Tax Question

[sundance]

All of this investment and retirement talk is solid gold and you should listen to it. In addition, you should set up a savings account where you put 4-6 months worth of expenses into it. Then leave it alone. That is your emergency oh shit fund. Don’t tie this money up, it should be very liquid. If God forbid something happens where you can’t work and you lose your job, you should be able to live 100% off of that savings account.

On banking, let me plug Ally for a minute here. I’ve been very happy with them since abandoning Wells Fargo a couple of years ago. Good app, no account fees and 2% interest on savings. If you’re going to park money in an account somewhere it’s a pretty good one for it.

 

[Shwafta]

I'm currently at work now so I can't reply immediately, but I am definitely reading everything coming this way!

 

[Ulrich]

True but young padawan doesn't have that problem, and I previously mentioned the problem of converting if you already have a regular IRA stash twice in pervious posts.

That's one form of conventional wisdom, and not necessarily wrong. But equally strong currents believe the opposite, either because they think you should plan for an income in retirement similar to your earning years, or because they expect income taxes are likely to be higher in the future at all levels, or other valid but uncertain reasons. Once you're planning for the future, a lot of your conclusions depend on your starting assumptions.

We’re fcked.

 

[21Architect]

Yeah as mgarbowski

Which reminds of another great benefit of a Roth IRA, you can withdraw your contributions at any time without penalties or complications.

413, if I’m not mistaken, there are several limitations to withdrawing contributions before age 59.5.

 

[Ulrich]

413, if I’m not mistaken, there are several limitations to withdrawing contributions before age 59.5.

I think what he meant is that you can withdraw any money you’ve put in/contributed to a Roth before you retire, but what you can’t do is withdraw any money derived as an investment gain. The money you put in has already been taxed, hence why you can take it; the investment gains haven’t been taxed hence why you have to wait.

 

[Shwafta]

To come back to this thread, I now have more information regarding everything and would like to hear your opinions (I have mine):
First off, the health care being offered has an HSA and a contribution the company gives per pay period, plus whatever I'd want to contribute to the HSA.
Second, I can choose one of the following two:
1) yes, I want to contribute __ % or $___ per pay period of pre-tax compensation <-pretty sure this is for basic 401(k)
2) yes, I want to contribute __% or $__ per pay period of my after-tax compensation, designated to a Roth 401(k) account

My thoughts are to do #2 with %age being enough to reach my employer's contributions?

 

[joe]

Max out the HSA (it's $7,000 in 2019) and put as much as you can to the Roth. Getting the full employer match should be the bare minimum - otherwise you're essentially giving up compensation.

 

[Shwafta]

Max out the HSA (it's $7,000 in 2019) and put as much as you can to the Roth. Getting the full employer match should be the bare minimum - otherwise you're essentially giving up compensation.

that's what I was thinking. Awesome and thanks!

...Thanks to everyone else who helped in previous pages too! I read all of it again today and now with a better understanding of how it all works, everything made way more sense!