Help resuming retirement investing

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Kedar
Posts: 5
Joined: Sun Nov 06, 2016 3:16 pm

Help resuming retirement investing

Post by Kedar » Sat Aug 12, 2017 1:50 pm

I am looking for advice for resuming savings for my spouse, who recently completed a graduate degree after being in the workforce for a number of years. She will be working part-time in the medical field, so she will be making a decent income that that puts us above the $193K adjusted gross income cap for an IRA (married, filing jointly with me being eligible for an employer-based savings program) and has access to a 401(k) without a match. We will be in the 33% tax bracket.

Questions:
  • Once we max our respective our TSP/401(k), is our best bet for additional long-term savings simply a taxable account at a place such as Vanguard?
  • My savings are currently held within a lifecycle fund within the TSP. Should I rebalance my holdings within TSP to focus more on bonds while focusing on index funds for the taxable account? I am not very familiar with tax efficient fund placement as this will be the first time we’ve been able to max out our tax advantaged space.
  • My wife has a 401(k) with an old employer. Assuming her new 401(k) is roughly the same quality as her old one (i.e., low fees and decent investment options), is it still worth rolling over the funds?
Thanks in advance for your thoughts.

Edited to add tax bracket.
Last edited by Kedar on Sat Aug 12, 2017 3:25 pm, edited 1 time in total.

mhalley
Posts: 4869
Joined: Tue Nov 20, 2007 6:02 am

Re: Help resuming retirement investing

Post by mhalley » Sat Aug 12, 2017 3:08 pm

I would say do a backdoor Roth up to the 28% tax bracket, above that do taxable investing. Some like roths even above that limit. Doing one above that bracket may or may not be worthwhile, but I decided to do it before I retired to have more tax diversification. Financial sanurai is generally anti Roth, but talks about doing them here
http://www.financialsamurai.com/is-a-ba ... good-move/
Another options is a high deductable health insurance plan and use an hsa as a stealth Ira.
Consolidating the 401k makes rebalancing simpler, but there is always the possibility of the plan getting worse. Either way is fine depending on how hard you find rebalancing with multiple accounts. If she does tr fund also, then of course it doesn't matter.
The wiki has a good article on tax effecient fund placement. The TSP has the great bond fund, but having a bond fund in taxable isn't terrible. Above 28% you would want a muni fund.

http://www.tspallocation.com/f-fund-vs- ... llocation/
https://www.bogleheads.org/wiki/Tax-eff ... _placement

https://www.whitecoatinvestor.com/asset ... n-taxable/

Kedar
Posts: 5
Joined: Sun Nov 06, 2016 3:16 pm

Re: Help resuming retirement investing

Post by Kedar » Sun Aug 13, 2017 6:15 pm

Thank you for your response.

Can you clarify why a backdoor Roth only makes sense up to the 28% bracket. We are at 33% (in a location with high state taxes), but to my uninformed mind it seems like doing a Roth at any bracket makes more sense than just using a taxable account and having to pay capital gains.

Post Reply