Starting a new job, tax questions

[MrUpwardlyMobile]

I’m starting a new job this month, and will be getting a ~$60,000 raise versus my old job. My income for 2018 will be roughly $260,000.

However, the new job is a brand new company and has no 401k plan at all.  I cannot deduct for IRA contributions, and already had to do a backdoor Roth IRA. I cannot contribute to a HSA because that’s not available on my wife’s insurance plan.

Any thoughts on what I can do to tax shelter income?

[Joel]

I believe you can deduct IRA contributions if you don’t have access to a 401k.

At that salary within a small company, you likely have some pull. I recommend encouraging the company to look into a benefits provider like Insperity that could get you access to a 401k.

[Catbert]

Yep, Joel is right advocate for a 401k.  Since its a new company maybe you could argue for the need of a 401k as a recruitment tool (even if the company contributes nothing).  Maybe you could volunteer to spearhead the project of looking into what it would take to set one up.

Other than that there is no way to shelter that income from taxation.  You'll have to pay taxes and buy a tax efficient mutual fund that doesn't spew off cap gains and dividends every year.

#1stWorldProblems

[terran]

I believe you can deduct IRA contributions if you don’t have access to a 401k.

This is right in future years, but if you had a workplace retirement plan at any point in 2018, that's not the case. Even if you didn't, I think there might be issues with undoing the backdoor roth now under the new tax plan.

Also, if your wife has a workplace retirement plan you're only eligible for deductible IRA contributions up to the same AGI limit as regular roth contributions ($189k in 2018 I think)

[MrUpwardlyMobile]

Other than that there is no way to shelter that income from taxation.  You'll have to pay taxes and buy a tax efficient mutual fund that doesn't spew off cap gains and dividends every year.

#1stWorldProblems

I guess I’ll use everything and pay down student loan debt even faster than I planned.

[MrUpwardlyMobile]

I believe you can deduct IRA contributions if you don’t have access to a 401k.

At that salary within a small company, you likely have some pull. I recommend encouraging the company to look into a benefits provider like Insperity that could get you access to a 401k.

that’s not a bad idea, but it’s probably not something I can push for in the first 6 months. I’ll be the first pure employee of the firm.  My understanding is that they’ll be hiring an administrative employee or two by the end of the year, and one subordinate attorney to be shared by the two partners and by me.

It’ll probably make more sense for me to wait until they hire people or find it more difficult to hire without a 401k plan than they expect.

Insperity plans look like they start at 10 employee small companies.  I need something that would make sense at the 3-5 person level.

I suppose I could ask my current employer to deposit my full final paycheck to my 401k with my current provider.