Hey MMM gang,
I'm in need of some help clarifying my retirement options moving forward with some big life changes coming up. The quick overview is that I am a medical resident finishing my residency in 4 months when I'll be going from total compensation of ~$60,000 to ~$240,000 overnight. I've been procrastinating some money moves I need to make but I'm not clear yet on what exactly I need to do.
Primarily I have three issues I need to figure out - what to do with my small HSA, funding a new Roth, and what to do with a previous SIMPLE IRA.
First and simplest I think is the HSA - I'm married and have 3 kids but they're currently insured through my wife's job while I have a HDHP at my current position. I've been contributing only a modest amount to the HSA over the past few years and currently have $1,980 in the account - it's not even met the plan threshold of $2k to transfer to an investment option so it's sitting in cash right now. There are expense fees of $2.50/month so I'm literally losing value in this thing right now though after the next paycheck when it exceeds $2,000 it should dump all of that into VFIAX. With my new employer I am going to have full coverage health insurance for my family paid for entirely by my employer so I will no longer qualify for an HSA. I'm wondering if I should just withdraw this money now and take the relatively small tax hit this year. My biggest fear if I leave this account open I'll forget of its existence over the years to come. As I see it here - 2 options - 1) leave it be, let it grow, make sure not to forget about it, use it as needed for medical expenses or b) withdraw it now and dump it into some other account.
Second and third problems go hand in hand - the SIMPLE IRA and a Roth. I have this SIMPLE IRA from a previous employer prior to med school. The current value is $10,300 and is invested 100% in a Vanguard Target 2040 retirement fund. I do not currently have a Roth (my retirement situation laid out below). I am currently investing 8% of my annual salary in the hospital 401k (+ 4.5% employer match). My new employer starting in July will contribute $19,500 to any retirement account I want so my plan is to max my individual contribution as well for a total of $39,000 to a new vanguard 401k. We'll also max my wife's 457 account separately. I want to max out Roths for each of us as well but we'll be over the Roth contribution limits after this year though so I'll have to do the backdoor conversion starting in 2022. But my understanding is I can't do a backdoor Roth with that SIMPLE IRA in existence so I don't know what to do with that money right now. My thought is that I need to open a new Roth IRA, roll over the SIMPLE IRA into it, but as a rollover does that count against my annual contribution limits? Also, because we have enough in cash savings right now that I'd like to fully fund a 2020 (last year) Roth before filing our taxes in the coming weeks. If the SIMPLE is going to get in the way though I'm wondering if I just need to withdraw it all and dump that into my 401k for 2020?
Appreciate the input. Apologies if this is a convoluted mess - happy to clarify anything.
Current retirement situation:
457 (previous employer) $22,200 - 100% VFIAX
SIMPLE IRA (previous employer > 2 years ago) $10,300 - 100% Vanguard 2040 Target Retirement
401k (current employer) $14,100 - 85% FXAIX, 15% FXNAX
HSA (current employer) $1,980 - currently in cash, will move 100% to FXAIX in coming weeks