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i401k question

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  • i401k question

    Looking for some free advice...

    Currently my practice (7 partners) has a crummy 401k with poor investment options. The best investment options still cost me about 100bps.

    I'm about to open an individual 401k through Vanguard and will be contributing 20% of my 1099 call and consulting income as "employer contribution" as well as the $18k employee contribution. Once this is set up, I'll be able to still contribute $35k/year through profit sharing into the crummy 401k.

    I have the option of setting up the i401k as traditional or Roth. I'm in 39.6% tax bracket so I'm thinking that traditional makes more sense. Am I wrong?


  • #2
    Yes, you probably want to do the traditional 401k option. Of course, you can set up your SOLO with a Roth option and switch to Roth at will. Use the Roth for market dips (like yesterday).

    You've got a great opportunity to avail yourself of 2 $18k elective contributions. Next, I'd focus my energies on getting that partnership plan changed! Why wouldn't everybody be on board for that?

    Also recommend you read Simple Wealth, Inevitable Wealth (2013 version) by Nick Murray.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Why live with a crummy 401k? With 7 partners, sounds like a small group practice... If you have any say at all in the matter, maybe try explaining to your colleagues how much they are losing with suboptimal funds and high costs. Talk to a small group retirement plan advisor like Kon Litovsky to look over the plan and advise if/what changes are warranted.