Not eligible for 401k until June - what to do until then?

[sportsportsports]

Hello! I need some advice.

I started a new job in November (after a covid layoff, very thankful) but I'm not eligible for the company 401k until the start of my 7th month (aka June). At this point, I have a nice nest egg saved up as well as replaced any savings that I spent during my layoff. But at this point I don't want my money just sitting there in a savings account and not "working" for me.

My main question is: what should I do with the extra money that I have until I can start contributing to my companies 401k ?

For more information:

• I am already maxing my HSA
• I've already contributed $3000 (50%) of my 2021 roth IRA contributions and will most likely be completing my 2021 contributions at the end of Feb
• I am planning on maxing my 401k once I can start contributing
• I've been semi-saving for a house down payment but don't have set in stone plans about when that will happen

My sub questions are:

• Can I retroactively deposit money into a 401k? Like, I continue to save and then dump it in as soon as I'm eligible? Or does that money have to come directly out of my paycheck?
• My roth IRA is through Vanguard and I've really been loving Vanguard. Is there another type of Vanguard account I can utilize well in this scenario?
• Along the same lines of above, is there an account type where I can pull my contributions at any time? For example, I've been saving money for a house down payment, but I also want it to work for me. Is there an account type that I can put it in, but then pull out my contributions when I want to buy a house?

Also, I know for sure I'm probably not aware of/thinking about all my options, so please let me know if I'm missing something important. Thanks for your help in advance, can't wait to learn from you all!

[plog]

1. No, has to come out of wages.

2. Open a taxable account.  All the same funds available.

3. Same as 2 a taxable account.

Now, its called a taxable account for a reason--you pay taxes on it--often annually even if you don't take any money out.  That's not a bad thing, just how the game is set up.  I suggest you read up on the tax implications of owning mutual funds.

Also, since you will be starting mid-year in your 401k make sure you calculate it correctly to hit the max this year (19,500).  Then in January readjust your contribution since in 2022 you will have 12 months to contribute instead of 6. 

[reeshau]

• Can I retroactively deposit money into a 401k? Like, I continue to save and then dump it in as soon as I'm eligible? Or does that money have to come directly out of my paycheck?

The money has to come from your paycheck, but there is no difference in deducting 100% of your paycheck and living off your cash, vs. putting in a lump sum at the same time.  Your company may limit you to 50% of your paycheck or something, but yes you could supercharge your contributions for a while.  or just leave them elevated throughout the year.  Are you planning on maxing your 401k?  Your 401k custodian should be able to help you calculate the contribution percentage that would get you the 2021 contribution number you want.

[ixtap]

You can either save up the money and then live off that while maxing out 401k contributions later in the year or go ahead and invest the money in a taxable brokerage account and make the most of your 401k contributions next year.

[terran]

Take a look at https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153

I would set enough aside so you can max out the 401(k) ($19.5k in 2021) even if that makes your income too low to live off of.

If you haven't contributed to your IRA for 2020 then you can contribute $6000 or your W2 box 1 income for 2020, whichever is less, any time until April 15th.

If you had HSA eligible health insurance as of December 1, 2020 and continue to be covered for all of 2021 you can make a full annual contribution to your HSA for 2020 any time until April 15th. Look up the "HSA last month rule" for more detail. If you end up losing coverage before the end of the year you'll have to withdraw much of it as an excess contribution, but it seems like a risk worth taking as long as you're planning to stay with this employer for the rest of the year.