Ready, aim, [Poll on Jan. 1 tax advantaged contributions]

[STC]

So who has their guns loaded and aimed at the 2013 tax advantaged accounts limits? How much will you contribute to tax advantaged accounts on Jan 1?

I'm doing my wife's and my Backdoor ROTHs on Jan 1. $11,000

[NYBoglehead]

My plan for 2013:
-Max out me and the Mrs' Roth IRAs (11k total): 4k in January, 4k in February, 3k in March
-Max out 401ks semi-monthly
-Enjoy the ride

[livesoft]

Can you give us until January 2nd when the banks and markets are open?

Anyways, I only contribute later in the year.

[Sam I Am]

I would like to be able to contribute to a retirement account, but all my earnings are unearned.

I sometimes buy an I-bond, or EE-bond, and I can also defer taxes by adding new funds to our Vanguard annuity.

Sam I Am

[Sidney]

I'm retired but I am going to max out my HSA so I counted that.

[Cubsfan]

Is the market open on January 1?

[STC]

Is the market open on January 1?

No, but deposits can be made to accounts.

[EyeYield]

I would like to be able to contribute to a retirement account, but all my earnings are unearned.

Same boat.

I'm retired but I am going to max out my HSA so I counted that.

I was under the impression that I can't contribute (open) a HSA without earned income.
Please tell me I'm wrong.

[EmergDoc]

The most I could put in on January 2nd would be two Roths and an HSA, so $17,250. I won't do it though. I'm saving up for taxes and a defined benefit plan contribution. I'll have to come up with the Roth and HSA money later in the year.

[STC]

The most I could put in on January 2nd would be two Roths and an HSA, so $17,250. I won't do it though. I'm saving up for taxes and a defined benefit plan contribution. I'll have to come up with the Roth and HSA money later in the year.

You also have iBonds, EEBonds, and for some a 529

[mcblum]

Nothing on the first of J. I always allocate money for the first three months to cover taxes and will start contributing to IRA about
April 1st. If stocks go down in the first three months, it will be a good buying opportunity.
Happy New Year to All! Marty

[Leif Eriksen]

I voted what I will add in prior to April 15 of 2013 for 2012. If you literally meant January 1 the answer is $0.

[pennstater2005]

1. Get match on wife's simple IRA and then roll into Vanguard account for better fund choice.
2. Max out Roth's (if possible)
3. Continue contributing to simple IRA if both Roth's maxed.
4. Turn off my tv and stay the course

[grabiner]

With my December dividends, I have more than $5500 in my money-market fund, and that will go into a backdoor Roth IRA on January 2 (probably converted on January 4).

I contribute the $17,500 to my retirement plan equally from every paycheck, so I won't have that much on my first payday.

[WHL]

I always drop the Roth IRA max into my vanguard account on the 1st. Since I've recently redone my entire asset allocation, it will go 100% into the total bond fund.

[mhc]

I'll max backdoor roths and HSA in early Jan. I won't max 401k until probably Nov.

[BolderBoy]

I was under the impression that I can't contribute (open) a HSA without earned income.
Please tell me I'm wrong.

Okay, you are mistaken. Happy to tell you that. HSA contribution deductibility has requirements, but earned income isn't one of them.

However deducting health insurance premiums if you aren't covered by an employer, does have some earned income requirements.

[letsgobobby]

I've already sent $11,000 from our checking to our Vanguard money market account, and have scheduled automatic contributions to our IRAs for 1/2/13. Then I'll have to convert those to Roth IRAs later in the week.

I don't have any other contributions to retirement plans that will occur by 1/2/13.

[interplanetjanet]

$5500 (backdoor Roth) sometime in early January (when I get around to it). Max out 401k in early Feb when my bonus comes through. Works for me (my company does a 401k match true-up over the course of the year).

[bUU]

I've got to clear some pre-tax IRA assets out of the way first, and that'll take a while (especially for some of it I cannot start the process until March).

Having said that, my spouse is going forward with a double-contribution to 401(k) so that it'll max-out in late June.... just in case of a job change that precludes further 401(k) contributions later in the year. I'm actually debating the merits of doing that myself. (Comments?)

[pshonore]

I was under the impression that I can't contribute (open) a HSA without earned income.
Please tell me I'm wrong.

Okay, you are mistaken. Happy to tell you that. HSA contribution deductibility has requirements, but earned income isn't one of them.

However deducting health insurance premiums if you aren't covered by an employer, does have some earned income requirements.

So if I'm collecting a pension or living off bank interest/dividends, I cannot deduct health insurance premiums (Part B, Medigap, etc) ???? or are you talking about self employed folks?

[TRC]

Just transferred 11K this morning to Vanguard for our Backdoor Roth Contributions.

Planning to max out my 401K by the end of January.

[englishgirl]

On January 1? Nothing.

I did already change my regular Roth contribution to $229 every two weeks, instead of $208. Vanguard tells me it is scheduled to go on January 2nd. So I guess I'm as "locked and loaded" as I can be.

The eagle-eyed may spot that $229 * 24 does not quite equal $5500. So I will be manually putting in an extra $4 into the account at some point in January. Heh. Maye I'll do that on January 1 just to keep up with you guys.

[kenyan]

On January 1? Nothing.

I did already change my regular Roth contribution to $229 every two weeks, instead of $208. Vanguard tells me it is scheduled to go on January 2nd. So I guess I'm as "locked and loaded" as I can be.

The eagle-eyed may spot that $229 * 24 does not quite equal $5500. So I will be manually putting in an extra $4 into the account at some point in January. Heh. Maye I'll do that on January 1 just to keep up with you guys.

I do it similarly for my and the wife's Roths, except monthly. I also changed our scheduled contribution rates to reflect the new limits. Just topped off our 2012 contributions with the missing $8.

[HongKonger]

I only have tax free accounts available to me in which I put everything. Does that count?

[BolderBoy]

[/quote]So if I'm collecting a pension or living off bank interest/dividends, I cannot deduct health insurance premiums (Part B, Medigap, etc) ???? or are you talking about self employed folks?[/quote]

I'm afraid that is outside of my knowledge-base at this point. I was mostly thinking about self-employed folks. Example: I'm "mostly retired", but do some 1099 consulting work. I'm a few years away from Medicare age yet, so I can arrange my self-employed situation in such a way that I can deduct my health insurance premiums (to the limit of my self-employed net income).

[asset_chaos]

Literally on 1 January, zero. But some time before January 31st my wife and I will fund Roths and 529s.

[Bacchus01]

$11K in back-door Roths
$9K in 529s.

[mickcris]

On January 1? Nothing.

I did already change my regular Roth contribution to $229 every two weeks, instead of $208. Vanguard tells me it is scheduled to go on January 2nd. So I guess I'm as "locked and loaded" as I can be.

The eagle-eyed may spot that $229 * 24 does not quite equal $5500. So I will be manually putting in an extra $4 into the account at some point in January. Heh. Maye I'll do that on January 1 just to keep up with you guys.

If set up for every two weeks, you should do $211.50 (with an extra dollar to be added later) for 26 contributions. 24 contributions in the year would be semimonthly.

[englishgirl]

On January 1? Nothing.

I did already change my regular Roth contribution to $229 every two weeks, instead of $208. Vanguard tells me it is scheduled to go on January 2nd. So I guess I'm as "locked and loaded" as I can be.

The eagle-eyed may spot that $229 * 24 does not quite equal $5500. So I will be manually putting in an extra $4 into the account at some point in January. Heh. Maye I'll do that on January 1 just to keep up with you guys.

If set up for every two weeks, you should do $211.50 (with an extra dollar to be added later) for 26 contributions. 24 contributions in the year would be semimonthly.

Haha, clearly you are way more eagle-eyed than me. Yes, it is set for semi-monthly, not every two weeks.

[sscritic]

I only have tax free accounts available to me in which I put everything. Does that count?

Only if you make deposits on January 1. I assume markets are closed. Isn't it nice to have two new years every year?

It looks like your markets are closed on Jan 1 and Feb 11, 12, and 13.

Code: Select all

1-Jan-13  Tuesday      The first day of January
11-Feb-13 Monday       The second day of Lunar New Year
12-Feb-13 Tuesday      The third day of Lunar New Year
13-Feb-13 Wednesday    The fourth day of Lunar New Year

http://www.hkex.com.hk/eng/market/sec_t ... nont10.htm

Oops, my mistake. Jan 1 is not New Year, it is only the first day of January.

[HongKonger]

I only have tax free accounts available to me in which I put everything. Does that count?

Only if you make deposits on January 1. I assume markets are closed. Isn't it nice to have two new years every year?

It looks like your markets are closed on Jan 1 and Feb 11, 12, and 13.

Code: Select all

1-Jan-13  Tuesday      The first day of January
11-Feb-13 Monday       The second day of Lunar New Year
12-Feb-13 Tuesday      The third day of Lunar New Year
13-Feb-13 Wednesday    The fourth day of Lunar New Year

http://www.hkex.com.hk/eng/market/sec_t ... nont10.htm

Oops, my mistake. Jan 1 is not New Year, it is only the first day of January.

Quite right! lol. No deposits for me on Jan 1. Me and my dry powder will be sat in front of the heater watching what happens over on the other side of the world before we contemplate jumping in.

[Aptenodytes]

Spouse and I normally adopt competing strategies -- I max out the Roth as soon as possible; spouse puts in $500 per month. This year may be a bit different as we are building a home addition and I want to get a firmer picture on cash flow before I commit fully to the Roth. Maybe I'll switch to $500/month for the short term and go all in once cash flow is clear.

I have a SEP IRA but the income on my side business is highly erratic so I never put that money in until after the income is in hand.

For voluntary contributions to the 403B I have never considered doing anything other than regular monthly contributions. In theory I could plop in the whole year's worth in January, from the emergency fund, and then pay back the emergency fund every month. But the benefit doesn't seem large enough to be worth that extra hassle (and the small risk I'll separate from the university mid-year).

[Cernel]

I will be contributing $14,000
- $6,500 to my wife's IRA and then doing a Roth conversion later in year
- $2,500 per each of my 3 children into their Roth IRA (This is my idea of a "Company match" in order to get them investing for their future. They put in $2,500 and I put in $2,500. Yes, I know that the limit goes up to $5,500 in 2013, but they are on their own with that. I guess I will see which one(s) have gotten the message that they need to save as much as they can for their future.)

[ofcmetz]

$0 is my answer. Majority of my tax deferred is done through payroll into my 457B and 403B. I put some into my ROTH here and there but January 1st is a day to watch college football.

[happymob]

Before Jan 15th (we have some checks to clear, money to be transferred, etc), we will fully fund our Roths (11k) and put $6k in our kids' 529 plans (Max 529 deduction for KS, though OK goes higher - we get state income tax deductions in both states, oddly enough). So, $17k total.

[kenyan]

My weekly 403(b) contribution normally gets deposited on Tuesday. I expect it will occur on Wednesday this year due to the holiday. Therefore, I will contribute $17500/52 or $337 on the first market day of the new year.

[zaboomafoozarg]

Maxing out Roth IRA and buying $10k I Bonds.

[bandoba]

I'm new to (back door) Roth IRAs. I'm trying to understand the reasoning behind funding it ASAP in Jan 2013. I'm assuming it is mainly to take advantage of tax free growth during 2013. Is that correct understanding? Am I missing any specific advantage in funding it right now rather than DCA over the year?

[kenyan]

You have the right idea. The advantage is that the expected direction of your investments is to increase in value. Therefore, time spent invested is better than time spent out of the market - on average. DCA holds back some of your capital throughout the course of the year, and that capital has a lower expected earning potential than invested dollars in your Roth. The likelihood is that said capital is invested in cash, earning almost nothing. I suppose you could have it invested in something else, but that would completely defeat the purpose of DCA in my mind. Even in that case, you'd be trading taxable growth for tax-free growth, so the Roth would be preferable.

[bandoba]

You have the right idea. The advantage is that the expected direction of your investments is to increase in value. Therefore, time spent invested is better than time spent out of the market - on average. DCA holds back some of your capital throughout the course of the year, and that capital has a lower expected earning potential than invested dollars in your Roth. The likelihood is that said capital is invested in cash, earning almost nothing. I suppose you could have it invested in something else, but that would completely defeat the purpose of DCA in my mind. Even in that case, you'd be trading taxable growth for tax-free growth, so the Roth would be preferable.

Makes sense. Thanks kenyan.

[kamo]

We'll transfer $11K from our taxable to our Roth accts. Didn't even know that Roth contributions increase by $500 in 2013 until I read two days ago the article written by Mel L. that was linked to Oblivious Investor's weekly email. Once again BHers have made me a better household finance manager. Thanks, and Happy 2013.

[telemark]

Every year I plan to max out my Roth IRA immediately, and every year the market shoots up in the last few days of December, undermining my resolve. It's happening again today: TSM is up about 1.5%. All that talk about the fiscal cliff and we can't even get a decent panic, grumble, grumble, grumble...

[Easy Rhino]

On Jan 2, if I remember to do it, I'll contribute $5500 to my Roth. My 401k and HSA both come out of my payroll in even installments throughout the year.

My wife set up her Roth with regular monthly contributions, and the occassional 'bonus' contribution if she's feeling flush.

[telemark]

Held my nose and put the full $6500 into my Roth IRA. Oh well, maybe I got a deal on Treasuries. I Bonds at the end of the month.

[rustymutt]

This will be the first year we don't get to make any contributions to tax advantaged accounts. Retire is fun and full of surprises.

[papito23]

Will decide in about 15 months from now. Prefer Roth IRA but sometimes Traditional IRA yields instant earnings for low/middle income folks (Earned Income Tax Credit, Retirement Savings Contribution Credit)... these are usually more valuable (and reliable) than a little more time in the market.

[letsgobobby]

I think this is the second year in a row of a big gain on opening day. It's like paying a 2% load on my IRA contributions.

[icedtea]

If all goes well and my landlord doesn't raise our rent too much, here's my plan:

- max Roth
- max tradtl 401k
- contribute about 28k to after tax 401k and rollover via non-hardship withdrawals to my Roth

Total to be contributed to tax advantaged: Roughly 51k, which amounts to over 50% of my annual income before taxes
(plus about 5k in 401k employer match)

I don't plan on contributing more to my taxable account this year. Taking advantage of my company's generous 401k since it allows for in-service withdrawals.

Iced Tea

[bdpb]

I think this is the second year in a row of a big gain on opening day. It's like paying a 2% load on my IRA contributions.

Last year, if you had waited until the end of the year you would have paid a 13% load.