What happens after you max out your Roth IRA Limit?

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spdoublebass
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What happens after you max out your Roth IRA Limit?

Post by spdoublebass » Fri May 26, 2017 10:29 pm

I recently opened a Roth IRA through Vanguard. This forum has been great with helping me through that process. When I opened the account I really did not think we would max it out this year, but it's looking like we might be able to do so.
We are both professional musicians and self employed at this point. However, we do teach at university's and we have access to a 403b. The university does not match any contributions (I do not know if that is the norm or not).

My question is what should I be doing after I max out the Roth?

What do people do who do not have access to a 401K or 403b? Is there something at Vanguard which i can start investing in that is similar to the 403b I am offered through teaching?
Since I file a Schedule C, would there be any benifit or is it possible to open a Solo 401K? Instead of going the 403b route? I believe vanguard offers an individual 401K for schedule C

Another question.... right now I use ETF's through my Roth, the 403b I'm looking at is an index fund. I do not see share prices listed. With Index funds do you not buy shares? I looked this up on the wiki but am still confused a bit.

Thank you for your time as always.
Last edited by spdoublebass on Fri May 26, 2017 11:01 pm, edited 1 time in total.

PFInterest
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Re: What happens after you max out your Roth IRA Limit?

Post by PFInterest » Fri May 26, 2017 10:31 pm

Now you max out your 403.
No.
You do buy shares. You can look up the prices but it is irrelevant.

krow36
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Re: What happens after you max out your Roth IRA Limit?

Post by krow36 » Fri May 26, 2017 11:06 pm

spdoublebass, welcome to the forum!
You can contribute up to 18k to the university’s 403b plan from your university employment. We would need to know more about the plan to know if that was a good idea. What are the funds you can select from, and what are their expense ratios? Are there any other fees? You can get this info from your HR office.

You can contribute to an individual 401k from your Schedule C contract earnings. You can select the solo 401k provider and so you can choose one that offers low-cost index funds (Vanguard, Fidelity or Schwab?). You can contribute 18k as an employee, and 20% of your Schedule C earnings as an employer. The 18k limit is shared by the 403b and the solo 401k. Others more knowledgable can give you more details on the solo 401k.

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spdoublebass
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Re: What happens after you max out your Roth IRA Limit?

Post by spdoublebass » Fri May 26, 2017 11:13 pm

krow36 wrote:spdoublebass, welcome to the forum!
You can contribute up to 18k to the university’s 403b plan from your university employment. We would need to know more about the plan to know if that was a good idea. What are the funds you can select from, and what are their expense ratios? Are there any other fees? You can get this info from your HR office.

You can contribute to an individual 401k from your Schedule C contract earnings. You can select the solo 401k provider and so you can choose one that offers low-cost index funds (Vanguard, Fidelity or Schwab?). You can contribute 18k as an employee, and 20% of your Schedule C earnings as an employer. The 18k limit is shared by the 403b and the solo 401k. Others more knowledgable can give you more details on the solo 401k.
Thank you for this information.
So, if I understand this correctly, the 403b and the Solo 401K are basically the same thing. If so I would prefer the Solo 401K over the other because I do not know how long I'll be teaching there etc. Also, I'll always be filing a schedule C. I would also prefer to stay with Vanguard. The 403b fund was through fidelity.

LeeMKE
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Re: What happens after you max out your Roth IRA Limit?

Post by LeeMKE » Fri May 26, 2017 11:30 pm

So, if I understand this correctly, the 403b and the Solo 401K are basically the same thing. If so I would prefer the Solo 401K over the other because I do not know how long I'll be teaching there etc. Also, I'll always be filing a schedule C. I would also prefer to stay with Vanguard.
Sorta but not exactly.

The income from your Schedule C (musician income) can be used to fund a Solo 401K. Open an account now, and wait to fund it. Many small business folks miss a year of contributions because they didn't realize the account must be open in the year of earnings, not at tax time, like IRA and ROTH accounts.

The income from the University can be used to fund the 403b.

Which to use will depend on how much income you have from each source.

IMHO, the 403b is usually expensive and often has lousy investments available. So I'd try to fill up my Solo 401K before putting money in a 403b. But, depending on where your income originates, may prevent you from choosing completely one or the other.
The mightiest Oak is just a nut who stayed the course.

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spdoublebass
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Re: What happens after you max out your Roth IRA Limit?

Post by spdoublebass » Mon May 29, 2017 8:14 pm

LeeMKE wrote:
So, if I understand this correctly, the 403b and the Solo 401K are basically the same thing. If so I would prefer the Solo 401K over the other because I do not know how long I'll be teaching there etc. Also, I'll always be filing a schedule C. I would also prefer to stay with Vanguard.
Sorta but not exactly.

The income from your Schedule C (musician income) can be used to fund a Solo 401K. Open an account now, and wait to fund it. Many small business folks miss a year of contributions because they didn't realize the account must be open in the year of earnings, not at tax time, like IRA and ROTH accounts.

The income from the University can be used to fund the 403b.

Which to use will depend on how much income you have from each source.

IMHO, the 403b is usually expensive and often has lousy investments available. So I'd try to fill up my Solo 401K before putting money in a 403b. But, depending on where your income originates, may prevent you from choosing completely one or the other.

All of this info has been very helpful.
I want to open a Solo 401K with Vanguard. Even if I don't fully fund it yet. There are fees though, such as $20 per fund. Is this a one time thing?
I'm going to call them tomorrow and see the ins and outs of it. Much of the info on the solo 401K is from 2010-11.
I'm trying to think, but nothing happens

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Bruce
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Re: What happens after you max out your Roth IRA Limit?

Post by Bruce » Tue May 30, 2017 6:20 am

There is some missing information here before you can get good advice.

I suggest you open a taxable account and save enough in that so in January of next year you can max out your Roth IRA contributions for that calendar year.

Investing in a taxable account may be better for you in the long run, then in an employer account with comparatively higher fees and no match

Your best course of action also depends on your anticipated tax rate, your other savings and investments, and if you already have an accessible emergency fund.

However that info is missing.

Regards,
Bruce | | Winner of the 2017 Bogleheads Contest | | "Simplicity is the master key to financial success."

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