Hello WCI forum! First post. Fan of the book and the blog. I evangelize for WCI with all of my medical friends whenever they ask about money.
I am in an orthopedic fellowship this year. The fellowship ends in August. We (wife and I) currently max out our Roth IRAs, her Roth 401k, my 403b, HSA, and we save in a 529 for our children (we are blessed that she is still able to be working!). In 2017, our income level was qualified to contribute to a Roth IRA. This year after signing a contract (probably in March) and starting a real job in September, I anticipate we will be over the Roth income limit for 2018 by the end of the year. In attempting to do the backdoor Roth for 2018, we don't have the $11000 up front to do it all at once. Usually we contribute a little per month up to the Roth limit as income comes in through the year and by the end of the year it is fully funded.
I’m thinking of 3 options:
1.) Store the money in my bank account as it comes in, earning 0.25% interest until it reaches 5500, then proceed with the backdoor Roth for my wife and then repeating for myself. Safest yet not in the market for a longer period.
2.) Contribute non-deductible contributions monthly to our T-IRA (buying index funds) until they hit 5500 and then backdoor convert to a Roth. This would get money into the market, but short term capital gains would be taxed and I’m not sure what would happen. I have the feeling calculating taxes owed on this would be messy with monthly contributions.
3.) Contribute monthly to my brokerage account and buy similar commission free ETFs to what I would have in my IRA. Once this hits $5500, sell and do the backdoor Roth. Short term capital gains would be owed on any gains. I anticipate that I would make more than 0.25% in my checking account and I would also be able to beat inflation, but if the bubble pops then I have some tax loss harvesting to do.
Any thoughts on which method would be the best balance between getting money into the market sooner and the least headache when doing the backdoor Roth at the end of 2018? Or am I worrying too much about this and just need to do option 1 and relax a little?
Thanks for all comments and replies.
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