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  • DMFA
    replied
    Total contribution limits are $18,000 across *all* 401(k) and 403(b) combined for elective deferral, aka "employee" contributions.

    "Employer" 401(k) contribution is limited to 20% of net profit defined as income, minus expenses, minus half self-employment tax. This is actually the same as the "25% of earnings" rule, just expressed as 1:4 instead of 1/4.

    Limit per 401(k) is $54,000 per unrelated employer. If you have a 403(b), though, you're considered to own it, hence you're limited to $54,000 totaled across all 401(k) and 403(b) accounts combined.

    See WCI's blog post about multiple 401(k) rules.

    Leave a comment:


  • childay
    replied


    I think this has increased to 25% AGI for 2017.  Also the maximal contribution (which you will not have hit with current 1099 income) will be limited by contribution and match to your employer sponsored 401k ($54,000/year cumulative for all 401k + $6000 catch-up over 50).  I am in the same boat, small fluctuating 1099 income. But the income has slowly grown over 7 years, and that tax deferred savings compounded over many years should look good when I am ready to retire.  IMO, totally worth opening a solo 401k.
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    I don't believe the % has changed.  And there is not an overall limit to "employer" contributions, only the 18k "employee" contributions.

    https://www.whitecoatinvestor.com/multiple-401k-rules/


    Pre-tax: 401K- $18K plus company match (it was $12K for 2016) 403B-$18K 457- $18K 401A- $11,250 plus $22,500 company match $99,750 pre-tax for 2016   Post-tax- $72K to betterment, $70K to bank savings (topped of EF)   Total for 2016-$243,750
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    Sounds like you are doing great!

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  • AnesPain
    replied





    Are there any restrictions for solo given fluctuating income? For example, if 1099 is $30k next year, can I still put away $18k into solo? 
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    Yes there is a yearly limit on the solo401k.  The contribution is based on your net business profits * 20% with the 18k max limit which you would not hit currently of course.  But you can keep your solo 401k open regardless of if you have income that year or not.
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    I think this has increased to 25% AGI for 2017.  Also the maximal contribution (which you will not have hit with current 1099 income) will be limited by contribution and match to your employer sponsored 401k ($54,000/year cumulative for all 401k + $6000 catch-up over 50).  I am in the same boat, small fluctuating 1099 income. But the income has slowly grown over 7 years, and that tax deferred savings compounded over many years should look good when I am ready to retire.  IMO, totally worth opening a solo 401k.

    Leave a comment:


  • RJ
    replied


    Yes there is a yearly limit on the solo401k.  The contribution is based on your net business profits * 20% with the 18k max limit which you would not hit currently of course.  But you can keep your solo 401k open regardless of if you have income that year or not.
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    Great info thank you.


    Can you break the yearly savings down?  You have the balances above but not clear what accounts are current.  30% sounds pretty good of course!
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    Pre-tax:

    401K- $18K plus company match (it was $12K for 2016)

    403B-$18K

    457- $18K

    401A- $11,250 plus $22,500 company match

    $99,750 pre-tax for 2016

     

    Post-tax- $72K to betterment, $70K to bank savings (topped of EF)

     

    Total for 2016-$243,750

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  • childay
    replied


    Are there any restrictions for solo given fluctuating income? For example, if 1099 is $30k next year, can I still put away $18k into solo?
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    Yes there is a yearly limit on the solo401k.  The contribution is based on your net business profits * 20% with the 18k max limit which you would not hit currently of course.  But you can keep your solo 401k open regardless of if you have income that year or not.


    Our gross income is around 800K; I haven’t done exact spending calculations, but savings rate is approximately 30% with about 85K going into pre-tax accounts yearly (which includes company match for both of us).
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    Can you break the yearly savings down?  You have the balances above but not clear what accounts are current.  30% sounds pretty good of course!

    Leave a comment:


  • StarTrekDoc
    replied




    @StartTrekDoc- thank you so much.

    No access to DCP yet. They are talking about it at my work, but hasn’t happen yet. So far- 401k, 403B, 457 and 401A. Still lots of pre-tax space, which we fully fund.

    Wife does work for university- one great perk- kids get one degree for free (undergrad or graduate). With 2 kids, could be huge advantage. That’s why I am not throwing too much money into 529s.

    Do you recommend a specific Muni Bond with Vanguard? How do you purchase Direct Cali Bonds?

    Thank you for bringing up HELOC, I have one for $200,000.

    I am very interested in direct rental property ownership, but honestly don’t really know how to start. Around here, real estate prices are crazy now, does not make sense to me as investment property. Out of state direct ownership- how does one start?
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    --Sounds like the Cardinal perk on the free education.   At least that's the only place I've seen it---though their retirement plan is paltry.

    I use Fidelity since UC system is Fidelity and I'm a neat freak.  So Fidelity it is .

    http://www.buycaliforniabonds.com/  -- will link you to their programs.

    RE:   there's a lot out there.  Are have rentals out in Stockton which we use a management company.  There are a lot of different options and attitudes and thresholds.  Some allow for cash flow neutral, vs negative vs only xxx positive on investment.  So the range varies widely based on what your goals are (cash flow vs appreciation holds vs leaveraged investment)--lots of options --- takes quite a bit of research though and not for the faint of heart.

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  • RJ
    replied
    @childay- thank you for your reply.

    Are there any restrictions for solo given fluctuating income? For example, if 1099 is $30k next year, can I still put away $18k into solo?

    Our gross income is around 800K; I haven't done exact spending calculations, but savings rate is approximately 30% with about 85K going into pre-tax accounts yearly (which includes company match for both of us).

    Leave a comment:


  • childay
    replied


    @WealthyDoc- Is it worth while setting up solo 401K for relatively low 1099 income (plus it fluctuates)? I agree about pre-loading 529s, but there is no tax benefit for me in my state. Constantly looking at surgery center, etc. investments. Nothing worthwhile so far.
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    Yes, you should set up the solo.  We used fidelity.  Don't use vanguard.  Then you can roll the old 403B in there and possibly have lower fees than the old work plan is charging.  Plus you will presumably have better access to various index funds.

     


    Now that I look at it, portfolio looks too complex. How would you simplify it?
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    I don't see the need to hold so many funds in each account.  It is okay, just a bit overly complicated.  Especially if you have to rebalance each account..

     


    Emergency fund: $200,000 sitting in bank savings at 0.1% (I know I am going to get comments about this one).
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    For sure get it into an Ally account earning 1%.  For me I would invest at least 3/4 of that in taxable.  Taxable can be considered a second tier EF.  However with two-physician family becomes less likely you will even need a EF unless your expenses are very high..

     

    Lastly you didn't mention your income or expenses or how much you are saving for retirement yearly..

    Leave a comment:


  • RJ
    replied
    @StartTrekDoc- thank you so much.

    No access to DCP yet. They are talking about it at my work, but hasn't happen yet. So far- 401k, 403B, 457 and 401A. Still lots of pre-tax space, which we fully fund.

    Wife does work for university- one great perk- kids get one degree for free (undergrad or graduate). With 2 kids, could be huge advantage. That's why I am not throwing too much money into 529s.

    Do you recommend a specific Muni Bond with Vanguard? How do you purchase Direct Cali Bonds?

    Thank you for bringing up HELOC, I have one for $200,000.

    I am very interested in direct rental property ownership, but honestly don't really know how to start. Around here, real estate prices are crazy now, does not make sense to me as investment property. Out of state direct ownership- how does one start?

    Leave a comment:


  • StarTrekDoc
    replied
    HCOL is hard.  With that mortgage and your loans with your income --- pay off forever.  I wouldn't change that plan.

    Are either you have access to a Deferred Compensation Plan since I see a 457 in there--perhaps UC system -- that's a potential for rollover to Roth IRA if so.

    Since two income household and life busy with 2 kids -- it appears you want to take a more autopilot investing methodology.  That's perfectly fine as it really depends on that desire on how active investing one should be that tailors responses --especially the real estate question.

    Questions:

    1. I’ve read on here that it’s not a good idea to keep bonds in taxable. I wanted to exchange Total Bond Market Fund for a muni bond of some sort. Which one would you recommend?  True.   Our bonds are in our 403b and 457 accounts.   ONE AREA you can consider modifying is the EF convert to MuniBonds -- Either as suggested a Muni Bond Fund or laddering yourself in purchasing varying lengths and times -- all depends on your desire.   We do both.  Mostly MuniBond Fund  but with boluses of Cali Direct Bonds every year as we too have a large mortgage that we don't want to pay off as we live in HCOL and high risk of natural disaster -- so that's our safety net against disaster essentially,.

    2. Now that I look at it, portfolio looks too complex. How would you simplify it?   Bogleheads 3 fund -- or really KIS - Age based funds

    3. What would recommend for EF other than sitting in checking account (I’ve heard good things about Ally bank)?  as above -- Muni Bond Fund. -- fast access --  Use HELOC if immediate access of funds.  with the appreciation of value in 3 years, you should be able to get easily with current mortgage bank

    4. We don’t have any real estate exposure in our portfolio. Any REITs or crowdfunding RE investments I should be looking at?  --Really depends on your own involvement on this.  We have 4 properties that we hold and varying management active on them.  2 local; 2 remote (using management co).  realtyshares is okay and we dabble, but REIT is just fine for that too. --- different options and pros/cons for each one -- whole different Ophrah show.

      1. Any other general advice/comments?    Sounds like RE is an interest to you.   Take your time researching this and how you'd like to get into it.  Lots of different avenues and really need to ID what you want out of it.   You appear to have a lot of post-tax income coming through and direct RE is a very good way to defer taxes through depreciation.



    Leave a comment:


  • Marko-ER
    replied
    You are welcome.  And I agree with almost everything WealthyDoc stated as well... just depends on how "hands on" you are with investments and how you handle complexity.  If you want to keep things simple, then VWIUX is a great solution for bond investments in taxable (is it also AMT-protected?).  As far as betterment, if you are selling within a tax-advantaged account (IRA, 401k, 403b or their ROTH analogues) and then you transfer into the same type of account in betterment, there is no capital gains.  Just missing a couple of days of fluctuations in the market.  If I were you, I would NOT touch your Vanguard IRAs, since that is a good fund selection with low ER.  I would look into moving into betterment that Old DC/403B- $24,000 in pathway 2050 target fund that you mentioned... what's the ER on that target fund?  What are the annual administrative costs for the 403B? (my previous employer's 403B charged 0.08, which in retrospect is reasonable, but add that on top of 0.16 for the mutual fund without the ancillary benefits of betterment, and accumulate over 30 years that those fee$ add up).

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  • RJ
    replied
    @AnesPain- thank you! Will look into those options.

     

    @Marko-ER- thank you for great advice. I had no idea about Roth with Betterment. I will do that to make it simpler. I was actually thinking about liquidating my Vanguard accounts period and transferring everything to Betterment. But I will have to pay capital gains, won't I?

     

    @WealthyDoc- Is it worth while setting up solo 401K for relatively low 1099 income (plus it fluctuates)? I agree about pre-loading 529s, but there is no tax benefit for me in my state. Constantly looking at surgery center, etc. investments. Nothing worthwhile so far.

    Leave a comment:


  • WealthyDoc
    replied


    Questions: I’ve read on here that it’s not a good idea to keep bonds in taxable. I wanted to exchange Total Bond Market Fund for a muni bond of some sort. Which one would you recommend? Now that I look at it, portfolio looks too complex. How would you simplify it? What would recommend for EF other than sitting in checking account (I’ve heard good things about Ally bank)? We don’t have any real estate exposure in our portfolio. Any REITs or crowdfunding RE investments I should be looking at? Any other general advice/comments?
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    Questions:

    1. I’ve read on here that it’s not a good idea to keep bonds in taxable. I wanted to exchange Total Bond Market Fund for a muni bond of some sort. Which one would you recommend? VWIUX Vanguard intermediate term tax exempt fund, admiral

    2. Now that I look at it, portfolio looks too complex. How would you simplify it? Agree.  Just buy the entire market such as VTSAX or buy just a Target fund

    3. What would recommend for EF other than sitting in checking account (I’ve heard good things about Ally bank)? Ally is fine but your EF isn't for return.  It is for security.  Vanguard tax-exempt money market fund would be an option too.  Personally I would slash the EF by about 2/3.

    4. We don’t have any real estate exposure in our portfolio. Any REITs or crowdfunding RE investments I should be looking at? Crowdfunding takes some time and some risk that you may not have/need.  You could add VNQ to your tax deferred account if you want to.

    5. Any other general advice/comments? Doctors don't need a lot of special advice.  Save as much as you can.  Can you live off only one salary and bank the rest?  Start a SEP-IRA or Solo 401(k) for the medicolegal income.  Pay off your debt.  Look into surgery center, imaging center, hospital, PT investing.  You will likely need more in your 529s.  Pre-load for the most tax benefit rather than annual contributions.

    Leave a comment:


  • Marko-ER
    replied
    Answers to questions:

    (1)  Yep, read that article carefully and yes, for high income earners munis make a lot more sense, especially state-specific munis if you live in a highly taxed state (esp. Cali, though you have to be careful picking bonds).  I use Fidelity to build individual bond ladders and hold them to maturity.  Transactional costs are very, very low (1$ per 5000 invested) and if you hold bonds to maturity, you will not be subject to as much price fluctuations (though you are still subject to intrest rate risk).

     

    (2)  Yep, a bit too  complex, but far from the worst.  One (small) suggestion -- consider rolling over some of your IRA/ROTH IRA into betterment.  Betterment will give you certain # of months off their fees if you do, which with their increase in fees (from 0.15 to 0.25 in June), would be most welcome.  Plus betterment works better (I know bad pun), if you use their tax-managed/optimized approach and you have both taxable and tax-advantaged accounts with them.  Last but not least -- if you are contributing IRAs via traditional, betterment makes it ULTRA easy to do conversion-recharacterization-conversion etc.  One click of a mouse, unlike several forms (often need notarized) at other places.

    (3)  Agree with AnesPain.  I have CapitalOne 360 at 1.05% and DiscoverBank at 1.05% APR.  I really like discover (can send you a referal link, PM me), they give you a saving account (at 1.05%) and a linked checking account with 10cents cash back at every transaction, I use it for piddly stuff like at vending machines.  Another big bonus, they do online transfers free (most online banks do), but also really quick, cash available next business day -- many places like paypal drag their feet for 3-4 business days.

    (4)  REITs, yeah, not a bad idea.  Two ways to go about it:  VNQ and VNQI (since you already have vanguard; I use Schwab, because ER is marginally cheaper and Vanguard tilts toward small caps, which is a bit of a pro & a con).  Alternatively since you already like roboadvisers, consider wealthfront, since their index includes REITs.

    (5)  Read a lot.  Jack Bogle, William Bernstein are my favs, look up book recs on WCA site.

     

     

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  • AnesPain
    replied
    For EF/short term funds, my wife and I use Ally, Barclay's and Capital One 360.  Ally is currently giving us 1.05% interest, Barclay's 1.0%, and Capital One 0.75% (varies with amount of money, but it was at 1.0%, when we had more money in there).  All three have been easy to get money and and out without problems.

    Leave a comment:

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