .
Started a new job mid-September and moved my 401K over shortly after so it shows my current rate of return at -2.10%. I’m feeling like the next Oracle of Omaha.
Would like to look back on 2022 as the year I learned to think long-term and not panic. It would be kind cool if over my lifetime this doesn’t even rank in the top-5 down years $ wise. Unrealized gain/loss: ($188,000) Realized loss: $3,000 Dividends reinvested: $9,588 Interest income: $47 401k contribution: $13,900 Employee Stock Plan Contributions: $13,300 FSA: $2,160 Top performing ETF/stock: SCHD Worst performing ETF/stock: AMZN 2023 strategy: 1. Invest 67% VOO 33% SCHD 2. Reinvest dividends 3. Max ESPP 4. When appropriate, unwind some tech positions and move them into VOO/SCHD. Here’s to a much better 2023!
Haven't dug into the specifics yet but I wonder how a Roth 401(k) vesting match will be handled from a tax perspective.
What’s the general rule of thumb on 529 balances? I have moments where I think I’m contributing too much and moments where I think I’m not contributing enough.
I think you should be saving enough in your retirement accounts to make sure you will have what you need before you do a 529. I don't think there's a general rule though, it's fairly controversial on forums of how beneficial they are for the non-rich. I'm targeting ~2/3s of the expected cost for college savings and when I reach about half of that number in the 529 I've started saving half of the contributions in a taxable account to give me some flexibility.