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Help with where to put money next?

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  • Help with where to put money next?

    Been reading this blog a lot of last couple months and have learned a lot. Want to get some advice or how my plan looks and what I should do next.

    My wife makes $125k a year and I make around $175k.

    She has a 401k at work that we are now maxing out with an employer match of essentially 3%. So with max 401k and her employer match that is around $21,500 in her 401k a year.

    I have a simple IRA at my work I am maxing out. It has to go into Morgan Stanley account first. I am then pulling it out to a Vanguard traditional IRA and investing in Vanguard Index funds. My match is also 3% so my totally a year should be $17,500.

    So we have $39,000 going into tax deferred accounts. We are going to do a backdoor Roth in my wife's name since she has no IRA. That will be another $5,500.

    My question is. If we have another $5-15k to invest what should we do? The balance on my work IRA will mean I will essentially be pro rata taxed on the entire $5,500. Should I go ahead and do backdoor IRA in my name also?

    Should we max out HSA?

    I might be able to do a solo 401k but I don't do a lot of consulting. Maybe once a year if that. I read about rolling over IRA to a solo 401k to avoid pro rata of backdoor. Vanguard solo 401k don't allow rollovers into them from Ira but I think I read somewhere that Fidelity does.

    Thank you in advance for the advice. Love this site.

  • #2
    I would max out the HSA.  Triple tax free if used for healthcare.

    After that, you could consider a taxable account with Vanguard.

    If you've got children, or plan to have them, you might consider a 529 account.

    Comment


    • #3
      Agree with HSA. Maybe you could lobby for a better overall plan.

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      • #4
        I will do HSA. Should I skip backdoor Roth for me since I will be taxed on basically full amount?

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        • #5
          I agree with all others that the HSA is a no brainer as a savings vehicle and should not be used for any medical expense.

           

          I also suggest the mega back door Roth see Harry Sit and google back door mega Roth at the finance buff. If you are going save the money,  it may  at least tax free accumulate. It looks like you are a superior saver so you may be at a high tax rate in retirement.

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          • #6
            Like everyone else, I'd do the HSA.  It has multiple tax advantages and you can even invest it/grow it like a 401(k) and use it for non-medical funds when you reach the appropriate age.

            As mentioned, another possibility is the 529 if you have children or either of you wanted to go get another degree. Depending on your state, you may get a tax break.  You should look into your states 529 rules.  We are in Iowa, and we can contribute up to $3180 per student per account.  So my wife and I each put in $3180 for each of our boys and, while we don't get federal breaks, we get $12,720 (2 boys x 2 accounts x $3180) in deductions form the state.

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            • #7
              So if I

              max out wife's 401k with 17,500
              Max out my Ira with 12,500
              Do wife backdoor Ira 5,500
              Max out HSA. $5-6k(forget exact amount

              If I can do mega back door Roth should I do backdoor Roth for myself or not?

              Comment


              • #8
                I mean I I CAN'T do mega back door Roth for wife's 401k should I do backdoor Roth IRA for myself?

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