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Situation: currently FT physician. Wife used to work full time as a midlevel but has stopped the past couple years to raise our children. She recently did a couple article reviews for one of her professional magazines and was paid $1000 for it. That was her only income for the year. Her plan is to eventually go back to work part time, but that likely won't be for a few more years. We have no idea if this will be a one time thing or she will make periodic income in the future. I currently have an i401k with Vanguard and my question is essentially if I should set one up for her and invest.
Reasons to open i401k and invest:
-Given she has no other income, my understanding is she could put the entire $1000 in the i401k as the employee, saving on federal/state taxes (but not payroll). Not a world of difference, but nevertheless, it is still money saved.
-Would give us an account already setup in the event she does any work in the future, either one off jobs or eventually when she goes back to work part time in a few years (if she goes 1099).
-We don't currently have a traditional or SEP IRA or old retirement accounts from previous jobs but I suppose the i401k always gives us a place to put that money in the future (although I think that might be an issue with Vanguard).
Reasons not to open i401k:
-A decent amount of work (setup and managing ongoing Vanguard documents) for such a small investment. Likely only a few hundred in tax savings at my marginal tax bracket.
All in all, I was thinking of setting it up because I'm the person who hates to "leave any money on the table." But figured I'd get the thoughts from the rest of the group here. My understanding is the i401k account needs to be setup by 12/31 but I have until 4/15 to actually contribute/invest the $1000. Thanks!
Reasons to open i401k and invest:
-Given she has no other income, my understanding is she could put the entire $1000 in the i401k as the employee, saving on federal/state taxes (but not payroll). Not a world of difference, but nevertheless, it is still money saved.
-Would give us an account already setup in the event she does any work in the future, either one off jobs or eventually when she goes back to work part time in a few years (if she goes 1099).
-We don't currently have a traditional or SEP IRA or old retirement accounts from previous jobs but I suppose the i401k always gives us a place to put that money in the future (although I think that might be an issue with Vanguard).
Reasons not to open i401k:
-A decent amount of work (setup and managing ongoing Vanguard documents) for such a small investment. Likely only a few hundred in tax savings at my marginal tax bracket.
All in all, I was thinking of setting it up because I'm the person who hates to "leave any money on the table." But figured I'd get the thoughts from the rest of the group here. My understanding is the i401k account needs to be setup by 12/31 but I have until 4/15 to actually contribute/invest the $1000. Thanks!
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