Author Topic: Reached IRA Limit....now what...  (Read 781 times)

hbrocks

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Reached IRA Limit....now what...
« on: March 03, 2019, 01:07:06 PM »
 - So, I finally got my other half to open a Vanguard IRA in December 18....she threw 5.5k in for openers....
Than, January 2019, she threw another 6k at it....(straight up VTSAX for both contributions)....
We thought we'd be able to keep contributing to it this year so we logged-on last night to set-up auto-contributions and it's telling us ...."NO...you've reached your yearly limit"...(say what?)
I thought the "limit" just meant 6k was recognized by some tax benefit...anything after would not count.
So, now we don't know where else to invest her savings....
I personally have 401k from work and my own personal Vanguard account that's separate from hers.

Thanks

ixtap

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Re: Reached IRA Limit....now what...
« Reply #1 on: March 03, 2019, 01:13:42 PM »
The $6k is a hard limit; whether or not there are tax benefits depends on your annual income and work related retirement.

Just put the extra money in your favorite fund in a regular brokerage account. Vanguard will work if you want to keep accounts in one place.

EvenSteven

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Re: Reached IRA Limit....now what...
« Reply #2 on: March 04, 2019, 08:16:28 AM »
Obligatory link to the investment order sticky.

https://forum.mrmoneymustache.com/investor-alley/investment-order/

Stimpy

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Re: Reached IRA Limit....now what...
« Reply #3 on: March 04, 2019, 08:32:43 AM »
As stated, 6k is your hard limit.   It sucks, but I know your not the only one in this boat.    It's time to open a taxable account and start socking it away there assuming you've done (or have been able to do) the other items in the recommended investment order.

Keep stashing it away and good luck!

ixtap

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Re: Reached IRA Limit....now what...
« Reply #4 on: March 04, 2019, 08:41:24 AM »
And thank you for reminding me that I have done enough of my taxes to know that I can't contribute to a Roth IRA this year, and so should go ahead and transfer the funds I had set aside to my Motif account.

nereo

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Re: Reached IRA Limit....now what...
« Reply #5 on: March 04, 2019, 08:43:16 AM »
Obligatory link to the investment order sticky.

https://forum.mrmoneymustache.com/investor-alley/investment-order/
+1.

You seem to be on step 4 (assuming you did not jump over steps 1-3).  Next up is to max out your 401(k) if appropriate.
WHAT           
0. Establish an emergency fund to your satisfaction           
1. Contribute to your 401k up to any company match           
2. Pay off any debts with interest rates ~5% or more above the current 10-year Treasury note yield.           
3. Max Health Savings Account (HSA) if eligible.
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
    - you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or
    - your earn too much for an IRA deduction and prefer traditional to Roth, then
    swap #4 and #5)           
6. Fund a mega backdoor Roth if applicable.         
7. Pay off any debts with interest rates ~3% or more above the current 10-year Treasury note yield.           
8. Invest in a taxable account and/or fund a 529 with any extra.           


Note: 10y tresury yield is currently 2.75%, ergo step 7 would be debts > 5.75% rate.