Unsure which retirement accounts to prioritize this year

[dizzy]

Hi!

Year 2 of marriage.
I have a billion student loans (which I will never pay off, planning for tax bomb).  I got lucky and with new rules I don't have to recertify again until 1/15/2025.  Another year of $0 payments, wahoo!

Once I have to recertify I will be switching to SAVE plan and doing MFS which is the only way a student loan payment will be affordable for me.
NO JUDGEMENT on our strategy please.  Have researched extensively and had professional consults about it, we are happy to be paying the least amount possible according to the rules.

With this in mind I'm not sure where I should put retirement moneys this year.
Our goal is lean/baristaFIRE probably in 2-3 years.  On the poverty side of lean.  It doesn't seem like there will be a drastic-drastic change like some people here from being in a high tax bracket to lower once we "FIRE".

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Most of my money is in pretax- largely my solo401k.  I have almost no money outside of that.
Have a small bit of money in HSA, tradIRA and Roth, total about $22k.

My husband has 95% of his savings in a brokerage.  He also owns our house which will be paid off in a couple months.  That's our only debt apart from my student loans.

My husband started working fulltime for the first time in a while last March, he was mostly unemployed before since the pandemic.  He will make around $40k pre-tax and I will PROBABLY make about $70k plus whatever from churning I have to report.  I'm 100% self employed so still uncertain for the year, my busy season is Sep-Dec though shouldn't be wildly different than this guess based on YTD/future bookings already.

Husband is maxing his 403b up to the match (he puts in 6% and they put in 9%) but so far he is not putting any other savings in. I may contribute on his behalf if I have enough leftover to either a Roth or tradIRA, if that makes sense.
I originally thought to try to max my solo401k then tradIRA but unsure if that is the best strategy for us right now, or not.

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Questions:
Since we aren't making insaneo amounts of money, and also live off of small money (around $30k once we barista FIRE) does it make sense to take advantage of Roth contribution now in this year we can still do them, or should we go for the tax benefits of tradIRA, solo401k, 403b etc?  OR take advantage to catch up on my lack of post-tax funds.  OR something else?

For reference I will be covering all of my and some of husband's COL with baristaFIRE work (about $15-20k/yr projected).  Husband is open to working a little but wants it to be more of a passion project.  Recently he came up with a business idea tho we have things to research about setting it up (he has the knowhow and tools, that part is good to go).  Otherwise we will draw from his brokerage until retirement accounts are accessible.  We also are likely to sell the house and be "houseless" for a few years- combo of full-time in our RV, staying with friends/family, and international travel, all of which we've done significantly and love.  We'd be investing the house money at that time for unknown amount of time (likely: couple years) with the thought to eventually buy in a LCOL area.

[reeshau]

You aren't giving balances here, or expenses.  So, this is a general answer.  Keep up the pre-tax contributions, because when you hit pre-59 FIRE, living on savings and taxable investments, you are in an interesting place, tax-wise.

If you are really going to live mainly off his taxable brokerage for a while, those will largely be long-term capital gains, and the tax rate for MFJ is 0%, up to $89,250.  If you are going to make $15-$20k on the side, this is "counted" first.  But, you also get, at least, your standard deductible.  So, if you are withdrawing less than $89k or so from the brokerage to live, you have some space to do roth conversions in the 10% or 12% bracket.

The full story is more complicated than that, of course.  If you are on an ACA health insurance plan, you don't want to torpedo your subsidies with Roths, or you could spoil the math.  In my case, we have an 8 year old, so also have some nonrefundable credits to throw into the calculation.  But in my 3 years of FIRE as a real example, I'm able to convert about $40k per year, without writing a substantial (> $100) check to Uncle Sam.

[dizzy]

Me:
Roth $3.5k
Trad IRA: $11k
HSA $7.5k
Solo401k: $90k
Brokerage: $7k but probably dumping that into solo401k, I'm just doing a signup bonus with it right now
edit: forgot 529, currently ~$6000 which will convert to Roth eventually

P2:
403b: $3k? (haven't checked recently, it didn't start right away and random stuff keeps posting he says)
Brokerage: $175k
edit: forgot 529, ~$1500 which will convert to Roth eventually

Zillow says our house is worth $200k but who even knows.  We live really close to a major city in a blue collar, but safe/under the radar town.
It's conceivable someone realizes our town is a decent suburb to live in (like many others around us) and the prices go up.  Or not!  Anyway it's paid off next spring.

Our expenses currently are more like $45k since lots of transportation expenses (daily tolls for both, parking spot for me) and shitty eating out due to stress/time which we are hoping not to have as much of.
In FIRE we are estimating at around $30k annually.  This is assuming RVfire/still keeping house and includes some healthy room for eating/drinking/fun.  Healthcare will be marketplace (currently I'm on but husband has from work.  I'm allowed to join his plan, but the cost is much more than what I'm paying- $9 a month! haha).  Does not include some deals/churning around gas and food I'm either just getting into or haven't had time to do.

Anyway there is no scenario in which we spend over $89k a year lol, that's wild to me.

We will mainly be living off of my baristaFIRE work, and a little bit off of anything we have in brokerage and/or if he starts this side business.

Edit!  also I am 42 and he's almost 48.  and my student loans will be forgiven when I'm 59.5 which is SUPER, plan to take tax bomb money from solo401k.

OH edit again so we might not be able to do Roth conversions in the future because once student loans kick in will be doing MFS as it makes sense (at least while we are working still).  Will have to run the numbers afterwards once incomes change since we also hope for marketplace insurance.

[MDM]

OH edit again so we might not be able to do Roth conversions in the future because once student loans kick in will be doing MFS as it makes sense (at least while we are working still).  Will have to run the numbers afterwards once incomes change since we also hope for marketplace insurance.

MFS puts a very low limit on making direct Roth contributions but does not directly limit conversions. 

The Traditional versus Roth game is all about the marginal tax rate you can save now vs. what you expect to be when withdrawing later (or pay now vs. pay later if considering Roth conversions).

[MustacheAndaHalf]

I have a billion student loans (which I will never pay off, planning for tax bomb).  I got lucky and with new rules I don't have to recertify again until 1/15/2025.  Another year of $0 payments, wahoo!
...

Student loans can take part of your social security checks.  Do you have a plan for these student loans, other than "which I will never pay off"?

[dizzy]

Yes, as I mentioned above I am on a repayment plan that is income based and then the amount will be forgiven after the specified time in repayment.

I won't have student loans when we are taking social security, as I mentioned my loans are up for forgiveness when I am 59.5 (and a month or so but who's counting).  I looked at some calculator based on our numbers there if we retire early, and it said my husband should wait until almost 70 and I should pull at 62 based on our numbers.  We aren't really planning on that for retirement purposes (we consider social security as more as a health bucket that will be nice if it's still there, even if reduced).

There is tax I will have to pay on the forgiven amount which will be at a higher income bracket, that's supposed to be around $30k.
I have a spreadsheet from the student loan consultants that lets me plot out what it's expected to save per month for it (or total amount based on today's dollars) based on which plan I'm on.  I can edit this to keep change with how much my husband and I are making a year.  I realized that I'll be over age 59.5 when this tax is due so it makes more sense to pull that out of my pretax and favor funding that account to let it grow (also money I put there keeps my payments low).

I will switch from PAYE to SAVE after I recertify, right now my payment is $0 until Jan 2025 at which point I have to recertify.  If I switch plans early I lose my $0 payment.

Anyway really my question was just about this coming year though without all the long term strategy (which I HAVE figured out)

[sonofsven]

I do HSA, tIRA, SEP IRA, and if I have any extra $, Roth solo 401k.
HSA first because it's a great tax break now and grows tax free invested, and it's fairly accessible at any time because so many things you already buy are qualified as an HSA expense. It's like another emergency fund.

tIRA because it's a tax break now and you can do roth conversion later, if needed.
SEP IRA is also a tax break now.

As a self employed person of fairly low income myself, I like to get as many tax breaks as I can now to keep and invest more money for the future.

I also plan on some day selling my home and cashing in tax free home equity when it's time to downsize. The only problem with that plan is that the older I get, the more I feel like I might stay here forever!

[dizzy]

Hey sonofsven, I'm curious why wouldn't you just do a trad solo401k first (or at least after HSA.  unfortunately I don't have an HSA this year.  Maybe next year, will have to see)
You can contribute a lot more.
Also I'm not doing that but why do you have both a SEP IRA and a solo401k?  Seems weird, might as well just do everything in trad solo40k, no?

[sonofsven]

You're right that it's not optimal and there is more space in the 401k; it developed this way as I was able and willing to save more over time.
I started with a roth IRA, then switched to traditional after I divorced and gave up my rentals as I found my tax bill very high.
Then I added a SEP IRA, then the roth solo 401k. My taxes are low already so I like putting any extra into the roth solo 401k after maxing out the HSA, tIRA, and SEP.
I'm pretty low income so I'm not able to fill all the space in the solo 401 k regardless.
The SEP is very easy to set up and I like that simplicity.