Maxing Roth IRA on Jan 1st?

[EMres123]

New resident here. Due to some various side jobs during medical school, I have already maxed out my Roth for a year. Now with my resident income (it feels like so much money!), I will be able to save up the cash with my paychecks to have $5500 to go on January 1st barring anything crazy happening. My plan was to just put the cash in Ally bank savings until January 1st. Is there anything wrong dumping it all in for 2017 right away or is it better to gradually put it in given market volatility?

As far as I know I have the rest of my financial affairs in order for a new resident: on repaye, emergency account, disability insurance, 10% of income going into 401k etc.

Shoutout to WCI for educating my generation of doctors. His impact is definitely felt. I.E. At orientation last week, people were raising their hands asking things like, "is there a roth option for retirement accounts", "is disability insurance specialty specific?" and talking about the importance of being on REPAYE during residency. I'm not sure if we would have even known these things before this blog came around.

[jfoxcpacfp]

EMres123 wrote:

New resident here. Due to some various side jobs during medical school, I have already maxed out my Roth for a year. Now with my resident income (it feels like so much money!), I will be able to save up the cash with my paychecks to have $5500 to go on January 1st barring anything crazy happening. My plan was to just put the cash in Ally bank savings until January 1st. Is there anything wrong dumping it all in for 2017 right away or is it better to gradually put it in given market volatility?

As far as I know I have the rest of my financial affairs in order for a new resident: on repaye, emergency account, disability insurance, 10% of income going into 401k etc.

Shoutout to WCI for educating my generation of doctors. His impact is definitely felt. I.E. At orientation last week, people were raising their hands asking things like, “is there a roth option for retirement accounts”, “is disability insurance specialty specific?” and talking about the importance of being on REPAYE during residency. I’m not sure if we would have even known these things before this blog came around.

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Good for you! Yes, dump it in as soon as you can. Odds are in your favor as the market is up, on average, 7 out of 10 days (over the long term). Just make sure to have a well-balanced portfolio.

[The White Coat Investor]

Great to hear about the impact.

By the way, you can't actually invest on January 1st. Markets are always closed.

Bear in mind that you might come out behind leaving the money in cash for the next six months versus investing it, even in a taxable account. I assume you've already maxed out a 2016 Roth IRA?

[EMres123]

Roth for 2016 is Maxed out.

 

I didn't even think about opening a taxable account instead of just having it sit in ally savings for the rest of the year. I will probably end up doing that and then transfer it over to my Vanguard Roth in January 2017. I could also just bump up my 401k contribution (obviously won't be able to fully max this as a resident), but then I won't have access to that money to put in my Roth next year.

 

Thanks for the advice!

[jfoxcpacfp]

EMres123 wrote:

I didn’t even think about opening a taxable account instead of just having it sit in ally savings for the rest of the year. I will probably end up doing that and then transfer it over to my Vanguard Roth in January 2017.

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Just a thought - you will have to liquidate to transfer to your Roth. If the account is down, you may have to change your strategy to get to the full $5,500.

[TheGipper]

What will happen if they ban backdoor Roth mid year (which seems better than 50/50 odds) Will we have to recharacterize and get stuck in a nondeductible IRA?