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I'm looking at moving from a job with a 401k employer match plan to a state retirement system with a mandatory 9% (gross) employee contribution that accrues at 3.5%. Once vested (8 years), it's a defined benefit for life. I'm 34 years old and could start drawing it at age 60. If I end up leaving this new job before I'm vested I could roll the employee contributions + interest into a 401k or a similar plan. I've been contributing 6% to the 401k to get the full 3% employer match. I had been maxing out my Roth IRA for a the past few years, but this year I'm only putting about $2k in because I'm bad with money. Considering the mandatory 9% contribution, is the proper move going forward to leave the 401k in place and max out my Roth?
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Dec 2, 2014 15:55
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| # ¿ May 12, 2024 23:25 |
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SiGmA_X posted:Most people don't count pension as retirement, so make sure you keep putting 15%+ of gross away. The state may greatly change the pension plan by the time you retire.
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Dec 2, 2014 16:25
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SiGmA_X posted:I would say 15k. It comes down to how much money you want in retirement really.
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Dec 2, 2014 17:49
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SiGmA_X posted:You probably should save more than 15% total. Inflation is 2.5~3.5%, so you're not making gains on that 9%, but it's not losing money. I would say max your Roth IRA and then start doing taxable investments, maybe shoot for a total of 20% gross between the 9% work pension and your other retirement investments. That said, an investment growth calculation could help you see what you need to be saving to hit your required retirement income. I am married, but my wife is part of the same state system. Her situation is much better, though: She started work at age 22 making (and therefore contributing) peanuts. If she stays put, when she's 47 she'll be eligible to retire and start receiving benefits of 50% of her pay (average of 4 highest years) for life, plus an ongoing cost of living adjustment. If she works until age 52 that goes up to 60%. The way to really game the system would be to work for a University, slowly earn a PhD with free tuition while making a decent living in a non-demanding job for 20 years, then use that PhD to land a well-paying job to get your compensation level up for 4 years. Take a job elsewhere at age 52 and enjoy your 60% * $150,000 annual benefit (plus COLA) for life.
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Dec 2, 2014 22:48
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I've got an HSA but am changing jobs in six weeks, and the new employer does not offer an HSA. According to the benefits pamphlet of my current employer, I have the ability to change my voluntary contribution at any time. Apparently contributions made outside of that payroll deduction (like via the online site) are done post-tax. Should I crank that pre-tax payroll deduction contribution up for my last few paychecks to build up my HSA balance, which I can then take with me after I leave this job? edit: I have like $52 in there now, will likely have a $200+ bill coming from an ultrasound I just had done. My prescription costs are modest and in general I'm healthy. Easychair Bootson fucked around with this message at 19:37 on Dec 3, 2014 |
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Dec 3, 2014 19:35
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I've made a huge mistake. It's unlikely that I'll be able to make any significant contributions to it before I leave my job. I had been maxing my Roth IRA but I'd always assumed the major benefit of the HSA was being able to pay medical expenses pre-tax. Sounds like I should have been treating it similarly to the Roth IRA. edit: Thanks for the advice
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Dec 3, 2014 20:57
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I just changed jobs and am looking for some basic advice. My retirement savings are in a 401k and Roth IRA at about a 2:1 ratio. My new employer (state gov't) has a defined benefit pension plan with a mandatory 9% employee contribution. My understanding is that on top of that 9% my first priority should be to max out my Roth. I'd like to move my 401k and Roth to Vanguard. I assume that they'll advise me on my best course of action, but I'd like to have an idea of what that is. Should I be rolling anything over, or simply transferring my accounts? I don't plan to continue contributing to the 401k because I don't feel that I need additional retirement savings beyond what I listed above. Potentially relevant details: Married in our mid 30s and the wife is in the same pension plan, but since she already has 13 years of service she's my ace in the hole. She has a Roth that we're maxing out as well. We're both healthy with no kids, and our parents are extremely stable financially thanks to their pensions.
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Feb 1, 2015 17:10
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slap me silly posted:You can't contribute to the 401k anymore since you don't have that job now. You probably want to roll it over to a traditional IRA. The IRA you can just transfer. I did an IRA transfer a while back myself, all online - the Vanguard web site makes it so easy a kindergartener could do it. I expect the rollover would be easy too.
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Feb 1, 2015 17:42
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Cheers, thanks to both of you for the advice.
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Feb 1, 2015 18:09
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I only contributed about $2000 to my Roth IRA last year, but I'm budgeting $450/mo to max it out this year. Right now that money ($900, soon to be $1350) is in my checking account. Is there any reason I couldn't/shouldn't make that as a 2014 contribution (before 4/15) and leave myself some headroom in 2015? I have already filed my 2014 taxes, but I don't believe that matters since I'll stay under the $5500 limit.
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Feb 25, 2015 01:14
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I've been reading on bogleheads about asset allocation across multiple accounts, and one thing I don't see mentioned is consideration about the timing of withdrawals. I have a traditional IRA from a 401k rollover and I have a Roth IRA that I'm currently contributing to. Both are at Vanguard. I'm guessing that I'll want to tap the Roth first, at age 60 or older, and I may not be fully retired then, meaning I'm in a higher tax bracket. I'm in my 30s now. Should I be weighting the Roth slightly less aggressively than the traditional? Or is that such a minor consideration at this point that I can ignore it for now? I've considered simply using LifeStrategy funds but since the size of my portfolio gives me access to Admiral funds that makes me lean towards a lazy 3- or 4-fund strategy.
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Mar 3, 2015 20:39
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80k posted:Don't worry about withdrawal location, in regards to risk and asset allocation. Bogleheads also recommend having stocks in taxable and bonds in IRA's. It is customary to access taxable accounts first (Being able to choose tax lots and take advantage of lower cap gains rates tends to be very tax efficient), which often mean selling stocks on a whim.This is no big deal... the effect on asset allocation is often quite small and even if it were large, you could re-buy the same asset class in your IRA's to maintain balance. In your case, withdrawing from a Roth while rebalancing in a traditional would achieve the same purpose. Once you start spreading your funds around several different accounts (which could include a spouse's), it is only the overall asset class that matters and any withdrawals from any location can be easily fixed from an asset allocation point of view.
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Mar 4, 2015 03:57
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Karthe posted:I'd have to use a spreadsheet or something like YNAB to get a true feel for what my actual budget looks like. I can't recommend this enough. You seem to make decent money and have relatively modest expenses. Budget your savings and vital expenses and plan for those "surprise" expenses like semiannual payments and gifts and consumables for your car. I think you'll find that you can easily meet your savings goals if you look at every dollar earned more critically.
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Mar 18, 2015 22:51
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I have a Traditional IRA from a rollover 401k that I don't contribute to, and a Roth IRA that I max each year. If I want, say, an 80:20 mix of stocks:bonds, do I want each of those accounts to generally be around 80:20, or is there a strategy of loading up one with stocks and one with bonds (relatively) so you can have options in how to take distributions down the road?
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Jan 4, 2022 17:55
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Happiness Commando posted:Here are a lot of words on Bogleheads about tax-efficient fund placement Thanks. It looks like these two passages essentially answer my question. quote:If your investments are all in tax-advantaged accounts, fund placement will not have a large impact on your returns. quote:If all else is equal (and it often isn't, because you may have different options in your 401(k) and your Roth IRA), it is slightly better to have the fund with the highest expected return in your Roth account or HSA, because these accounts are free from Required Minimum Distributions (RMDs), [note 6] are not counted as income for making Social Security taxable, and probably are less subject to the risk of changing tax rates.
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Jan 4, 2022 18:35
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I have about $12k more than we (me + wife) need in liquid cash/savings. Most of it is in the form of "truck replacement fund" but that's going to be 2023 or later. All of this I-Bond talk had me sold on that, but then I thought I could take that $12k and max our 2022 Roth contributions now, in January, versus contributing $1000/mo throughout the year. I'd effectively be at "rule 4" on my Roth contributions, for all you old-school YNABers. Am I a chump if I'm not maxing our Roths at the beginning of the year? Or is that I-Bond rate just too good to pass up (understanding that it's variable)?
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Jan 6, 2022 03:38
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drk posted:In general "time in the market beats timing the market", so maxing out your IRA contributions as early as possible is good. But, if you have a known expense coming up at least a year out, setting aside the money for it into I Bonds certainly seems like a reasonable idea to me. That makes sense. Putting aside the eventual truck purchase and assuming I have emergency funds covered, what should I do with the $1000/mo I'm saving throughout 2022 for the tax year 2023 Roth contribution that I'll make one year from now? Is it worthwhile to be putting that money into I Bonds as I go, with the understanding that I need to get a year ahead in that savings in order to get them to at least 12 months of maturity? For that matter, should I be doing the same thing with the money I set aside monthly for homeowner's insurance and property taxes? e: by my simple math it looks like I'd earn somewhere between $100 and $700 a year, if the Series I composite rate is between 1% and 7% e2: forgot to subtract the last 3 months of interest from the bonds but I'm too lazy so it's a little less Easychair Bootson fucked around with this message at 16:08 on Jan 6, 2022 |
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Jan 6, 2022 15:51
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I have $9000 in cash in my truck replacement fund and I'm putting $1000/mo into it for the foreseeable future. I don't see myself buying a vehicle in 2023 unless something forces my hand. Should I be looking at I bonds or TIPS or something else? Currently my only accounts are with Vanguard (rollover IRA for me and Roths for my wife and me). I thought about I bonds last fall but it seemed like more trouble than it was worth. e: I should mention that I do something similar with my Roth funds, i.e. I put $1000/mo aside and hold it in cash until January at which time I make my contribution for the year, so I guess it would also be nice if I could earn a bit of interest on those as I go, too. Easychair Bootson fucked around with this message at 00:06 on Jan 3, 2023 |
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Jan 2, 2023 23:52
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Good points. It looks like Citi does a 3.3% rate and I've got my main credit card with them and have been happy, so I'm going to see about opening an account there. Thanks!
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Jan 3, 2023 15:50
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I just discovered that I'm eligible for an HSA (BWM: not understanding your health care benefits). I have individual coverage through my employer that qualifies as a HDHP. My spouse and I have annual, out-of-pocket expenses that are close to or exceed the contribution limit. We're already maxing out both Roth IRAs and getting the most out of our employer's retirement plan. Maxing the HSA is a no-brainer, right? Then my question is: what's the best way to use the HSA? Use it to pay those qualified expenses with pre-tax HSA funds as they come up? Or pay the expenses with cash and sit on the HSA to be used in retirement?
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Aug 8, 2023 12:47
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nelson posted:It’s less paperwork and better for cashflow to use it for expenses but if you are already maxing out your other tax advantaged accounts and have money left over it is better to pay cash and save receipts to take out the money later. What kind of paperwork comes into play? I was thinking when it comes tax time I just say I contributed $x to a HSA and don't pay income tax on that amount.
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Aug 8, 2023 14:10
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Thanks for all of the info! I'm currently beating my head against my desk for not realizing earlier that I qualify. I'm on my way to open a HSA with Fidelity. My $10 investment in a comedy forum two decades ago continues to provide the best RoR I've found.
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Aug 8, 2023 17:23
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| # ¿ May 12, 2024 23:25 |
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You say that, but I have it on good authority* that a market crash is coming** * my wife's boss * timeline TBD
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Aug 23, 2023 15:57
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