LETSGOBROWNIES Posted February 14, 2018 Share Posted February 14, 2018 2 minutes ago, Darth Pees said: So if I'm doing 8% now, just switch it all to a ROTH? As long as you continue to get the match from your employer, yes. Link to comment Share on other sites More sharing options...
ramssuperbowl99 Posted February 14, 2018 Share Posted February 14, 2018 (edited) 22 minutes ago, Darth Pees said: $68,000 in contributions, and it says it'll be worth $118,000. Is that about right? Yeah that's about right. Save all your receipts (including that $400 you just got), and just to be safe scan them and file them on a hard drive or something so you can the distributions tax free. 15 minutes ago, Darth Pees said: @ramssuperbowl99 Here's another question. My employer will match 6% of my contributions towards retirement. I have the option to split that between a 401k pre-tax and ROTH. Should I split the contribution there? Currently I'm doing 8% all towards 401k pre-tax. My understanding is that your employer contributions are always pre-tax (which is why they match instead of just paying you like they normally would). I'd start maxing your traditional (pre-tax) 401k first. Once you have that, your HSA maxed, and your IRA choice (traditional or roth), then you want to start looking at a roth 401k.* (Worthless background) roth 401k's kind of suck on their own, but there's one awesome thing you can do called (informally) the "mega backdoor roth IRA" where you rollover the $18.5k rothIRA contributions you make every year into a rothIRA. That, plus the $5.5k rothIRA limit let's you contribute $23k/year tax free. This is how Mitt Romney and his wife contributed $46k/year to a rothIRA they got to be worth several hundred million dollars (they did some other slimeball crap tbh though). Not all employers let you roll your roth 401k contributions over while you're still working, so you'd have to ask - I believe the term is "in service distributions". Edited February 14, 2018 by ramssuperbowl99 Link to comment Share on other sites More sharing options...
pwny Posted February 14, 2018 Author Share Posted February 14, 2018 Just now, Darth Pees said: So if I'm doing 8% now, just switch it all to a ROTH? All the money in ROTH, 100% in stocks. As you get closer to retirement, you move them out of stocks and into less short-term volatile markets like bonds. Link to comment Share on other sites More sharing options...
LETSGOBROWNIES Posted February 14, 2018 Share Posted February 14, 2018 Never mind, do what @ramssuperbowl99 said. Link to comment Share on other sites More sharing options...
LETSGOBROWNIES Posted February 14, 2018 Share Posted February 14, 2018 1 minute ago, iPwn said: All the money in ROTH, 100% in stocks. As you get closer to retirement, you move them out of stocks and into less short-term volatile markets like bonds. This is how my portfolio is set up, but I’m no expert as far as finance is concerned. Link to comment Share on other sites More sharing options...
AFlaccoSeagulls Posted February 14, 2018 Share Posted February 14, 2018 2 minutes ago, ramssuperbowl99 said: My understanding is that your employer contributions are always pre-tax (which is why they match instead of just paying you in tax). I'd start maxing your traditional (pre-tax) 401k first. Once you have that, your HSA maxed, and your IRA choice (traditional or ROTH), then you want to start looking at a roth 401k.* What do you mean by "maxing your traditional 401k first"? Like set the max contribution amount, or? All I see right now on my portfolio is a box for PRE-TAX contribution (currently set at 8%), and a box for ROTH contribution (currently set at 0%). If I'm understanding you, I should be doing 6% to 401k and however much else to ROTH? Link to comment Share on other sites More sharing options...
pwny Posted February 14, 2018 Author Share Posted February 14, 2018 5 minutes ago, Darth Pees said: Alright here's what I filled out for each box. $3,400 for HSA Contribution per year $500 for medical expenses per year (and that's very conservative) which gives the automated field a $2,900/year savings. Years to accumulate: 20 Federal Tax Bracket: 25% State Tax: 9% Estimated Rate of Return: 5% The $500/year in medical expenses would be pulled out of the investment. I got under $300k this time. I’m also basing it on a higher return, that is closer to the actual rate of return. 5% is very conservative imo, but based on 5% and those numbers, that’s right. 1 Link to comment Share on other sites More sharing options...
ramssuperbowl99 Posted February 14, 2018 Share Posted February 14, 2018 Just now, Darth Pees said: What do you mean by "maxing your traditional 401k first"? Like set the max contribution amount, or? All I see right now on my portfolio is a box for PRE-TAX contribution (currently set at 8%), and a box for ROTH contribution (currently set at 0%). If I'm understanding you, I should be doing 6% to 401k and however much else to ROTH? There is a federal maximum that you can put in - this year it's $18,500. Before you switch to a roth 401k, I would make sure you're doing the following: 1. Putting enough into your pre-tax 401k to get the maximum employer match 2. Putting $3,450/year into your HSA (it goes up like 50 bucks a year, that's the 2018 max) 3. Putting $5,500/year into an IRA (either traditional or roth) 4. Putting a total (not including your employer contributions) of $18,500/year into your pre-tax 401k Obviously that's a lot of savings and it takes people a long time to get raises/promotions to that level, so if you don't have enough to do that no biggie. That's just the general pecking order. Link to comment Share on other sites More sharing options...
AFlaccoSeagulls Posted February 14, 2018 Share Posted February 14, 2018 (edited) 4 minutes ago, ramssuperbowl99 said: There is a federal maximum that you can put in - this year it's $18,500. Before you switch to a roth 401k, I would make sure you're doing the following: 1. Putting enough into your pre-tax 401k to get the maximum employer match 2. Putting $3,450/year into your HSA (it goes up like 50 bucks a year, that's the 2018 max) 3. Putting $5,500/year into an IRA (either traditional or roth) 4. Putting a total (not including your employer contributions) of $18,500/year into your pre-tax 401k Obviously that's a lot of savings and it takes people a long time to get raises/promotions to that level, so if you don't have enough to do that no biggie. That's just the general pecking order. Okay so I have steps 1 and 2 covered (step 1 for sure, and I just set up step 2). I don't have step 3 done, as I haven't opened an IRA (I want to eventually do a Roth IRA, just haven't opened it yet), and I don't think I have step 4 accounted for. $18,500/year into my pre-tax 401k would be almost 4x more than I'm currently putting into it per-year. I don't think I can actually get to that level given my salary lol If I change my contribution from 8% pre-tax to 8% Roth, what exactly happens? EDIT: Also, I should mention I have it setup to increase 1% every year. Edited February 14, 2018 by Darth Pees Link to comment Share on other sites More sharing options...
LETSGOBROWNIES Posted February 14, 2018 Share Posted February 14, 2018 The part about an HSA that gets overlooked is, when you NEED the money for health related expenses, you often aren’t in a position to earn more at that moment (off work, on disability, etc.) Also, God forbid you ever get cancer or something like that, treatment can be 3x per week with a copay for each visit. For a lot of folks that’s $150/week IN ADDITION to your deductible, out-of-pocket max, etc. The financial benefits of maxing an HSA are wonderful, but the idea of (after a few years of saving) not having to worry about the cost of health care is even better. Link to comment Share on other sites More sharing options...
pwny Posted February 14, 2018 Author Share Posted February 14, 2018 14 minutes ago, ramssuperbowl99 said: My understanding is that your employer contributions are always pre-tax (which is why they match instead of just paying you like they normally would). I'd start maxing your traditional (pre-tax) 401k first. I’m confused at what you’re getting at here. Link to comment Share on other sites More sharing options...
TheVillain112 Posted February 14, 2018 Share Posted February 14, 2018 There's a lot of these floating around, but this is probably my fav so far... 1 Link to comment Share on other sites More sharing options...
MWil23 Posted February 14, 2018 Share Posted February 14, 2018 Dave Ramsey has made me walking proof that if you follow a few basic principles, that you can be in really solid financial shape as long as you stick to them, don't compromise, and are wise with your money, even if that means waiting until you're 31 to invest in the market, outside of retirement, which thankfully I've always done and always will do. Link to comment Share on other sites More sharing options...
AFlaccoSeagulls Posted February 14, 2018 Share Posted February 14, 2018 So if I can, I'd like to re-visit the HSA stuff real quick. Now that I've maxed out my contributions, I still don't know what I should allocate the investments in. So when I load the page, there's a bunch of categories: Mutual Fund Investments Large Cap - US Equity Small and Mid Cap - US Equity Non-US Equity Fixed Income Asset Allocation And then in each of those sections there's like 5-10 options... Link to comment Share on other sites More sharing options...
ramssuperbowl99 Posted February 14, 2018 Share Posted February 14, 2018 23 minutes ago, iPwn said: I’m confused at what you’re getting at here. Well the way the question was worded made me wonder if the question was "my employer would match 6% in a pre-tax 401k or 6% in a post-tax 401k". Link to comment Share on other sites More sharing options...
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