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  • What to do...What to do?

    30 y/o final year resident, heading for 2 yr fellowship.  Recently married.

    Loans: 40K left at 6ish%
    Wife TIRA recent rollover from job: 30k (stocks)
    My Roth IRA: 10K (bonds)
    No mortgage, renting, and will for next 3yrs
    Own side non medical business: <10k/yr profit, passive income, but registered LLC

    Should we convert TIRA to Roth and take the tax hit?
    Technically, in 3 yrs I wont be able to do (without paying more taxes) backdoor Roths without converting TIRA, correct?
    Should I pay off all loans prior to further investments?
    Should I set up SEP IRA for 20% of <10K profit? (May not help at this point when I can't even max IRAs)

    Anything else can be recommended?  I don't know what direction to head over the next few years.

  • #2
    Not an expert by any means but this would be my plan.

     

    Roll tIRA into 401k if possible. You will want the backdoor roth option down the road.

    Paying off any debt @ 6% is never going to be faulted and is likely a long term positive move.

    I'd think the best use of your side business would be a separate solo 401k for that company if possible. In the future this will allow 53k (MD job) + X$ from side job to be tax deductible.

     

    Obviously your current income, expendable income makes a significant difference for how much you can currently save etc, but presuming a large pay increase in 3 years (if no moonlighting etc now) then this should be a great plan. Goal of debt free at end of fellowship is quite an enviable position for most post training.

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    • #3


      Should we convert TIRA to Roth and take the tax hit? Technically, in 3 yrs I wont be able to do (without paying more taxes) backdoor Roths without converting TIRA, correct? Should I pay off all loans prior to further investments? Should I set up SEP IRA for 20% of Click to expand...


      • What the heck are you doing at 30 y.o. with bonds in a Roth IRA? Convert TIRA to Roth, definitely, and get into an appropriately-diversified equity mutual fund/ETF portfolio.

      • Loan balance is low, live cheap and pay them down but don't skimp retirement savings.

      • If you put $ in a SEP, you'll be right back where you started with the back-door Roth problem. Set up a SOLO-k instead.




        Anything else can be recommended?  I don’t know what direction to head over the next few years.
        Click to expand...


        Fee-only financial planning or read The One Page Financial Plan. Or both.


      btw, loved the name you chose for this thread. Evokes a mental image of anguish and hand-wringing.

       
      Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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