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I'm looking for advice for how to take advantage of tax year where I am able to make a very large donation to our donor advised fund (DAF) and reduce our marginal tax bracket from 35% to 24%.
Background:
- Typically donate ~$10-15,000 to favorite charities through our donor advised fund (DAF)... love thought of creating "mini-endowment" and donate investment returns.
- Two primary income sources: W2 (~$400,000) and 1099 ($145,000). Married with single income.
- Investments: Max out W2 401K, HSA, Backdoor Roth x 2. Plan to contribute 20% 1099 Profits to I401K pretax
- Brokerage Account ~$165,000 with $42,000 Long Term Capital Gains
- 2020 Taxable Income ~ $500,000 (Line 15 1040)
Questions:
1. I'm strongly considering transferring $165K from my brokerage account to our DAF this year vs. 3 years. It would be nice to fully fund our donation plan moving forward. Any issues with this thought process?
2. Megabackdoor Roth question: I currently have a VG Solo 301K for 1099 business and contribute $19,500 employee pretax to W2 401K. I'm thinking about doing a rollover of these funds to TD Ameritrade or Fidelity to take advantage of a Megabackdoor Roth. Am I able to make an employer pre-tax contribution to 401K (20% profits ~ $25,000) and then add another $33,000 post-tax to Roth while paying 24% marginal tax rate? I anticipate transitioning to part-time in my 50s (5 - 9 years from now) and plan to do Roth conversions at that time, but would probably still be in the 24% tax bracket.
Thanks for any advice you're able to offer.
Background:
- Typically donate ~$10-15,000 to favorite charities through our donor advised fund (DAF)... love thought of creating "mini-endowment" and donate investment returns.
- Two primary income sources: W2 (~$400,000) and 1099 ($145,000). Married with single income.
- Investments: Max out W2 401K, HSA, Backdoor Roth x 2. Plan to contribute 20% 1099 Profits to I401K pretax
- Brokerage Account ~$165,000 with $42,000 Long Term Capital Gains
- 2020 Taxable Income ~ $500,000 (Line 15 1040)
Questions:
1. I'm strongly considering transferring $165K from my brokerage account to our DAF this year vs. 3 years. It would be nice to fully fund our donation plan moving forward. Any issues with this thought process?
2. Megabackdoor Roth question: I currently have a VG Solo 301K for 1099 business and contribute $19,500 employee pretax to W2 401K. I'm thinking about doing a rollover of these funds to TD Ameritrade or Fidelity to take advantage of a Megabackdoor Roth. Am I able to make an employer pre-tax contribution to 401K (20% profits ~ $25,000) and then add another $33,000 post-tax to Roth while paying 24% marginal tax rate? I anticipate transitioning to part-time in my 50s (5 - 9 years from now) and plan to do Roth conversions at that time, but would probably still be in the 24% tax bracket.
Thanks for any advice you're able to offer.
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