I am in dire need of information about retirement plans. I have spent hours online researching my specific situation and I just can't find exactly what I am looking for. I have tried calling financial advisors but they all want 1% of my money every year till I retire or die. So here it goes and I would appreciate anyone who can help me with my specific situation:
I work several jobs, shift scheduling, one I work I make 145,000 a year and they provide a profit sharing/401k plan, the employer contributes 20% of my income to a retirement plan(around 30K), which I have invested in 3 different index funds. I also through the same employer have 18,000 taken out pre tax from my paycheck as the employee 401 k portion(which is also invested in the 3 index funds).
My questions is I work another w-2 job right now and make about 100K a year through this position, but they do not offer a retirement plan option. I also make 80k through a C corp that I own and payroll myself through somewhat. My question is, can I contribute to a roth ira via the backdoor roth? If so, how do I do this? Can i have my second w-2 job differ income into a retirement entity of some kind, if they don't offer anything? Can I start another 401k or another type of retirement plan with the income I make from my c corp? If so, what type of plan can I start with that money? I know that I am maxing out my 401k for the year with the first w-2 job, so I am wondering what are my options to put more money away. Or I am open to any advice that you have that would enable me to put more money away for my retirement. Thanks!
Help with reitrement plans
Picked a quote out of a slightly older article off the web to illustrate the point.
"The limits on how much can go into your 401(k) plans each year doesn't change whether you have one, two or 10 401(k) plans at the same time. As of 2012, the maximum elective deferral limit is $17,000. For example, if you contribute $10,000 to your first 401(k) plan, you can't defer more than $7,000 into your second 401(k). You are responsible for tracking your contributions to all your 401(k) plans to make sure you don't go over the contribution limits.
In addition to limits on your deferrals, the IRS limits the total of your contributions plus your employer's contributions each year. As of 2012, the total can't exceed $50,000. For example, if you have two very generous employers and one of your employers puts in $30,000 to your first 401(k) and your second employer puts in $20,000, you've reached your limit so you can't defer any more of your salary into the plan.
If you go over the annual deferral limits and don't correct the excess contribution, you have to pay taxes on the excess twice: once when the money goes in and a second time when you take distributions. "
From another article:
"The total of your elective salary deferral plus employer matching contributions is limited to $53,000 for the year 2016."
So regardless of how you cut it, it appears the most you could get into retirement accounts based on employee and employer additions for the year 2016 is going to be $53K a year. You seem to be at $48K so it looks like you're nearing the limit, but that's something a tax pro should be telling you. I think you should seek the help of a tax accountant who knows and works with corporations to look at the details and provide tax strategies towards maxing out retirement contributions since most of your questions are tax versus investment related. They would be more likely to charge a flat fee or hourly rate for advice versus a financial planner looking to take a percent so that may be better to get you set up initially and not need them further down the road.
On a side note in the end your "retirement" money is simply money you saved, taxed deferred or not. No one is stopping you from saving $50K a year or more in taxable accounts and investing that however you'd like. You may not get the advantages of 401Ks, but you also don't suffer from the disadvantages and can potentially retire early living off the taxable account balances until you can withdraw from the tax deferred at a more traditional retirement age.
Just some thoughts. Best wishes.
"The limits on how much can go into your 401(k) plans each year doesn't change whether you have one, two or 10 401(k) plans at the same time. As of 2012, the maximum elective deferral limit is $17,000. For example, if you contribute $10,000 to your first 401(k) plan, you can't defer more than $7,000 into your second 401(k). You are responsible for tracking your contributions to all your 401(k) plans to make sure you don't go over the contribution limits.
In addition to limits on your deferrals, the IRS limits the total of your contributions plus your employer's contributions each year. As of 2012, the total can't exceed $50,000. For example, if you have two very generous employers and one of your employers puts in $30,000 to your first 401(k) and your second employer puts in $20,000, you've reached your limit so you can't defer any more of your salary into the plan.
If you go over the annual deferral limits and don't correct the excess contribution, you have to pay taxes on the excess twice: once when the money goes in and a second time when you take distributions. "
From another article:
"The total of your elective salary deferral plus employer matching contributions is limited to $53,000 for the year 2016."
So regardless of how you cut it, it appears the most you could get into retirement accounts based on employee and employer additions for the year 2016 is going to be $53K a year. You seem to be at $48K so it looks like you're nearing the limit, but that's something a tax pro should be telling you. I think you should seek the help of a tax accountant who knows and works with corporations to look at the details and provide tax strategies towards maxing out retirement contributions since most of your questions are tax versus investment related. They would be more likely to charge a flat fee or hourly rate for advice versus a financial planner looking to take a percent so that may be better to get you set up initially and not need them further down the road.
On a side note in the end your "retirement" money is simply money you saved, taxed deferred or not. No one is stopping you from saving $50K a year or more in taxable accounts and investing that however you'd like. You may not get the advantages of 401Ks, but you also don't suffer from the disadvantages and can potentially retire early living off the taxable account balances until you can withdraw from the tax deferred at a more traditional retirement age.
Just some thoughts. Best wishes.
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Bichon Frise
- Posts: 1092
- Joined: Fri May 04, 2012 2:23 pm
First, you should take the time to organize your questions a little more coherently.
If you're asking about stashing more money away in tax sheltered accounts, you have little room to grow. You could SEP-IRA from your C-corp (not sure on your corporate structure or if you'd qualify). I also haven't investigated enough to know if you can have a SEP-IRA and a 401k, but my high level knowledge thinks this is ok.
You'll need to watch the "pro-rata" rule on the backdoor roth. If you have ANY other IRA, you'll need to account for it in the calculation to do the backdoor. In other words, if you do a SEP-IRA, you screw yourself for the backdoor roth.
Other than that, what's your aversion to tax efficient investing in taxable accounts? e.g low yielding, low turnover, low fee funds?
If you're asking about stashing more money away in tax sheltered accounts, you have little room to grow. You could SEP-IRA from your C-corp (not sure on your corporate structure or if you'd qualify). I also haven't investigated enough to know if you can have a SEP-IRA and a 401k, but my high level knowledge thinks this is ok.
You'll need to watch the "pro-rata" rule on the backdoor roth. If you have ANY other IRA, you'll need to account for it in the calculation to do the backdoor. In other words, if you do a SEP-IRA, you screw yourself for the backdoor roth.
Other than that, what's your aversion to tax efficient investing in taxable accounts? e.g low yielding, low turnover, low fee funds?
Bichon Frise
"If you only have 1 year to live, move to Penn...as it will seem like an eternity."
"If you only have 1 year to live, move to Penn...as it will seem like an eternity."
avocado wrote: Good to see you back, I was starting to miss your incisive commentary!
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