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Omerta posted:Double posting because I have some questions. My wife and I are lawyers. She started her own firm around 1.5 years ago and netted $90k her first year, which is great for a first year law firm. She is still ramping up (including hiring people) and her net is all over the place. In the last three months, it was $31k, $1k, $49k. She’s aiming for a $325k distribution from her firm. My wife and I have a similar setup, and have been using that strategy. S corp, so in our case two salaries, plus the distributions. Live on the salaries, treat distributions like windfalls. They can disappear at any time and not derail the train.
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Apr 26, 2022 17:45
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spwrozek posted:It seems like this is the time to talk to and use an accountant. My GF started her office 5 years back and went from LLC to S-Corp, takes some salary depending on the advice of the accountants, they provide tax savings by investing in business needs (equipment and such). It had been pretty important for her to maximize her retirement and profit while minimizing taxes. She has a 401k though for all her employees. Also consider starting a SIMPLE IRA if you don't want to deal with 401k to start. Talk to an accountant, but if you want to sock away some money for her in a tax advantaged way she should need some salary until she gets a good savings in the bank.
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Apr 26, 2022 19:57
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H110Hawk posted:Also consider starting a SIMPLE IRA if you don't want to deal with 401k to start. Talk to an accountant, but if you want to sock away some money for her in a tax advantaged way she should need some salary until she gets a good savings in the bank. I think that ship has sailed as she sold half her business and is part of a larger company now as an employee. I don't know all the ins and outs though. Her lawyers and accountant were all over the sale. The biggest thing for most small business owners is a tax accountant and lawyer are really key to min/maxing.
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Apr 26, 2022 20:06
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spwrozek posted:I think that ship has sailed as she sold half her business and is part of a larger company now as an employee. I don't know all the ins and outs though. Her lawyers and accountant were all over the sale. Oops, wrong quote. The person with the SEP IRA.
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Apr 26, 2022 20:16
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spwrozek posted:It seems like this is the time to talk to and use an accountant. My GF started her office 5 years back and went from LLC to S-Corp, takes some salary depending on the advice of the accountants, they provide tax savings by investing in business needs (equipment and such). It had been pretty important for her to maximize her retirement and profit while minimizing taxes. She has a 401k though for all her employees. Yeah, she has an accountant and we have a financial planner. Epitope posted:My wife and I have a similar setup, and have been using that strategy. S corp, so in our case two salaries, plus the distributions. Live on the salaries, treat distributions like windfalls. They can disappear at any time and not derail the train. Thanks! We are basically doing the same but living off my salary (less tax advantaged savings). Good to get some anecdotal confirmation. H110Hawk posted:Also consider starting a SIMPLE IRA if you don't want to deal with 401k to start. Talk to an accountant, but if you want to sock away some money for her in a tax advantaged way she should need some salary until she gets a good savings in the bank. Our accountant/financial advisor thought that a SEP IRA made the most sense, so that’s what we set up.
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Apr 26, 2022 22:00
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Omerta posted:Our accountant/financial advisor thought that a SEP IRA made the most sense, so that’s what we set up. As you take on employees such as admin staff, paralegals, or associates that might change - those people won't be Self Employed. Fidelity's at least is very cheap and has the standard fund offerings. It's like $25/pp/yr or something silly. Something to keep in mind if you're in a range where 401k's are burdensome but you want to offer something. (2-25 employees sort of thing.) Obviously "partners" would be a little different, but I assume it would still be 100% eat what you kill. Omerta posted:My wife and I are lawyers. And I forgot: I'm so sorry. 
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Apr 26, 2022 22:20
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My mother does not live in the US anymore but still has multiple financial accounts located in the US. She is getting old and does not speak English well enough to navigate her way through all her accounts so I help her all the time to ensure that she does not have to deal with any fines from the IRS or the like. For example, I am currently trying to help her set up her required minimum distribution with her IRA but I am having a difficult time as obviously her financial institution only wants to speak with the account holder. It adds even more difficulty to the situation since the distribution that she would like to make requires a Medallion Signature Guarantee that is only available in the United States. She would have to fly to the US before April of next year to get this taken care of. With this in mind and to ensure that any future situations like this do not happen, I wanted to ask how exactly a Power of Attorney works. My understanding is that my mother and I would go to a lawyer + notary to get a Power of Attorney form filled out which will then grant me full access to make decisions on her behalf which would also be accepted my financial institutions as well. Does anyone here have any experience with this or how I should go about this?
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Jun 21, 2022 14:15
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That's the basics yes, though depending on your state you don't need an attorney, they are a form. Here is one for Los Angeles. http://file.lacounty.gov/SDSInter/dca/1021444_4.18.17_UniformStatutoryFormPowerofAttorney.pdf Fill it out, don't sign it, notarize it (they will tell you to sign it in front of them), done. I highly recommend not writing any free form prose in that "special instructions" line because it will trigger further review. Now, you need to dedicate some time to go bank to bank getting this setup while she is still in the USA. If you can do it in person that's better. Does she speak a language these banks can potentially get a translator on the line for? Having her here for a few days doesn't guarantee that someone is going to grant a medallion - are they asking for this because it's going to a foreign account or what? Can you just put the money into a basic taxable brokerage or checking account at the same firm where the IRA is at without a medallion?
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Jun 21, 2022 15:35
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H110Hawk posted:That's the basics yes, though depending on your state you don't need an attorney, they are a form. Here is one for Los Angeles. http://file.lacounty.gov/SDSInter/dca/1021444_4.18.17_UniformStatutoryFormPowerofAttorney.pdf Thank you for sharing. What do you mean by triggering further review if something is written in the special instructions? Also, if I already have the notarized power of attorney form, why would she need to be involved with the banks? Does the notarized POA form grant me access to make decisions on her behalf? They are requesting a Medallion Signature Guarantee because that is the requirement for this specific IRA distribution and the account specifies that any transactions require this stamp. What do you mean it is not guaranteed? I thought it would be as simple as making an appointment with a bank and getting the stamp on the same day?
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Jun 21, 2022 16:11
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Busy Bee posted:What do you mean by triggering further review if something is written in the special instructions? Basically the prose is going to need to be interpreted by an attorney of any place you attempt to use that POA. If you stick with the unaltered form they should accept it much more readily. The reason I say you need to dedicate time to getting it setup is that each bank likely has a process to get you registered as a POA. They don't want to be liable when you show up with a fraudulent form and drain grandma's account. I'm sure you could get lawyers involved and figure out how to make it happen while she isn't present, but if she's sitting there and able to communicate with them it's way easier. You translating does not count. Medallions are insanely annoying to get I will pray for you. (They are an indemnity against anything that went wrong. So if you withdraw $10k fraudulently, then whoever issued the medallion is simply on the hook for $10k.) You might genuinely consider moving her account to a new custodian that doesn't have this requirement. You should also verify that it's needed for exactly what you are looking to do and not just whole account transfers. It's a huge burden to require that for something people do perhaps monthly. You probably still need an attorney to help you figure out the rules around her being in a foreign country. USA laws make it insanely difficult to deal with foreign people and domestic money. Can you move this money to her country in one fell swoop? It's not on the embargo list right?
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Jun 21, 2022 16:33
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H110Hawk posted:Basically the prose is going to need to be interpreted by an attorney of any place you attempt to use that POA. If you stick with the unaltered form they should accept it much more readily. The reason I say you need to dedicate time to getting it setup is that each bank likely has a process to get you registered as a POA. They don't want to be liable when you show up with a fraudulent form and drain grandma's account. I'm sure you could get lawyers involved and figure out how to make it happen while she isn't present, but if she's sitting there and able to communicate with them it's way easier. You translating does not count. Got it, thank you for the explanation. Unfortunately, I have checked all avenues and she has to get a Medallion to do what she wants to do. Any sort of transaction on her account requires it and cannot be changed. Her other financial accounts are in the US so it will go directly from the IRA to her US account. The issue she is facing now is that she has to make the required minimum distribution or else she will be penalized by the IRS.
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Jun 21, 2022 16:47
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Busy Bee posted:Got it, thank you for the explanation. Yup. I would use that medallion to move her custodian to a different brokerage. gently caress all that. What I mean by foreign is that once these banks catch wind that she is outside of the country the USA has draconian laws around money laundering that kick into high gear.
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Jun 21, 2022 16:50
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Hi, I have a job offer that some things seem off about and I figured this was a good place to ask if these are red flags. For context, I am a graphic designer just out of school with a bachelor's. I graduated 8 years ago with an associates in design and have been working on and off in the field. Essentially, I'm not entry-level but I'm not quite qualified for senior level positions. I live on the west coast and was applying for an east coast remote job in North Carolina at a legitimate seeming brick and mortar business that sells and designs tile. They were hiring urgently and I was selected as one of the potential applicants. They sent me an email with pretty standard interview questions to answer. After answering them, I got another email a few days later saying I was selected for the position. It seemed odd since I didn't talk to anyone personally or get a chance to ask questions of my own. This was also a full-time, non-contract position where he said the starting rate was $45 / hr, nearly double what I would be expected to make in this position. The email also said to send info to HR and they would get started on training quickly. Obviously I had some questions, I sent the info to HR and asked the hiring person a few questions: Would I have flexible hours working in a different time zone? Is this a contract position based on the pay rate? And a few others. He only answered the first one, that there is flexibility and said the others would be answered in training. HR then sent me an acceptance letter to sign and return, nothing suspicious. So I'm being pushed through quickly without talking to anyone and without any of my questions being answered and I have to sign an acceptance letter before it moves forward for job training for a job with an ungodly amount of money (for me). None of this sits right although there aren't any traditional red flags that I can tell. They're nice enough in emails and there's enough of an online presence for me to believe they're a real business. What do you all think?
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Jul 26, 2022 19:38
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Jabberlock posted:Hi, I have a job offer that some things seem off about and I figured this was a good place to ask if these are red flags. Don't spend one red cent of your own money, and make them do I-9 verification in person - there are plenty of mobile notaries who will meet you at a starbucks and do this. Lookup their business registration on the city/state/whatever website and call that number and ask to be transferred to the person you're allegedly talking to. If you're still worried, open a new online bank account dedicated to this job, get your paychecks there until you know they're legit. Ally Bank let's get new ones with the push of a button once you're setup. Otherwise, signing an offer letter in the USA generally is worth the paper it's printed on if either side decides to back out. Just don't quit your old job until this one is real. If anyone asks you to deposit a literal check or sends you an ACH transfer of "too much money" or otherwise asks you to send ANY of it back STOP, call your bank and tell them you have been the victim of fraud. Again, don't send ANY money back.
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Jul 26, 2022 21:28
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Kind of seems like an identity theft scam? You're going to send your personal info and SSN into the ether without having talked to someone on the phone? I would call their brick and mortar location and get a quote for new tile for <pick your favorite mall> tell them you need about 50,000 sq ft. If nobody returns your call the same day I would be extremely suspicious Double the money and they're hiring right away? If it sounds too good to be true, it usually is
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Jul 27, 2022 01:20
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Hadlock posted:Double the money and they're hiring right away? If it sounds too good to be true, it usually is Job scams are on the rise. Watch out for these red flags
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Jul 27, 2022 02:28
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It was a scam. The giveaway was them saying they would send a check for me to purchase equipment for work, I don't know the details of how it works but its a common one. Thanks for the help though, something definitely didn't feel right about it.
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Jul 27, 2022 03:51
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Is this the place for a churning question? Hanmi bank has a deal* for $300 bonus for $20,000 average balance from a new checking customer. It's a steep "buy in" but $300 is better than what Ally would give me in interest after 3 months, and I figure, hey I'd like more money so let's do it. However, the funding part of account setup is asking me to EFT it, but Ally charges $20 for an EFT. Is there a free way to do this, or is this just kind of a necessary part of churning? *drat, the page https://www.hanmi.com/personal-checking-offer/ was there yesterday but today it's gone. It said offer expires 7/31 and I luckily did keep most of the fine print text... quote:1To qualify for the offer, you must be a new checking customer, must open a qualifying personal regular checking account with new money. A new checking customer is defined as a customer who has not had any existing personal checking account with Hanmi Bank within the past 180 days from the date of the account opening. New money is defined as funds that are not held at Hanmi Bank.
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Jul 29, 2022 17:53
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You can usually set up an EFT from the new bank to pull the funds for free.
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Jul 29, 2022 18:00
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If you can direct deposit $5k in a 30 day period, there is a SoFi account bonus available right now for $300 that might be less hassle for you: https://www.doctorofcredit.com/sofi-checking-5000-direct-deposit-required/ Edit: Oh this one is even better (I forgot about it since I already have a Chase account): $300 bonus if you open an account and direct deposit any amount within 90 days: https://www.doctorofcredit.com/chase-600-checking-savings-bonus/
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Jul 29, 2022 18:10
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Thanks! I ended up calling the customer service line to ask a couple of additional questions and was told I'd have to open the account at a physical branch to get the incentive (their hours are the same minus one hour as my own work hours, no weekends), and also that my account would take longer to approve than the incentive window allows. RIP. I don't make enough to DD for SoFi but I could look into Chase; I closed my Chase account about 2 years ago, they might consider me a new customer by now. And $600 is a hell of a bonus.
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Jul 29, 2022 19:23
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Anyone have any suggestions for getting better about spending money and feeling ok with what, by all objective measurements, is an amount of wealth well beyond most Americans? I earn an obscene amount of money at a tech job, live well below my means and save a ton, and I'm still terrified of losing my job, being destitute, etc. Like, obviously, therapy is the answer, but we're currently doing other important things there. I'm trying to outrace the terror by sprinting to my FIRE number, but ... that's addressing a symptom.
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Aug 1, 2022 22:59
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Happiness Commando posted:Anyone have any suggestions for getting better about spending money and feeling ok with what, by all objective measurements, is an amount of wealth well beyond most Americans? I earn an obscene amount of money at a tech job, live well below my means and save a ton, and I'm still terrified of losing my job, being destitute, etc. Like, obviously, therapy is the answer, but we're currently doing other important things there. I'm trying to outrace the terror by sprinting to my FIRE number, but ... that's addressing a symptom. This is me and I’m looking for an answer too.
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Aug 1, 2022 23:30
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What helped me get into the "gently caress it, I have the money" mindset was creating a savings account with the 6 months emergency fund. It's even called "In Case Of Emergency." Not only is that money there in case I lose my job / total my car / medical emergency, but it also gives myself permission to spend other money outside of that account. There's some that go to specific savings-adjacent plans (Roth IRA, grad school, home repairs), so I also feel covered there. I know I'll need a roof soon, but I got several thousands in my home repairs so I don't touch "In Case of Emergency." But, I also want to take a big trip next year, so I'm socking away money now. I go to a ton of sports, so I budget for those tickets. Eventually, either you'll run out of buckets for things that could go wrong, or things you want to do. You might just be paralyzed by the potential of what that money could mean for you, so you're not figuring out what it should mean. It could be a launching point for a big "what the hell do I want to do with my life" but it might be "where can I fly direct for Labor Day." Also, Gatsby had it right: throw parties.
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Aug 2, 2022 00:33
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Decide on a few things that matter to you on which you will spend money. For me it is skiing and a toy car. Then I can be as frugal as I want in other areas but have some areas to spend money and enjoy it. If you don’t enjoy the money you are making in some way it’s pointless. Also: therapy.
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Aug 2, 2022 13:01
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Happiness Commando posted:Anyone have any suggestions for getting better about spending money and feeling ok with what, by all objective measurements, is an amount of wealth well beyond most Americans? I earn an obscene amount of money at a tech job, live well below my means and save a ton, and I'm still terrified of losing my job, being destitute, etc. Like, obviously, therapy is the answer, but we're currently doing other important things there. I'm trying to outrace the terror by sprinting to my FIRE number, but ... that's addressing a symptom. Do you budget? If not, that's where I'd start because a budget is explicit permission to spend money on stuff. Regardless, go to loving therapy. You're going to have the exact same problem if or when you FIRE. I'd guess that the transition is going to be a problem as well.
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Aug 2, 2022 15:25
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Is there a hierarchy of what retirement accounts you should focus on first? For example this year we maxed out our IRAs, my wife and I did just a regular non-roth IRA. Then we each contribute up to the max match in our 401ks. Based on the company match and our contributions we would only be about 2/3 of the way towards maxing our 401ks. Would we be better off maxing out the 401k and leaving the IRAs less funded next year? Our savings goal for 6 months in an emergency fund is almost finished so we may be able to contribute more to retirement next year.
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Aug 11, 2022 14:19
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BaseballPCHiker posted:Is there a hierarchy of what retirement accounts you should focus on first? Basically follow the flow chart from reddit personal finance. Above all else make sure you are maxing out the company matching, that is free money. Your 401k would have to be very bad to leave free on the table. If your 401k is fine (no fees, index funds) its also fine to only do that if your total savings is this year is <= max.
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Aug 11, 2022 14:32
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Is there a reason you're not choosing Roth IRAs? I think in general for people with 401ks and no other special circumstances, Roths are typically suggested.
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Aug 11, 2022 16:05
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Grumpwagon posted:Is there a reason you're not choosing Roth IRAs? I think in general for people with 401ks and no other special circumstances, Roths are typically suggested. Ignorance I guess? No reason and we could certainly max out Roths next year instead of traditional IRAs.
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Aug 11, 2022 16:20
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Roth IRA / Trad 401k is a fairly common pattern, I think. The goal is to have differently taxable buckets to pull from depending on what your expected tax bill will be?
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Aug 11, 2022 16:59
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Coco13 posted:What helped me get into the "gently caress it, I have the money" mindset was creating a savings account with the 6 months emergency fund. It's even called "In Case Of Emergency." Not only is that money there in case I lose my job / total my car / medical emergency, but it also gives myself permission to spend other money outside of that account. There's some that go to specific savings-adjacent plans (Roth IRA, grad school, home repairs), so I also feel covered there. I know I'll need a roof soon, but I got several thousands in my home repairs so I don't touch "In Case of Emergency." This is good advice. If you're doing the whole early retirement thing, you really should allow yourself to spend money on things like vacations. Then, and this is the important part, account for that in your expenses when calculating the amount you need to be financially independent, so you can keep doing it. The extreme FIRE mindset is to live in a 500 sq ft shack and and eat nothing but rice and beans, but if you don't need to have a job, you should be able to do things that allow you to actually enjoy your life.
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Aug 11, 2022 17:18
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BaseballPCHiker posted:Is there a hierarchy of what retirement accounts you should focus on first? Your post seems to suggest you think the employer match fills up your 401k space. For instance, if you contribute 10k and your employer contributes 5k you think you've used up 15k of contributions. This is not the case. Employer contributions are a totally different bucket with different (much larger) limits. When you contribute 10k and your employer matches 5k you've only used 10k of your 401k and would need to contribute an additional 10.5k to max it out.
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Aug 11, 2022 17:34
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Happiness Commando posted:Anyone have any suggestions for getting better about spending money and feeling ok with what, by all objective measurements, is an amount of wealth well beyond most Americans? I earn an obscene amount of money at a tech job, live well below my means and save a ton, and I'm still terrified of losing my job, being destitute, etc. Like, obviously, therapy is the answer, but we're currently doing other important things there. I'm trying to outrace the terror by sprinting to my FIRE number, but ... that's addressing a symptom. I'll tell you what changed my perspective on a few things in life. Death. I'm in my early 40's, and this is about the time where the adults from your childhood start getting sick and dying. My dad died when he was 52 (I was only 19), and his dad died at 57 well before I was born. My little brother overdosed on opiates about 6 years ago. I don't have any living male family aside from my son. My wife comes from a very large family though, and her mom, and all her aunts and uncles are in their mid to late 60's at this point. Many of them worked their rear end off for almost 50 years to be able to retire, and my observation is that retirement is bullshit, especially at that age, and I'm not waiting to do all the poo poo I want to do, or buy the things I want to buy when there is zero guarantee I even make it to retirement. Uncle E busted his rear end his entire life at the plant so him and Aunt J could retire and travel the country in their 5th wheel. Aunt J got breast cancer at 61 and fought for almost 6 years before she passed. They only took a few trips in that 5th wheel. Now it just sits in the back of his property. He keeps busy with the grandkids, but his retirement is nothing like he thought it would be. He's had his knees replaced and eye surgery, but he's in decent health for the most part. Uncle K retired the day he hit 63.5 years old and paid out of pocket for Cobra for 18 months until Medicare kicked in at 65. He couldn't wait to stop working. He's pretty much just gone to doctor appointments for the last 4 years. Triple bypass, ongoing issues from diabetes, etc. They travel a fair bit, but his health has limited what he can do. His retirement is pretty much finding new restaurants to eat lunch at. His wife Aunt J suffered a detached retina and is now blind in one eye. My mother in law retired at 62, and her knees are absolutely shot and she's not in good enough shape to get them replaced. She's 67 now and is pretty much homebound and barely gets around using a walker Uncle D retired a few years ago and he's had a couple major surgeries. Triple bypass, and some giant benign mass removed from his abdomen. About 6 months ago they told the family he's starting to show signs of dementia. He went to the bank to cash a check and drove off before they sent the money back to him in the drive thru. When questioned he didn't remember even going to the bank. I guess if you take anything away from that is you have to take care of your body and hope it holds up until you get to retirement age. So given my family history, and my observation of my wife's family, I decided a few years ago that killing myself working to maximize retirement is just bullshit. Tomorrow is not promised and I'm not going to sacrifice things today for some future goal I may never reach. I went to therapy for a few years after my little brother died, and it really helped work out some poo poo. I grew up really poor. I'm talking Section 8 housing, food stamps, free lunch, food insecurity, poor. Spent a few months in foster care when I was 12 and was a ward of the court until I was 18. Growing up wasn't great, I'll leave it at that. I get way too hung up on the value of material possessions because of it. It's something I'm still working, but I won't lie, I like nice stuff and it makes me feel good. I used to feel guilty about buying nice stuff and spending money on myself, but it's ok. I've got a good paying tech job, and between my wife and I we do really well. One of my most recent purchases was a really nice Zwilling Pro kitchen knife. It's absurd to spend that much money on a knife, but it's a quality piece that should last me the rest of my life and I love using it. I consider it money well spent. The last few years I've been more focused on experiences and making memories with my kids. We take a couple vacations a year, and every other year my wife and I take a vacation without the kids. If there's a concert or event coming to town I want to see, I just buy the tickets. I love standup comedy, so we're usually at the comedy club at least once a month seeing someone on tour. I rather be 65 with a lifetime of memories and a little less money in the bank, than be 65 with few memories and a bunch of money in the bank. I could get die in a highway accident driving my car next week. I don't want any regrets about things I should have done or things I put off until <x>. I never worry about losing my job or being destitute. I've worked in restaurants growing up and while going to school, and I've been broke as poo poo and poor before. I can go back to it if I have to. Denny's can always use a line cook. I've got a useful skill set in tech though, I can't imagine being out of work for more than a month. The key for me is to find a balance. I save an appropriate amount for retirement but I don't max things out. (We will be plenty comfortable in retirement) I'm not sacrificing things today so I can possibly enjoy them later on in life. I like spending money on things, but have focused more recently on experiences and making memories than physical goods. I still spend money on high quality stuff, but I will wait for a deal or sale on it. I try to spend as much time with my kids as possible and almost never let work get in the way of my time with them. TL;DR Find a balance, it's OK to spend money on yourself, tomorrow isn't promised, take care of your physical body.
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Aug 11, 2022 17:50
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Amara posted:Your post seems to suggest you think the employer match fills up your 401k space. For instance, if you contribute 10k and your employer contributes 5k you think you've used up 15k of contributions. Thanks for this and you were correct. So the TL;DR seems to be, either is fine if I like my 401k options. My options there are OK, but I prefer my Vanguard IRA options so I will continue to fully fund that first, switching to a ROTH next year, and then hopefully be able to contribute to my 401k more next year.
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Aug 11, 2022 21:19
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Please make sure you are eligible to take a tax deduction for a traditional ira. Since it's clear you have a workplace 401k be aware that if you make more than 68k single or 109k married filing jointly you start losing your ability to deduct the tradional ira contribution from your taxes. You lose the ability to make any tax deduction pretty soon after that. This makes it a bad account since you're investing with after tax money and will still have to pay taxes on the money when you take it out. The usual thing to do is to convert your traditional ira into a backdoor Roth ira... But this gets more complicated if you haven't been planning around it. Also man, traditional IRAs are generally a bad idea if you can avoid them because they limit your ability to ever do a backdoor Roth because of the pro rata rule. Edit: sorry, I just wasn't thinking enough to make write this out earlier. The reason Roth IRAs are recommended is because once your income goes over a certain amount (as outlined above) you lose the ability to make tax-deferred contributions to the traditional ira AND you're not allowed to contribute directly to a Roth ira so you MUST do a backdoor Roth as the only way to access ira space. If your traditional ira is full of money by this point because you've been putting money in there for a few years unaware of this you're stuck unable to use the backdoor Roth ira without taking an incredibly painful tax hit (pro rata rule) that negates all the tax-deferred benefits from doing traditional ira in the first place. So to maximize retirement planning you need to keep traditional ira space empty or else give up on ever using your yearly backdoor Roth. In particular Happiness Commando posted:The goal is to have differently taxable buckets to pull from depending on what your expected tax bill will be? Is only the secondary reason. The primary reason is that if you have money in a tradional ira you can't do a backdoor Roth without penalties and you lose access to yearly ira space, which adds up. So, BaseballPCHiker posted:So the TL;DR seems to be, either is fine if I like my 401k options. No, it's not fine. Not if you anticipate ever making more than 130k household income and want to fully max out tax-advantaged retirement space. poo poo I forgot how stupid this all was. I've internalized it for so long it's automatic. Amara fucked around with this message at 22:15 on Aug 11, 2022 |
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Aug 11, 2022 21:59
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Those income limits are MAGI, right, so they don’t include 401(k) contributions?
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Aug 11, 2022 22:32
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Three main reasons to do Roth IRA contributions. 1) You want to hedge against future income tax policy changes. 2) You are over the threshhold for deducting traditional IRA contributions. 3) You anticipate the above being true for you at some point in time. Two reasons to do traditional IRA contributions: 1) you are taking the tax deduction and you are sure that you will always make under the threshold for the tax deduction. 2) you anticipate making a lot less money in retirement than you do today. The situation I can come up with in my mind is that you are relatively old, you have significantly underfunded your retirement in the past (or got defined contribution retirement accounts wiped out in a divorce or something) and you make a lot of money today.
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Aug 11, 2022 22:38
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Oh true, all of this is modified adjusted gross income and I messed up the Roth contribution income limit. It's a mess, but 1) make sure you qualify to take a tax deduction for your traditional ira contribution 2) look over the tables and make sure you don't anticipate needing to do a backdoor Roth someday
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Aug 11, 2022 22:42
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BaseballPCHiker posted:Is there a hierarchy of what retirement accounts you should focus on first? as others have said, after you put enough into your 401k to secure your full company match, the main question is the quality of the funds in your company's 401k plan and the expense ratios and administrative fees. very often an ira opened at fidelity, vanguard, or charles schaub will be cheaper and have many more funds to choose from compared to a 401k, but not always one minor factor that's much less important, but still kind of worth knowing is that the money in 401ks is very difficult for any potential creditors to seize, while iras have less robust protections which require you to declare bankruptcy. it's a very niche benefit, but if a theoretical 401k and ira were identical in terms of funds and fees, the 401k would be better to hold in case anyone successfully sues you
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Aug 12, 2022 06:45
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