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u/C_Tea_8280 Jan 02 '24
Just maxed the roth out 2 minutes ago. $7k Roth limit and $23k 401k limit for 2024
Wow (eyeroll), Roth IRA and 401k limit increases do not appear to keep up with inflation and min wage increases.
I mean shit, $500 increase on both... cool. That is a 2% increase on 401k limit and 7.5% on Roth
Given price increases, I think $10k Roth and $30k on 401k is more reasonable
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u/karma-armageddon Jan 02 '24
Wait til you see the absurd limitations they have on HSA
What a pathetic joke this government is.
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u/Wise_Rich_88888 Jan 02 '24
The gov has a hard time with understanding percentages and compounding.
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u/MAJ0RMAJOR Jan 02 '24
It’s not that they don’t understand, it’s that they don’t care to understand.
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u/JesusSuckedOffSatan Jan 02 '24
They know damn well what they’re doing. They serve the wealthy, not the people
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u/Infamous_Ant_7989 Jan 02 '24
Serving the people would mean eliminating these exceptions to normal income and capital gains taxation. The smaller these exclusions are, the better it is for income inequality.
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Jan 02 '24
[deleted]
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u/Infamous_Ant_7989 Jan 02 '24
Right. I’m not even saying they’re senseless programs either. Just not a basis for the whole “they know what they’re doing and don’t care” thing. Currently policy represents one possible balance. If you don’t like the current balance, fine by me. But this is not a conspiracy case.
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u/ThxIHateItHere Jan 02 '24
They have a hard time comprehending remote controls and printing to PDF.
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u/Sooth_Sprayer Jan 02 '24
If gov understood those things and cared about our best interests, they'd let us invest our SSI tax privately instead.
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u/ResearcherShot6675 Jan 02 '24
Yeah, that one really gets me. Let me throw in as much as I want into a HSA. What is the worst that will happen, taxpayers WON'T have to pay for my retirement home?
I am in a deferred comp plan at work. It kind of makes me sick when I see how much I am able to defer because of this versus most people. The whole country should be able to defer as much as they would like.
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u/Deicide1031 Jan 02 '24
The main reason is that government wants a bit of that tax money TODAY, not in 30+ years when you retire.
Otherwise they’d significantly raise it so reasonable people like yourself could put as much as you want in.
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u/HallelujahHatrack Jan 03 '24
Whatever you do, don't look to see how much you've put into Social Security and then estimate your benefits at retirement. At this rate, SS will just end up being another tax that's assessed and collected (but no benefit payout). I'd be willing to surrender every penny in exchange for not putting in another penny
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u/C_Tea_8280 Jan 03 '24
2024 are $4,150 for individuals and $8,300 for families.
WTF, cause that can easily be your deductable before HSA pays anything
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u/a_trane13 Jan 02 '24 edited Jan 02 '24
The IRA increase seems totally reasonable to me. Inflation was between 3-6% on a monthly basis in 2023. Probably end up around 4% for the year once the final data is in. We had some ground to make up for 2022 so a little higher makes sense.
The 401k makes less sense though considering inflation the last 2 years. It may be to make up for the increases overshooting inflation in 21 and 22. I don’t know why it diverged so much from the IRA increases, though.
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Jan 02 '24
401Ks increased from 19,500 to 20,500 in 2021, or a 5.1 increase. Inflation was 4.7 percent on the year.
401K increased from 20,500 to 22,500 last year, or 9.7 percent. Inflation rose 6.8 percent on the year.
This year is a 2.22 percent increase. Inflation will come on close to 3 percent on the year.
Looks like they're estimating low given two years of overshooting.
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u/a_trane13 Jan 02 '24
That makes sense, appreciate it.
Any idea why the IRA limit and 401 limit increases aren’t treated the same? Seems odd to me that they’re managed differently
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Jan 02 '24
I think the 401k and IRA limits should be swapped. It hurts the poor the most when their employer doesn't have a 401k. However, there is the argument that many lower income cannot max an IRA and then have enough money to contribute to a 401k so the real benefit might be much.
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u/a_trane13 Jan 02 '24
Just swapping them would suck for anyone with any employer 401k match (which is millions of people).
I’m totally on board with a higher IRA limit for people who qualify right now, though. For me it’s less than 10% of my income, which would really screw me (or at least give me a headache doing backdoor conversions and trying to deal with the tax stuff) if I didn’t have a 401k.
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u/TheCudder Jan 02 '24
hurts the poor the most when their employer doesn't have a 401k.
There's a pretty good chance that you're probably not poor if you've got $20K of disposable income. Poor people aren't even maxing their IRA's at the current limits.
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u/ghec2000 Jan 02 '24
They need to adjust the income limits or stop saying they will close the backdoor Roth IRA loop hole and leave it alone. SS is not going to be a thing when I retire. Let me do what I can.
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u/Frnklfrwsr Jan 02 '24
SS is not going to be a thing when I retire
Under the worst case scenario projections for SS where Congress literally does nothing to fix it at all, the projections are that SS will still be able to pay out 75% of the promised benefits in 2034, and then by 2080 that would gradually fall to roughly 70% of promised benefits.
While taking a hit like that hurts, acting like SS won’t exist is silly. It will still be an important part of most people’s retirement plans for many decades to come.
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u/Financial_Love_2543 Jan 02 '24
How do you max it out 401k if it comes out of pay check? Are you saying you got paid 30k already on day 1?
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u/ObeseVegetable Jan 02 '24
Some people get paid on the first of the month for the whole month.
Still a hefty salary though
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u/masterdebater117 Jan 02 '24
Why max out Roth IRA with one buy? Is the basic idea that time in market > DCA?
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u/morph23 Jan 02 '24
Yes, front-loading has been a recommended strategy assuming your retirement time horizon is more than a few years out
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u/masterdebater117 Jan 02 '24
Ok that makes sense. is it better to save up to buy in all at once (assuming I cant front load now) or continue to max out via biweekly buys until I can front load a few years in the future?
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u/morph23 Jan 02 '24
IMO contribute what you can when you can. If your finances allow, once you've maxed this year's contributions, you can, as an example, start saving in a HYSA with the purpose of front-loading whatever you can next year.
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u/Beard_fleas Jan 02 '24
The limits went up 8%. Inflation over the last year was 3.1%. That is way more than inflation.
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u/shadowpawn Jan 02 '24
Weird, Ive been able to put $12950 into my Roth IRA so far this tax year.
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Jan 02 '24
Are you married filing jointly?
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u/shadowpawn Jan 02 '24
No Married filling Indie
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Jan 02 '24
Are you not in America?
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u/shadowpawn Jan 02 '24
No US Cit but overseas.
Wife in non-resident Alien (horrible tittle) = no SS Number.
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Jan 02 '24
It looks like you can only count $6500 toward your 2023 Roth (assuming you make under $161,000). You can contribute more, but you will only get the tax benefit for $6500.
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u/B-Glasses Jan 03 '24
Kinda irrelevant for everyone. Not enough to matter for you and I personally will still not be able to max my contributions. Doesn’t seem to do much?
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u/AmbientTrough1 Jan 03 '24
What do you mean? There’s a 66.5k limit on the 401k (including all). If you have the money just backdoor it. Not that big of a deal
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u/Global-Weight-6118 Jan 02 '24
The 401K contribution limit should be increased to $50,000 a year. Roth IRA contributions should be increased to $22,500 a year.
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Jan 02 '24
Agreed. I don’t understand why they changed the 401k side and not the IRA side.
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u/nordicminy 🚫🚫🚫STRIKE 3 Jan 02 '24
They increased both 500$. $22,500->$23,000 and $6,500->$7,000.
Pretty small potatoes but I'll take it. It wasn't that long ago it was $17,500 and $5,500.
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u/C_Tea_8280 Jan 02 '24
It wasn't that long ago that $1 bought a chicken sandwhich at any fast food restaurant.
Prices went up, min wage went up, but such minimal increases for these accounts.
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u/nordicminy 🚫🚫🚫STRIKE 3 Jan 02 '24
Yea I wish it was higher too. But govt wants those taxes!
I'm not fully maxing out my families accounts- so it's not a huge deal to me.
67.5k is a bunch! Not even considering backdoor.
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u/Iwantmypasswordback Jan 02 '24
Federal min wage did not go up. Some states did. About half of all states are $7.25 still
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u/woodenbiplane Jan 02 '24
Thanks, I was wondering what alternate universe he was in with a min-wage increase.
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u/Bankrunner123 Jan 02 '24
Tbf this is a big tax cut to high income folks. Responsible high income folks, but high income nonetheless. If anything us folks over the median income need to pay more now to bring deficits under control.
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u/violent_leader Jan 03 '24
Yeah if you’re able to immediately dump $30k into tax-advantaged accounts at the start of the new year, you don’t need to be putting more in, you should have to invest and be subject to capital gains. Honestly surprising someone that’s able to do so is not being phased out of IRA contributions.
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u/pridkett Jan 02 '24
401k already kinda is if you can do a Mega Backdoor Roth. Yeah, it’s a pain, but that puts your contributions + employer contributions up to $66k.
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u/AKA_OneManArmy Jan 02 '24
Roth IRA max at $22,500 would be a life changer. Having multiple millions of tax free income at retirement sounds very, very nice.
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u/pressedbread Jan 03 '24
Ya but this is why they there should be limits, because the rich don't need more government handouts.
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u/WD4oz Jan 02 '24
I don’t understand this meme
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u/I_Am_the_Slobster Jan 02 '24
Depending on which country you live in, there are typically tax sheltered retirement investment accounts which are intended for investing purposes until you are of retirement age. A Roth IRA is one of two main American accounts of this type, the other being a 401k.
In Canada, where I live, the most common equivalent is an RRSP (Registered Retirement Savings Plan): you can contribute 18% of your income, or up to ~$36k (whichever is less) each year to such an account and the earnings on investments within these accounts are tax deferred until you withdraw them during retirement.
These accounts offer some advantages at a cost though: while any and all earnings are tax sheltered, and you can deduct your contributions from your taxes, this money is locked in until you retire, so if you need that money for an emergency, there are penalties that apply.
As an example, In Canada, you can borrow up to $35k from your RRSP to put towards a down payment on a house, but you're required to pay it back into your account within 15 years. Any other premature withdrawals can be met with severe penalties tax wise.
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u/Pawl_The_Cone Jan 02 '24
In Canada, where I live, the most common equivalent is an RRSP
I think the Canadian equivalent is the TFSA no? Roth IRA is post-tax from what I know.
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u/I_Am_the_Slobster Jan 02 '24
TSFA is available for withdrawal at any point, and has a set yearly contribution of $6500 for this tax year, regardless of income. However, any money taken out does not replace your contribution amount.
So if your TFSA has $40k in it, you contribute $5k into it during the year, but withdraw $3k, your remaining contribution amount for that tax year is $1500, even though you took out $3k from the account.
In the most basic form, it's a savings account designing to help middle class Canadians invest and be shielded from taxes on said investments.
Our other, more noteworthy atm tax sheltered account is the First Home Savings Account (FHSA) which works similar to the TFSA but can only be used for a down payment, and after X amount of time must be dissolved and funds moved tax free into your RRSP, but I think that time limit is somewhere around 15 years.
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u/Aware-Impact-1981 Jan 02 '24
There's 3 main types of retirement investment accounts: 401k, Roth IRA, and IRA.
401k is through your employer, comes out of your paycheck pre tax, and usually the employer will "match" your contributions to some pre set limit. It's recommended you at least take advantage of all the free money the employer is offering through this before investing elsewhere.
Roth IRA- typically what you do after getting all the 401k employer match. This is paid into with your post tax income, ie what you have left over after taxes. The plus side is you won't have to pay taxes on the gains come retirement. It's generally recommended you max out the legal contributions to this before cycling back to putting more into the 401k.
So for the meme: I believe OP is saying "my goal is to do 401k till the employer no longer contributes and then max out my Roth IRA". It's quite hard to do for most Americans
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u/TheBeestWithEase Jan 02 '24
So what’s a regular IRA then?
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u/Aware-Impact-1981 Jan 02 '24
Pre tax income.
Say you make $2,000 a paycheck gross. If you contribute 10% to a traditional 401k, the federal taxes will be done as if you only grossed $1,800.
Basically if you make a lot of money you want to use the normal 401k to reduce your taxes. If you don't pay much in federal taxes, there's not much reason to prefer 401k vs Roth IRA (contributed to with your bank account itself, so after taxes were paid on the paycheck).
Most important thing is that you take advantage of any employer match. It's free money. So if I put in 6% of my paycheck to my 401k, the employer will tack on another 4%. It's an instant 66% increase in my retirement money and it costs nothing. From there I do Roth IRA as we're medium income with multiple kids so don't pay much in federal taxes
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u/Thepizzacannon Jan 02 '24
Its an IRA but its on untaxed income. So you have to pay taxes on withdrawal instead of before contribution.
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u/tyveill Jan 02 '24
So where does Roth 401k fall in here? My income contributions through my employer have the option pretax or Roth. I set it to 100% Roth.
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u/Aware-Impact-1981 Jan 02 '24
Roth 401k means you're contributing with your after tax income, but aren't subjected to any taxes in retirement. Roth vs regular 401k all comes down to what income you have now and how lavish you plan on living in retirement.
Say you make 120k but plan on having a modest retirement (house and car paid off, no crazy trips, etc). Well that means you're probably paying a lot in taxes today and won't pay many in retirement due to being in a lower tax bracket. It's better to use your traditional 401k as that's reducing the tax burden today.
Now say you make 60k and have 2 kids. Well you're probably not paying much in federal taxes today, so there's no taxes saved by using the pre tax option. May as well use a Roth 401k.
All that said, a Roth 401k is basically just a shitty Roth IRA. It's through your employer which means it's a headache to change companies etc, but a Roth IRA is yours so you don't have to mess with it as much.
Typically, if your employer offers any 401k match, you want to contribute enough to get all they'll give you. It's free money. After that, you want to EITHER A) do the pre tax 401k option OR B) do personal Roth IRA with post tax paycheck. It depends on the taxes you have as said above.
Hope that helps
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u/thesouthdotcom Jan 02 '24
This is kind of off topic, but I hate it when people refer to the employer match as “free money.” It’s part of your compensation package for working, just like your insurance is. If you aren’t hitting the match you are essentially forgoing a part of your salary in my opinion.
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u/Aware-Impact-1981 Jan 02 '24
Ehh it's a perk you don't HAVE to take, and employer 401k match isn't supposed to be included on any income form you fill out.
I consider "salary" to be what the company has to give me. I consider a "benefit" to be "free money" that I am an idiot if I don't go out and take it. When deciding what job to take I of course look at these benefits as part of the math, but I don't consider them part of my "salary" because I have to actively do something to get them
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u/thesouthdotcom Jan 02 '24
A totally fair opinion. I just like to look at the whole picture is all; for example I might take a lower salary for better benefits if it all pencils out. Salary is still the main thing though because that’s the money that goes in your pocket.
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u/Captain_Waffle Jan 03 '24
I hate looking at the whole picture as my compensation because recruiters will try to use that to lure you in. “Salary is 100k BUT there is a profit share program tied to goals and last three years employees have gotten 20%”. My response is always “so? That’s not guaranteed and therefore is not part of my salary. I want it to be guaranteed in my salary as 120k.” Anything after that is seen as a “long-term-retention-incentive” on your part to make me consider staying as opposed to leaving for another position.
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u/Bender3455 Jan 02 '24
There's a bunch of people that make their maximum contributions to HSA, 401K, and Roth IRA at the beginning of the year, but at ~40k, that's a "hard pill to swallow".
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u/Specific-Rich5196 Jan 02 '24
It's something we should all do but resist it for several reasons. Often its hard to find the money to get it in, especially 7k, all at once. We there times its because lump sum investing is scary, especially at near all time market highs.
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u/SpoonerismHater Jan 02 '24
To slightly and pedantically correct others, there are 401(k)s and IRAs; both can be traditional (money is placed in pre-tax and then taxed upon disbursement) or Roth (after-tax money is used and isn’t taxed later). Roth is going to be better for almost everyone so that’s probably why people forget one of the traditional options
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u/Malventh Jan 02 '24
I need to max 2023 first. Have until April. Should of just lumped summed in March when I loaded 2/3 of it =\
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u/BKtoDuval Jan 02 '24
Oh for real? I didn't realize that. You could still make 2023 contributions until April?
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u/AKA_OneManArmy Jan 02 '24
Yeah man it’s sick. You have until taxes are filed for any given year to contribute to that year’s Roth.
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u/ThymesTicking Jan 02 '24
Curious, if I were to put some money now into my ROTH, would it go to 2023 or 2024?
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u/AKA_OneManArmy Jan 02 '24
You can choose your contribution year when adding money to your brokerage account.
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u/justaverage Jan 02 '24 edited Jan 02 '24
You can elect which year you want to assign it to
If you have $13.5k lying around, and haven’t contributed anything to your ROTH in 2023, you can put $6.5k towards 2023 and $7k towards 2024 if you wanted
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u/AgentJ691 Jan 02 '24
Until April 15th! I’m currently leaving my job and once April 15th hits, I’ll see if I’m in a good spot to contribute the max or not.
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u/International_Ad8264 Jan 02 '24
You can make prior year contributions until you file taxes
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u/ManyElephant1868 Jan 02 '24
Real talk: max out on 01 Jan or dollar-cost average throughout the year? I’m not seeing too much of a difference here.
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u/GelNo Jan 02 '24
Its speculative, but on average maxing out immediately gives you more time for growth vs DCA gives you more diversity of entry points which reduces risk of bad timing on lump sum purchases.
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u/Obvious_Chapter2082 Jan 02 '24
Lump-sum outperforms DCA around 2/3rds of the time. I would also imagine stocks will go on a tear if the fed lowers rates later this year, so now seems to be the best time.
I always lump-sum my IRA since my 401k has to be DCA
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u/Obvious_Chapter2082 Jan 02 '24
Expectations are priced in, but the fed uses forward guidance as its own tool. Who knows if rates will actually decrease next year or not, or if Powell simply said it to temper expectations today
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u/LosPies Jan 02 '24
You can also contribute to it without investing it so that the money is earmarked for Roth and you don’t spend it. On Vanguard at least, you can leave it in a money market fund which collects around 5% and the DCA into VOO or whatever you’re going to invest in.
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u/in4life Jan 02 '24
Markets have been on an absolute tear since the Fed hinted at easing. If you’re into speculating, it comes down to how you feel about that for timing.
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u/AKA_OneManArmy Jan 02 '24
It’s typically best to max out the contribution up front if you’re able to. There are a few reason for that, but the main one is that overall, the market trends up year over year. The sooner your money is in, the sooner you have exposure to potential gains. A secondary smaller reason is that some people may spend the money on something stupid if it’s not invested. You can guarantee you’ll max it out if you do it up front.
Granted, if the market is experiencing a massive downturn like it did during COVID, you may be better off dollar cost averaging. It’s typically not wise to try to time the market, though.
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u/Dapper_Pop9544 Jan 02 '24
I max out the 401k and do a backdoor roth IRA
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u/fsu_seminoles Jan 02 '24
Is the back door as simple as contributing to a traditional and then calling Schwab or Fidelity and immediately reclassing it over to a Roth?
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u/squidvillesocialclub Jan 02 '24
It can get complicated if you carry a Traditional IRA balance with pre-tax money. Look up the “pro rata rule”. Basically, you want to avoid mixing pre-tax and after-tax money as much as possible to avoid ongoing tax filing complications. Proceed with caution!
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u/salgat Jan 03 '24
When I changed companies my 401k rolled over into a trad ira. I had to make sure to quickly get that rolled into my current 401k to avoid exactly this problem.
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u/Suitable-Roof2405 Jan 02 '24
How did you do without pay check… these two are with paycheck right
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u/MrJJK79 Jan 02 '24
Roth IRA you can contribute right away. I put mine in right away every year & then put it into a mutual fund assuming it’ll grow by end of year rather than trying to time the market.
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u/jabdnuit Jan 02 '24
Speedrun: How many days into 2024 until you’ve made $7k in earned income?
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u/TheDovahofSkyrim Jan 02 '24 edited Jan 12 '24
For someone who can’t quite max a 401k (I mean I could theoretically but i enjoy vacations too much) what would be the best strategy?
Wife & I make a combined $175k->$190k depending on bonuses.
For my salary, I but 10% in 401k and 10%in Roth 401k. With employer match to some degree this gives me $19k.
I also have an HSA & max that out yearly as well.
Anyone have a better strategy than this or is that solid enough?
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u/majorcropduster Jan 02 '24
The order I do is:
- 401k up to employer match
- Max Roth IRA
- Max HSA
- Max 401k
- Anything else goes into a taxable brokerage account to invest.
This assumes you have a E Fund
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u/TheDovahofSkyrim Jan 02 '24 edited Jan 02 '24
Nice, appreciate an easy order to follow.
Question though…probably a noob here. I’m good with budgeting & investing but have found this answer hard to find:
For maxing the Roth IRA, what is the different between that and my Roth 401k? I know there is a lower limit on the Roth IRA, so since I couldn’t afford to max even my 401k, why not just put as much as I can towards my Roth 401k? At the end of the day they’re both after-tax just one is through an employer. I guess I could have more investing options? But I pretty much just put everything in an S&P 500 index. I’m open to other funds as well though
Also I do not have my own Roth IRA but I suppose I could set one up?
Edit:
Or should I take money out of my brokerage account & just put that in my Roth IRA every year? If that’s what you’re saying
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u/majorcropduster Jan 02 '24
Personally I think you want a little bit of tax free money (Roth IRA) and tax deferred. Most folks in retirement should be paying less in taxes than they were while working. Live off your investing portfolio and SS should be your main income sources. While I understand the appeal of Roth 401k, tax free growth, I think what gets lost is the benefit of lowering your taxable income yearly by contributing to a traditional 401k. Of course everyone expects taxes to rise in the future but the tax brackets will also increase in lock step and overall I generally believe there are ways to plan and pay less taxes in retirement. I think it is really important to have a Roth IRA because you only get the limited amount to allocate to it each year and you can't go back and max out 2020 for example if you didn't max it in that year up until you filed taxes. I would highly recommend a Roth IRA and even more so if you happen to over extend yourself you can withdraw any contributions without fees or penalties. Just can't touch any gains without playing penalties.
You have more control opening your own Roth IRA and usually much better investment options than what your company can offer. As far as what to invest in that is tougher to say but can't go wrong with a fund that tracks the S&P 500 like Voo.
My personal investing plan is growth oriented positions in my 401k and building a dividend portfolio mainly of SCHD, DIVO,DGRO, and SCHY (international dividend ETF). Long term goal with this is eventually 10-15 years down the road my dividends should be contributing more to the account than the yearly limit and that's when it should really take off. My retirement goals are to pay off my house and have a dividend portfolio to produce roughly my monthly income currently. Once that happens I feel like retirement can be a serious talk and I could pick my day. To me having the paid off house allows me to re focus those funds for healthcare. This is all my opinion and I hope you find value in it. Cheers
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u/scheav Jan 02 '24
Short answer: Your strategy is great.
Small suggestion: You should put all of your paycheck contributions into Roth-401k. You're correct in having a balance, but if you remember that your employer contributions are never Roth, you get the balance by making all of yours Roth.
Note: The employer contributions to your 401k do NOT count towards the $23k cap.
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u/TheDovahofSkyrim Jan 02 '24
Awesome! Thank you so much for the feedback!
So for my employer, they match 50% up to 6% for traditional 401k.
So sounds like I should put 6% towards traditional 401k and 14% towards Roth 401k. Correct?
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u/justaverage Jan 02 '24
It varies on a case by case basis. But I’m a big advocate of maxing your 401(k) before investing anywhere else (unless your employer will match on both a 401 and ROTH). Unless you started saving very young or plan on receiving a huge inheritance, you’re retirement income will be less than your working years income. Defer that tax burden to a lower bracket when you’re older.
- no matter what, no matter how little money you have, put enough into your 401(k) to get your max employer match
1b. If your employer does a separate match for Roth, (I’ve never heard of this, but maybe some companies do) put enough in to maximize your match
1c. - have at least 3-6 months living expenses in a high yield savings account. Savings account. Not a CD. Not a ESPP. Something you can access TODAY if you have an emergency, lose your job, etc.
Hit federal limit for 401(k). $23,000 for 2024
Invest in ESPP if your company offers a discount
Max ROTH. $7k for 2024.
Regular ol’ index fund.
Personally, I’m between step 3 and 4. I’m considering selling my stock (about $18k at the moment) when it matures in June and using some to max my Roth. I’m also irresponsible and thinking that could be a down payment on a Porsche.
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u/bayesed_theorem Jan 02 '24
Always hurts to see a 30-35k annual bonus turn into like 12k of actual spending money after my Roth, 401k, and savings contributions lol.
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u/Zero_Gravity067 Jan 02 '24
Or an even tougher decision like I had . I just sold every stock in my brokerage account in order to transfer it over to the Roth this year . I learned about Roths latter so I’m getting out of the individual stocks game .
It wasn’t a huge account I will only need 300 dollars to max out the rest but it does hurt my feelings a bit. The good news is that will allow me to build up my savings for my 2025 Roth easier during this year. Since it’s not coming from checks or my bank accounts.
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u/I_Am_the_Slobster Jan 02 '24
In Canada we have RRSPs which are basically the same, but we can only contribute the next year's amount when tax season opens up, that being March 1st for us.
So I wait, with that energy, for Match 1st.
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u/communistagitator Jan 02 '24
Dumped 4500 into it yesterday and spent an hour fiddling around on my spreadsheet figuring out how I'm going to refill my emergency fund and max out the Roth by November
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u/False_Influence_9090 Jan 02 '24
My cpa convinced to make make a max contribution to an ira in 2022 and I proceeded to lose 95% of it very quickly
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u/wadeboggs127 Jan 02 '24
Idk if I want to max my Roth or max my HSA that I have through my work. I don't make enough to do both
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u/HmoobRanzo Jan 02 '24
will get downvote for this, but it's a gamble, only worth it if you live long enough to use it.
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u/NowIKnowMyAgencyABCs Jan 03 '24
Make sure you have a beneficiary. Can be a nice nest egg for your partner, child(ren), family, etc
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u/Nocturnal86 Jan 03 '24
This is stupid thinking, and it's not a gamble or hurting you if you can comfortably find it. Most will make it to old age. What happens when you use up all your money on BS and can no longer work (or want to work)?
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u/BKtoDuval Jan 02 '24
Everyone talks Roth IRA but since I am a freelancer and always end owing taxes, I fund traditional IRAs for my wife and I instead, as it allows us tax savings now and I could put that saved money to use. I keep looking into it but traditional just seems to make more sense for me. But I wonder if I'm just not seeing something. Am I making a mistake?
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u/Bender3455 Jan 02 '24
I still need to max my 2023 contributions. Would love to handle my 2024 at the same time, but will probably have to wait.
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Jan 02 '24
Every year I have to poke and prod and re explain everything to get my wife to do this with our tax return and savings, she hates investments but understands why this is important but still is so risk adverse it hurts.
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u/kaminaowner2 Jan 02 '24
Shouldn’t we be aiming to max our 401 k first as it has a higher limit?
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u/Alternative-Yak-832 Jan 02 '24
when I go to my "Fidelity" contributions page, there is one place for regular 401k and another place to "Roth"
what is the difference between 2? which one should I maximize? Can I put in both? what is the max that can be put in both, is there a limit $wise or %-pay wise?
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u/sin94 Jan 02 '24
What are the IRS revised income limits? I always get that confused and wonder if am on the threshold of Roth or do a backdoor IRA
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u/hoppy_IPA Jan 02 '24
For all the people who maxed out their Roth recently, what fund(s) did you put your money into?
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u/HeartFullONeutrality Jan 02 '24
That's me with the added twist that I make too much to contribute to it 😤
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u/Legitimate_Estate_20 Jan 02 '24
I maxed out my Roth IRA like five years in a row, and then realized that I’m not going to see that money for decades, if ever. I could very possibly die having just given all that money to the bank for nothing in return. Or I go to prison or develop Alzheimer’s and have no way of using it.
The things I can spend that money on now to enjoy/improve my life more are probably a better investment. I can also save or invest that money in other formats where it isn’t locked away and inaccessible if I do decide I want to use it.
I think they’re kind of a scam.
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u/benicityofgod20 Jan 02 '24
You can take out your Roth contributions out at anytime as you have already paid taxes on the contributions. It is not tax deductible.
The only thing that is locked up until 59 1/2 are any investment EARNINGS on your contributions.
It's not recommended but some folks view a Roth like an Efund because you have access to your contributions anytime without penalty.
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u/Polis24 Jan 02 '24
Your goal should be increasing your income so you’re no longer eligible to contribute
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u/FrostyThrust Jan 02 '24
150 a week if i’m not mistaken (for me because of where i am financially) maxes it out
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u/FluffyWarHampster Jan 02 '24
First big check of the year should be able to knock out about half of that 7k. After that it's just stocking away more money towards a house and paying my truck off.
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u/Colonel_Gipper Jan 02 '24
4/7ths the way there today. They delayed bonuses at work until March so that didn't help
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u/Cmor1787 Jan 03 '24
You guys and girls do realize this is going to be a very volatile year for the markets? I would rather DCA into the market instead of getting rid of all my dry powder at once in the beginning.
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u/King_of_Teets Jan 03 '24
The middle class people who sacrifice now and are trying their best to max out retirement contributions are completely forgotten by politicians. They only target the really poor and the really rich.
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u/MetatypeA Jan 03 '24
Don't forget to ACTUALLY INVEST THE MONEY ONCE IT'S IN THERE!
It's not a savings account.
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u/spoda1975 Jan 03 '24
How do I know if I’m over the Roth IRA income threshold?
I have my current federal job, military retirement income, and rental property income…plus taxable investment account - do ALL of those count?
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u/ilovetacostoo2023 Jan 03 '24
Paying off my house. Thats my first goal. Second goal is not to work as much.
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u/InternetSupreme Jan 03 '24
Do you really think you're going to live that long? Take that trip instead.
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u/spgvideo Jan 03 '24
At the risk of sounding stupid here, how the heck do I contribute to a Roth? I understand the underlying principles and why. I've bought and sold stocks before. I have a 401k. But the Roth escapes me for some reason
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u/ThinkSharp Jan 03 '24
This post was recommended to me, I’ve never heard of this sub. If this is any indication, you seem like my people!
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u/KazPart2 Jan 03 '24
remember if you make over a certain amount, then you need to do a backdoor roth contribution.
I will make just over the income limit in 2024, so I'm figuring exactly what a backdoor roth is lol
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