Early Retirement Extreme Forums

It's probably a wash, but I"ll be starting work in mid-July 2017 with an annual income of 65K, so around 30K of income for 2017. Should I fill the Roth for the year, or a traditional IRA?

I'm thinking traditional will save me the most $ if I'm taxed at all, via a Roth conversion ladder, but then I have to do that, and the RCL has to still exist. In that case, maybe the Roth would be easier.

You might just put the money aside and wait until you can estimate your tax bill. If you aren't paying any taxes anyway due to only working for a part-year, the Roth makes more sense. But doesn't the new employer also have a 401(k) option?

Not until 2 years passes it seems, and it's a SIMPLE IRA

401(k) only 2 years in? brute has never heard of that.

thoughts on the long-term validity of RLC (and HSA) also appreciated by brute, who thinks that certain humans (Mad Fientist) are over-optimizing to a current tax environment that could change over the next 30 years they want to live off of their investments.

Yeah, the 401K thing sounds weird.

You can decide while you're doing your taxes if a trad IRA would be beneficial and contribute then if you want.

Trad/Roth (at end of year based on tax bracket) + HSA (keep the bill on your medical expenses after opening the HSA and you can take out that amount later)

My god thats such a huge grad income!!!! I started on $37.5k. That was a while ago but things havent changed too much. Probably about $42k now. What city are you working in?

http://www.gocurrycracker.com/roth-sucks/

The 2yr for SIMPLE IRA sounds normal---it's a small business paperwork issue. Check to see if it's calendar years or employment years though. It might be that the actual real regulation bar is 1.00 calendar years! Also ask payroll to see how flexible they are. When I worked as a quant, I sent a short email to HR asking them to just max the hell out of my 401k (so paycheck = $0 until 401k was maxed) and they correctly calculated the amounts w/o being confused. OTOH, when I worked as a physicist, the 401k was run by Fidelity and apparently, the idea of contributing more than 75% was inconceivable to their systems. DW has had similar problems trying to convey that "no, I don't actually need any of my paycheck to go to my checking account" with her employers. Also keep in my you can contribute to *IRAs for the previous year until tax day. That's generally not the case for employer plans (I made that mistake the first year I ever had an actual employer plan).

thrifty++ wrote:My god thats such a huge grad income!!!! I started on $37.5k. That was a while ago but things havent changed too much. Probably about $42k now. What city are you working in?

Thank you, it seems like listening to all of RPF was handy. : ) Now if only I can pass my geology comprehensive exam to graduate on time.

I'll be in a small city/suburb outside of NYC.

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I decided to just wait on picking the Roth or Traditional 'till tax time; I'll just put some $ into a taxable account.

Wow your living costs will be cheap too then. You should be able to smash out savings really fast. Radical Personal Finance? I just started listening to that too. Are you referring to the you are 100% responsible for your income podcast?

I meant that listening to all the episodes on it helped me get a finance job I like as a liberal arts major in geology. I actually strongly disagree with a lot of the "you are 100% responsible" themes Joshua mentions. Although I employ these 100% responsibility strategies in my life because they are useful, I think the line of thought completely fails to take into account the effect of sociological drivers in individuals' lives. It also makes it easy to discredit people as "not trying hard enough."

Bear in mind, if you max out your 401K by going 'zero paycheck' you'll miss out on any employer contributions for the rest of the year after you've maxed - they are based on your % of pay per each contribution, not your net contribution. At least mine is, thus I have to plan it all out to get the max for everything.

@Cmonkey that depends on whether they calculate a true up.

The easy answer is divide the max by the amount of paychecks left in the year if they dont true up.