Author Topic: Should I max out Simple IRA  (Read 4954 times)

bdonney

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Should I max out Simple IRA
« on: June 25, 2015, 07:32:35 PM »
First some back end. I'm 28, make a little over $60k per year in Wisconsin.
I Just started investing this year, only really got into my career the last three years. I maxed out a 2014 and 2015 Roth IRA.
I'm currently only putting in enough into my SIMPLE IRA at work to get the 3% match.

As I have a decent amount of money left over each paycheck, I'm planning on Maxing out my Simple IRA if I can ($12500/year)
My company uses American Funds. I guess the question is what fund should I throw money into.

The fund I have currently is AWSHX (Washington Mutual Investors Fund) Expense Ratio: .6% and a front end load of 1.11%(I think they called it their "Lipper Growth & Income Funds Average")

I guess I'm curious about who knows about American Funds, I'm Loosing over a percent off the batt, should I not stuff the SIMPLE IRA full and put some into regular taxable accounts. Looking for preference on what you guys would do

MDM

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Re: Should I max out Simple IRA
« Reply #1 on: June 25, 2015, 07:52:20 PM »
That $12,500 happens to be just about the amount to get you down to the 15% federal marginal bracket.  So yes, putting all that into your SIMPLE IRA seems reasonable.

Pick the best fund/fee combination you can (do you have a list?), then rollover your SIMPLE IRA to your own IRA after the "two year period."  E.g., see http://www.retirementdictionary.com/tutorials/tutorial-simple-ira-distributions-rollovers-and-transfers.

bdonney

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Re: Should I max out Simple IRA
« Reply #2 on: June 25, 2015, 08:21:06 PM »
Every time I've looked at their funds, it appears my work's adviser pointed me to their best plan. I think there is a non-front load funds but they have huge expense ratio's. I did find this list: http://quicktake.morningstar.com/fundfamily/american-funds/0C00001YPH/fund-list.aspx I'll take a look.

Can you roll Roll over while You're still at your employers. I just always here about people rolling after they leave not during.
My  plan down the road was to roll parts of it to a Roth if I expected to need it.
« Last Edit: June 25, 2015, 08:44:51 PM by bdonney »

MDM

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Re: Should I max out Simple IRA
« Reply #3 on: June 25, 2015, 08:32:22 PM »
I defer to those more knowledgeable in SIMPLE IRA specifics, but based on the link I referenced it appears you can do a rollover while still working.  Again, you should verify that, but if so that would be best for you.

bdonney

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Re: Should I max out Simple IRA
« Reply #4 on: June 25, 2015, 08:49:56 PM »
Hoping someone who has also been stuck with American Funds will Chime in at some point, I'll keep looking through their funds in the mean time. Looks like I'll have some questions for my boss/work's Simple IRA adviser.
I did mention moving our simple IRA to Vanguard to my boss's but I highly doubt they'll do it and I'm not going to push it.

MDM

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Re: Should I max out Simple IRA
« Reply #5 on: June 25, 2015, 09:05:10 PM »
Note that the fees you pay for the various American Funds in your SIMPLE IRA may be different than what you see in Morningstar. 

That's because the fees are set by the SIMPLE IRA administrator.  Often the annual fees will be higher, with the difference going to the administrator.  Sometimes, on the other hand, front-end load fees are waived.  You want the story direct from your plan administrator.

More info (if you haven't already seen it) at http://www.irs.gov/Retirement-Plans/Plan-Sponsor/SIMPLE-IRA-Plan and links therein.

It appears that after two years of participating in the plan you can rollover all amounts - including each new year's contribution and earnings - into your own IRA.  Your plan admin may charge withdrawal fees - just something else to check.  All the legalese should be in something called the "Summary Plan Description" and you are entitled to a copy. 

bdonney

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Re: Should I max out Simple IRA
« Reply #6 on: June 25, 2015, 10:02:05 PM »
Sounds like I'll have to meet with or call the adviser anyway to increase my contributions. I'll bring a list of questions and get that summary plan. I'll post what I find out. probably in a week or so.

Thanks MDM.

TomTX

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Re: Should I max out Simple IRA
« Reply #7 on: June 28, 2015, 09:51:49 AM »
Fuck American Funds. Fuck your company. They're both screwing you over.

Get your company to move the SIMPLE to Vanguard. The Supreme Court has held that your employer has a fiduciary duty in fund choices. Fuck 'em.

If the answer is "costs" - the last time I checked Vanguard charged all of $20 per employee per year to run the SIMPLE.

bdonney

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Re: Should I max out Simple IRA
« Reply #8 on: July 07, 2015, 02:25:39 PM »
I have brought up that I would switch to Vanguard, I can come off like a know it all I guess, probably because I do a lot more research than the average person. I didn't want to push it. It's such a small town my "financial adviser" for my company actually knows my mom and some of my family from growing up together. Yeah if I max out the SIMPLE feels like I'm getting a decent tax benefit but then I get this big kick in the balls from their shitty expenses and sales fees.

Why are there so many retirement accounts? and why would any business have an IRA.. it stands for individual retirement account.. not employee retirement account. why do 401ks get higher limits. This stuff starts to make my head spin, I don't understand why the accounts itself get so complex. Why isn't it just.. Employer account max 18k.. IRA $5500. self employed - whatever. and have roth/traditional options. why cant that be it. Why would a government employee get different accounts.

Sorry for the rant, I just hate complexity for complexity sake.