Retirement account limits

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rickberg
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Retirement account limits

Post by rickberg » Thu Jan 29, 2015 2:42 pm

Looking at all the other Bogleheads post out there I want to ensure that I am taking advantage of all available tax-advantage accounts that out there. Can you tell me if my list is complete:

For someone in their 30's, married, no kids, working at mega corp:

For myself:
401k - 18k
Roth IRA - 5.5k

What else is there that I can take advantage of? Can I fund a tIRA? HSA? 529?

How does one qualify for a HSA account? I get health insurance via my company and they have FSA accounts where I can put pre-tax money in to spend on health related expenses.

Thanks

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timboktoo
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Re: Retirement account limits

Post by timboktoo » Thu Jan 29, 2015 2:44 pm

I *think* that the HSA only applies if you have a high deductible health insurance account, but I'm not certain.

- Tim

DSInvestor
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Re: Retirement account limits

Post by DSInvestor » Thu Jan 29, 2015 2:45 pm

Your spouse can contribute to Traditional or Roth IRA even without compensation as long as you file joint tax return. That's another $5500/yr.

HSA requires that you have an HSA compatible high deductible health plan (HDHP).

If your megacorp allows for after-tax non-Roth 401k contributions and allows for in-service rollovers, you may be able to something BH's call mega backdoor into Roth IRA.
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mnvalue
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Re: Retirement account limits

Post by mnvalue » Thu Jan 29, 2015 3:14 pm

Your spouse can have an IRA using your income to qualify, as already mentioned.

The IRA limit of $5,500 per person counts for both Roth IRA and Traditional IRA. So as you are doing $5.5k into the Roth IRA, you cannot contribute to a tIRA.

To have an HSA, you must have a high-deductible health plan (HDHP). Among other things, the legal definition of HDHP would require that your FSA not be eligible to be used for health care expenses. That is, if you have an "HDHP plan" an an FSA that is only allowed to be used for dental and eye glasses, that's fine. For the actual details, see IRS Publication 969: http://www.irs.gov/publications/p969/ar ... 1000204025

You could do a 529, but I wouldn't rush into one, given you have no kids.

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fortyofforty
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Re: Retirement account limits

Post by fortyofforty » Thu Jan 29, 2015 4:42 pm

After you've fully funded your 401k, and both of your IRAs, you might have to simply invest in taxable investments. You can still think "tax managed" if you want, meaning low dividend, low turnover. Vanguard has some tax managed funds specifically for that purpose.
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AAA
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Re: Retirement account limits

Post by AAA » Thu Jan 29, 2015 5:40 pm

DSInvestor wrote:Your spouse can contribute to Traditional or Roth IRA even without compensation as long as you file joint tax return. That's another $5500/yr.
There are some complications to this.

From the Charles Schwab web site:
A Traditional IRA contribution is fully deductible if your income is under a certain level or if you (or your spouse) don’t have an employer-sponsored retirement plan. If you (or your spouse) do have a 401(k) or pension plan, the tax-deductible portion of your IRA contribution may be limited.

A few years ago we made an IRA contribution for my wife but on her W-2 the box for retirement plan at work was checked. She was actually part-time and couldn't take part in the plan, but nevertheless it was checked and her payroll department wouldn't change it. The contribution we made was therefore not deductible.

mnvalue
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Re: Retirement account limits

Post by mnvalue » Thu Jan 29, 2015 6:30 pm

AAA wrote:A few years ago we made an IRA contribution for my wife but on her W-2 the box for retirement plan at work was checked. She was actually part-time and couldn't take part in the plan, but nevertheless it was checked and her payroll department wouldn't change it.
This violates the employer instructions for the W-2. That box should only be checked if she is both eligible and actually contributed, unless the plan is a profit sharing plan. In that case, the instructions say to check the box if there's a grace period where the employer could put additional money in for this tax year. I think it should also be limited to "Employee is eligible to participate", but it's not, so maybe that's where the confusion came from on the employers part.
AAA wrote:The contribution we made was therefore not deductible.
I doubt the W-2 is authoritative in the matter. If your employer gave you a W-2 that was erroneous in some other way and refused to correct it, you wouldn't blindly follow it (and expect the IRS to side with you), would you?

My employer contends that box is not required, so they never check it. Reading the instructions, I think they're wrong, but it's not worth fighting them over.

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AAA
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Re: Retirement account limits

Post by AAA » Thu Jan 29, 2015 8:09 pm

mnvalue wrote:If your employer gave you a W-2 that was erroneous in some other way and refused to correct it, you wouldn't blindly follow it (and expect the IRS to side with you), would you?
Well, I figured that the IRS might use the status of that box in some cross-checking to determine the eligibility of a deductible IRA contribution and didn't want the hassle of having to defend it.

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TomatoTomahto
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Re: Retirement account limits

Post by TomatoTomahto » Thu Jan 29, 2015 8:13 pm

Does your 401k allow post-tax contributions (not Roth-401k)? If so, read up on mega backdoor Roth.
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