Prioritizing investments question

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Topic Author
AMG79
Posts: 59
Joined: Wed Mar 07, 2018 11:50 am

Prioritizing investments question

Post by AMG79 »

I read the wiki but still have a question.

Married filing jointly. 22 - 24% tax bracket.
Recently made changes to be invested in 3 fund portfolio with all Vanguard funds across all accounts. Average ER is .05. (Was .23 before 3 fund switch.) :D
Him: Employed with excellent 401K with Roth and Trad options. Company matches 6%. They say there are no additional fees - company covers them. He does not have an IRA as of now.
Her: Self-employed and working part-time while two children are young. (4 & 2 years old). Has a TIRA and Roth IRA.
We max HSA.

Question: Our normal income is below the Roth IRA contribution limits on most years and leaves us in 22% tax bracket. However, it exceeds it some years due to selling RSUs. Since his 401K is good, should we aim to max that and put His IRA at the bottom of the prioritization list?

I would love help with a specific priority list of maxing all tax advantaged space available to us, including specifics on Roth/Trad for both 401K and IRA for his & her please. And does the list differ on years of higher income?

Appreciate the help immensely!!
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Prioritizing investments question

Post by PFInterest »

max both 401ks
learn about backdoor rIRA.
max both rIRAs.

thats your priority list.
Topic Author
AMG79
Posts: 59
Joined: Wed Mar 07, 2018 11:50 am

Re: Prioritizing investments question

Post by AMG79 »

PFInterest wrote: Sun Nov 25, 2018 9:11 am max both 401ks
learn about backdoor rIRA.
max both rIRAs.

thats your priority list.
There's only one 401k. So Trad 401k max first? Keep an eye on income year-to-year for Roth IRA eligibility and backdoor when income is too high for Roth?
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Prioritizing investments question

Post by PFInterest »

AMG79 wrote: Sun Nov 25, 2018 9:21 am There's only one 401k. So Trad 401k max first? Keep an eye on income year-to-year for Roth IRA eligibility and backdoor when income is too high for Roth?
if she is self employed (ie 1099) you can open a solo 401k. yes trad.
yes, you can always backdoor a Roth if you are worried about going over.
Topic Author
AMG79
Posts: 59
Joined: Wed Mar 07, 2018 11:50 am

Re: Prioritizing investments question

Post by AMG79 »

Small business owner with no 1099. We do not have the funds to max all accounts at this time. We have about $25k/year to contribute.
User avatar
BL
Posts: 9521
Joined: Sun Mar 01, 2009 2:28 pm

Re: Prioritizing investments question

Post by BL »

3-6 months emergency fund. Upper half could be in Roth IRA if necessary.
HSA if insurance is suitable. Save it if you can pay out of pocket without cutting back on other tax-advantaged accounts.

Fill 401k to match.
Fill rest of 401k.

Do spouse's tIRA if deductible (check it out and wait till tax is calculated if necessary to be sure.) May help make you eligible for Roth IRA if close.
Do Roth IRA if eligible (wait until tax is calculated if necessary.) Also do spouse's if deductible tIRA not needed for Roths.

Use tax savings for IRAs or these accounts, not spending elsewhere.
Set up her work 401k or IRA if you have more funds you could invest.
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