I found out that wife needs to open an IRA and put in $5500 to lower the tax bill ;). I cannot do that since I already have a 401(k). She will also have a 401(k) soon so next year she will not be able to make IRA contributions.

Questions: do we chose Schwab, or go with Vanguard which also handles the 401(k) accounts? Most likely we won't be making frequent trades, we will probably buy a mutual fund such as Vanguard and leave it there for 10-15-20 years.

Thanks

vanguard if you like their options.

Vanguard Mutual Fund.

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Go with Vanguard. Pick a target date fund if you don't want to think about where your money is.

>I cannot do that since I already have a 401(k).

Meaning you don't have the funds? You can certainly put money into both.

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FYI, in the future you can still make individual IRA contributions even if you have an employer's 401(k).

I opened up a Vanguard for an individual IRA in addition to my employer's 401k provider (not Vanguard), but really only out of curiosity, a chance to compare and a little bit of not-all-eggs-in-one-basket superstition.

I have a Vanguard Target IRA fund and like its performance.

Totally unscientific and unsupported, but I think Vanguard generally has pretty good funds. You can probably (maybe) buy them at Schwab too, but if you already have the 401(k) at Vanguard, that's what I'd do.

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Acer
FYI, in the future you can still make individual IRA contributions even if you have an employer's 401(k).
...

I know, but with both of us working now, we hit the limit. Yes, I can make IRA contributions, but it will not be tax deductible. So I might as well put it in a normal stock account, at least I could withdraw whenever I wanted. Am I missing something?

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Acer
FYI, in the future you can still make individual IRA contributions even if you have an employer's 401(k).
...

I know, but with both of us working now, we hit the limit. Yes, I can make IRA contributions, but it will not be tax deductible. So I might as well put it in a normal stock account, at least I could withdraw whenever I wanted. Am I missing something?

The only thing that you might be missing there (and I may be wrong - not an accountant) is that that money in an IRA would earn dividends and such tax free.

.

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Phony Stark's Robot



Edited 1 time(s). Last edit at 03/14/2018 04:23PM by pRICE cUBE.

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pdq

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Acer
FYI, in the future you can still make individual IRA contributions even if you have an employer's 401(k).
...

I know, but with both of us working now, we hit the limit. Yes, I can make IRA contributions, but it will not be tax deductible. So I might as well put it in a normal stock account, at least I could withdraw whenever I wanted. Am I missing something?

The only thing that you might be missing there (and I may be wrong - not an accountant) is that that money in an IRA would earn dividends and such tax free.

But I could also put more money in 401(k) and the outcome would be the same, right?

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pdq
The only thing that you might be missing there (and I may be wrong - not an accountant) is that that money in an IRA would earn dividends and such tax free.

But I could also put more money in 401(k) and the outcome would be the same, right?

A traditional IRA would essentially work the same as your 401k.

A Roth IRA has tax free withdrawals, but you put in post-tax money. There are also income limits for a Roth IRA (i.e. somewhere after 100k in income for a single person, you get partial contribution limits and at a certain income point, you are no longer eligible to contribute anything to a Roth IRA). My dad is a huge fan of Roth's since he thinks any tax free income is a loop hole of some sort. Of course, whether or not it is better for you is a complicated question involving how much you make now vs. how much you think a Roth would grow, etc, etc.

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Gareth

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pdq
The only thing that you might be missing there (and I may be wrong - not an accountant) is that that money in an IRA would earn dividends and such tax free.

But I could also put more money in 401(k) and the outcome would be the same, right?

A traditional IRA would essentially work the same as your 401k.

A Roth IRA has tax free withdrawals, but you put in post-tax money. There are also income limits for a Roth IRA (i.e. somewhere after 100k in income for a single person, you get partial contribution limits and at a certain income point, you are no longer eligible to contribute anything to a Roth IRA). My dad is a huge fan of Roth's since he thinks any tax free income is a loop hole of some sort. Of course, whether or not it is better for you is a complicated question involving how much you make now vs. how much you think a Roth would grow, etc, etc.

My accountant is likewise a proponent of putting as much into a Roth as I can (stated as I'm 39yo and have a few years yet to work).

There are age and income limits on Roth IRAs.

/Mr Lynn

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There are conditions in which even if you have a 401k, and you do NOT have a traditional IRA, you can make up to a $5500 contribution to a traditional IRA and immediately afterwards roll that traditional IRA through the “black door” and into a Roth IRA. Drawback: you pay taxes on the contribution; it’s ultimately a Roth IRA. Benefit: that contribution grows and is withdrawn tax-free. I was skeptical when my tax preparer pointed this out, but it’s true. I qualify for it; my wife does not. Google “back door Roth IRA” for more information.

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Acer
FYI, in the future you can still make individual IRA contributions even if you have an employer's 401(k).
...

I know, but with both of us working now, we hit the limit. Yes, I can make IRA contributions, but it will not be tax deductible. So I might as well put it in a normal stock account, at least I could withdraw whenever I wanted. Am I missing something?

If you can't get a deduction for a regular IRA, then you should consider contributing to a Roth IRA, which is funded by after tax dollars. But when you are ready to start withdrawing for retirement , all of your gains in the Roth account are tax free. With a traditional IRA all withdrawals are taxed.

but there are also limits for Roth IRA.

....thought you were looking to join the Irish R...........Army........

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but there are also limits for Roth IRA.

practically speaking, nope - [www.bogleheads.org]

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Schwab is now advertising an S&P index fund with microscope fees, trying to beat Vanguard at their own game. If that's the direction your plan to go with investments, check it out. You can get free advice, including information about taxes and contributions, from any of the big investment firms.

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pdq

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Acer
FYI, in the future you can still make individual IRA contributions even if you have an employer's 401(k).
...

I know, but with both of us working now, we hit the limit. Yes, I can make IRA contributions, but it will not be tax deductible. So I might as well put it in a normal stock account, at least I could withdraw whenever I wanted. Am I missing something?

The only thing that you might be missing there (and I may be wrong - not an accountant) is that that money in an IRA would earn dividends and such tax free.

Yes. But only tax free until you start taking it out...

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richorlin



Edited 1 time(s). Last edit at 03/15/2018 08:16PM by richorlin.