Several questions on best choices for house/Roth IRA/401

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Several questions on best choices for house/Roth IRA/401

Postby enderland » Sun Mar 24, 2013 1:13 pm

Hi everyone - this forum is great! I've spent a ton of time reading over past weeks and would not have even thought to ask this question prior to then :D

My situation is pretty simple as I started working fulltime a month ago (almost done with thesis... so close!).

Personal Details
Income: ~75k a year
Age: 24, single
State: IA (roughly 8% to 9% marginal, 64k is where this changes)


Assets:
~5 month emergency fund
18k cash (additional)
~10k in Fidelity lifecycle 401k fund (0.12% ER)
~700 in Fidelity HSA
~1.5k in a Roth IRA Vanguard 2050 fund (0.18% ER)
$0 in 2012 Roth IRA

Current Savings Plan
Roth 401k (7% income)
Regular 401k (10%, company match)
Max out Roth IRA (2013, this is about 8% my income)
~1k a month towards a house down payment
$100/month to HSA

Questions

I am interested in buying a house roughly 2 years from now. My plan (prior to reading so much here) was to save that $1k or so a month for a house down payment, which would give me about $40k or so (roughly) when I am looking to purchase a house in a few years. Possible other uses for that money may include a wedding or a wife's student loans.... but that's a few years away, so let's assume house.

It seems it would be good though to take $5,000 of my current cash savings and fill out my space in the 2012 Roth IRA. So I have a few specific questions on my overall plan:

  • I have already filed taxes for 2012, but as best I can tell, putting this into my Roth IRA should not affect this tax return - is this correct?
  • I assume the answer is yes, but is it advisable to put that $5,000 into the Roth IRA?
  • If I do this, is it advisable to just put $5k at once? I realize I'm getting close to the deadline....
  • What is best to save the house downpayment in? I assume my 0.2% savings is not ideal :)
  • After reading a ton on roth vs normal 401k, I am seriously considering making my contribution non-roth (given I'm at about a 34% total tax rate on that income)
  • Should I max out the HSA?

Thanks and let me know if you have questions!

------

Update: 4/9/2013 - I have maxed out the HSA and filled out 2012's Roth IRA. Looking for optimal choice for 401k now. Currently have a mixture of 2050 and 2055 BTC LIFEPATH.

Here are my 401k options. Note I cannot find ticker symbols for the first grouping (???)

BTC LIFEPATH 2015, 2020... 2055 ------- 0.12% (this is becoming 0.10%)

S&P 500 STOCK INDEX ------------- 0.02%
SMALL/MID STOCK INDX ------------- 0.06%
INT'L STOCK INDEX ------------- 0.07%
US TIPS BOND INDEX ------------- 0.05%
US BOND INDEX ------------- 0.05%
COMMODITY INDEX ------------- 0.36%
REAL ESTATE INDEX ------------- 0.06%

FID GROWTH CO K (FGCKX) ------------- 0.77%
ROBECO LG CAP VALUE ------------- 0.40%
LS SMALL/MID CAP ------------- 0.70%
HARBOR INTL INST (HAINX) ------------- 0.78%
WFA EMRG MKTS EQ I (EMGNX) ----------- 1.26%
WF CORE PLUS BOND ------------- 0.33%
BLENDED INT. FUND ------------- 0.23%
FID INST MMKT (FMPXX) ------------- 0.10%
Short-Term Investments ------------- 0.21%
Last edited by enderland on Tue Apr 09, 2013 4:42 pm, edited 2 times in total.
enderland
 
Posts: 194
Joined: Sat Mar 23, 2013 12:36 pm

Re: Several questions on best choices for house/Roth IRA/401

Postby livesoft » Sun Mar 24, 2013 1:38 pm

enderland wrote:
  • I have already filed taxes for 2012, but as best I can tell, putting this into my Roth IRA should not affect this tax return - is this correct? Yes.
  • I assume the answer is yes, but is it advisable to put that $5,000 into the Roth IRA? Yes.
  • If I do this, is it advisable to just put $5k at once? I realize I'm getting close to the deadline.... Yes.
  • What is best to save the house downpayment in? I assume my 0.2% savings is not ideal :) People have different ideas. We knew we had no hard deadline to buy a house, so we invested the down payment money into a stock mutual fund. Others would say that is too risky.
  • After reading a ton on roth vs normal 401k, I am seriously considering making my contribution non-roth (given I'm at about a 34% total tax rate on that income) Yes, do traditional 401(k), not Roth 401(k).
  • Should I max out the HSA? Yes.

It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
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Joined: Thu Mar 01, 2007 9:00 pm

Re: Several questions on best choices for house/Roth IRA/401

Postby enderland » Sun Mar 24, 2013 3:47 pm

Ok. I think I'm going to put in the order for the $5k into my 2012 Roth IRA now then. Just feels weird to transfer so much money around when you aren't used to seeing (relatively) large account balances :)

Maybe I'll just do $2,500 now and $2,500 more next week. Might make me feel better about it? Hah.
enderland
 
Posts: 194
Joined: Sat Mar 23, 2013 12:36 pm

Re: Several questions on best choices for house/Roth IRA/401

Postby enderland » Tue Apr 09, 2013 4:43 pm

OK.

Thanks livesoft - I've done most of those suggestions and now looking to get the best breakdown of options in the 401k itself.
enderland
 
Posts: 194
Joined: Sat Mar 23, 2013 12:36 pm


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