I see this advice on the forums pretty regularly for sequencing of funding accounts/projects:
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)
6. Fund mega backdoor Roth if applicable
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.
Items 1, 3, 4 (or substitute with SoloK....see below), 5, and 6 all have to do with contributions to tax-advantaged accounts that can be used for retirement. I was wondering if there was some overall cap on the contributions for these items.
Our situation is pretty unique and we should be able to fund all of these items in tax year 2016 (next year). So I'm trying to do some planning. Our W2 salaries combined will be about $210k and I expect for our "side" business to have a banner year and deliver north of $600k in profits. My understanding is we should be able to contribute to these items as follows:
-Items 1, 5 - $18,000 for my wife and I each (plus employer matches....whatever they are. I am too lazy to look them up, but assume 4%ish)
-Item 3 - $6,750 total for family (my employer covers $1,500 of this)
-Item 4 - $11,000 combined (wife and I) backdoor Roth IRA available (I can't do mega Backdoor Roth) + $106k (wife and I) employer contributions from SoloK from my side business (constrained by 25% of profits, which I hope we'll have enough to fund next year)
-Item 6 - Not available in my plan through Fidelity
So ignoring the employer match this should be roughly $18,000*2 + $6,750 + $11,000 + $106,000 == $159,750 that can be stuffed into tax-advantaged accounts. My question is whether or not this is possible or if choosing one or more of the items above necessitates that I can't choose another. Are there constraints I am not aware of or are all of these mutually exclusive?
Edit: Forgot 2*$18k....corrected above.
