Author Topic: No 401K or HSA -- what now?  (Read 811 times)

LAJPP

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No 401K or HSA -- what now?
« on: September 07, 2018, 12:57:12 PM »
I'm sure this has been discussed, so my apologies...

I have been investing in 401K and HSA accounts through my employer, but my new job does not offer a 401K or HSA. I will continue to maximize my contributions to an IRA, but with the low maximum contribution limits, I will have a lot of money with nowhere to go. I can't seem to find any good substitute for these tax advantaged accounts... do I really just have to invest in taxable accounts? Are there other accounts I should be aware of?

MDM

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Re: No 401K or HSA -- what now?
« Reply #1 on: September 07, 2018, 02:57:14 PM »
do I really just have to invest in taxable accounts?
Pretty much.
Quote
Are there other accounts I should be aware of?
Not really.  In theory, annuities.  In practice, no.

laserlady

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Re: No 401K or HSA -- what now?
« Reply #2 on: September 07, 2018, 04:58:45 PM »
The only other tax-advantaged account I can think of -- only applicable if you'll be paying for kids' school costs in the future -- is a 529 plan.  I don't have kids, but I hopefully will at some point, so I set up a 529 plan in my niece's name, and I make tax-advantaged investments there.  I used my niece as the designated beneficiary because this way I can take advantage of my state's tax credit for 529 contributions for minors while keeping the money in the family.  There's no penalty for transferring from a designated beneficiary to that beneficiary's first cousin, so if I have a child in the future, I can transfer the money over into an account in my kid's names with all the tax savings I've accrued along the way.  And if I don't have kids, I'll be happy to help my nieces and nephews out with their college expenses.  (After all, if I don't have kids, they'll be the ones choosing my nursing home when I get dementia.)  I only put a small percentage of my income there, but it does have some tax advantages for me.

tralfamadorian

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Re: No 401K or HSA -- what now?
« Reply #3 on: September 08, 2018, 07:29:21 AM »
Have you asked your new employer if they could consider starting a 401k or a simple IRA? These guys start at $1k initial then $1.5k/yr for a 401k.

nkt0

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Re: No 401K or HSA -- what now?
« Reply #4 on: September 08, 2018, 07:43:59 AM »
Pretty sure anyone within income limits can contribute to a traditional IRA up to $5500, pre-tax.

reeshau

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Re: No 401K or HSA -- what now?
« Reply #5 on: September 08, 2018, 09:24:05 AM »
If your new employer has crappy benefits, what is the health insurance?  And, if nothing, what insurance will you get?  You can still do your own HSA if your plan qualifies as an HDHP.

MustacheAndaHalf

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Re: No 401K or HSA -- what now?
« Reply #6 on: September 08, 2018, 09:30:46 AM »
Your goal with retirement accounts is to save on taxes, right?

So look at tax efficient investments in a taxable account.  It's probably not as bad as you expect.  Take $10,000 invested in VTSAX as an example, which yields 1.8% in dividends.

So you'll receive $180 in dividends, and for most people that means $27 in tax (15% for qualified dividends).  Think of it like having a 0.27% higher expense ratio.

Also, if it's suitable for your tax bracket, you might invest in tax-exempt bond funds.  Their income is Federal tax-exempt, and having bonds in taxable probably frees up space in your retirement accounts.

LAJPP

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Re: No 401K or HSA -- what now?
« Reply #7 on: September 16, 2018, 08:22:42 AM »
Thanks for the suggestions. I will have to research setting up an HSA on my own. I had not heard of being able to do that. I also like to perspective on the actual cost of investing outside tax advantaged accounts -- I was planning to invest in funds that pay few dividends but that further emphasizes.