Author Topic: Basic/Starter Questions  (Read 628 times)

Westwood87

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Basic/Starter Questions
« on: February 17, 2019, 08:13:42 AM »
I understand my wife and I should max our 401k/403b and then also open IRAís and max those. How do we go about doing this. I see we can front load our 401k & 403b or invest weekly.

 What happens when we hit the $19,500 limit? Should our employers see that and automatically our investment will top out?

Do we set it up so IRA investments are pulled right from our check? Or bank account?

Iíve heard a lot about taxable accounts, are these different than the items mentioned above?

MustacheAndaHalf

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Re: Basic/Starter Questions
« Reply #1 on: February 17, 2019, 07:38:13 PM »
Does your company match 401(k) contributions?  If they don't, and the plan choices have high expense ratios, an IRA may be a better place to start.  But yes, once you've contributed the annual limit, your company automatically stops further contributions (which will make your paycheck deposits get bigger).

An IRA has nothing to do with your company, except that you must have an income to contribute.  You contact a company like Vanguard, Schwab or Fidelity to setup an IRA.  You'll fill out an account form and send them a deposit.  An IRA is an account type: you will still have to pick what to invest in, inside the IRA.

Westwood87

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Re: Basic/Starter Questions
« Reply #2 on: February 18, 2019, 09:01:37 AM »
Yes, we get 100% up to 3%, then 50% for the next 2%.  I do the 5% for now to get the 4% match.  (We're putting all of our money currently to pay off student loans, which should be gone by June.  So we both moved down to our minimum % to get full matches)

How do you have a roth IRA if it not connected to your paycheck? 

Side note I know we're in the 22% where the roth/tradtional conversation seems to point to either a 50/50 allocation or all traditional.

Finances_With_Purpose

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Re: Basic/Starter Questions
« Reply #3 on: February 18, 2019, 10:36:03 AM »
Plan your contributions to hit your limits.  You can do it monthly: 1,583.33/month for 12 months.  Or any combo.  Also take into account the time it takes to change contributions if that's an issue w/ your employer (there's sometimes a 1-2 month lag). 

Your employer could let you over-contribute, which then becomes a paperwork/tax hassle. 

It's easiest to do IRA contributions from paycheck if available as it then isn't reported as income that's then offset (where you would then get a bigger tax refund since you're filling the account with after-tax dollars). 

Unless you mean a Roth IRA - which it sounds like you might be, since you say you're maxing your 401ks already - in which case you only put in after-tax money, so you can simply write a check. 

Taxable is usually just a normal investment account with whichever institution (Vanguard, Fidelity, etc.).  Tax-deferred/advantaged: 401k, 403b, 457, IRAs, etc.  All the special names/types are various government statutes/programs that let you put money into investments without paying tax on the gains; everything else is generally taxable. 

MDM

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Re: Basic/Starter Questions
« Reply #4 on: February 18, 2019, 02:17:58 PM »
I understand my wife and I should max our 401k/403b and then also open IRAís and max those. How do we go about doing this.
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