unicorn, i am coming in from a previous advisor so I dont know if you answered this, but if you max out on a corporate 401k, you cannot also do salary contributions to an individual 401k. If there is no corporate 401k then you can treat 401k same as corporate and contribute UP TO max, plus profit sharing potential. It helps if you establish a LLC or other entity to justify income from other sources.
Hi Mattie: This is a fairly new strategy for the after-tax portion of a 401(k) rolling to a Roth IRA. I just tried to find some literature on the Roth 401(k) portion to a Roth IRA but I do not see evidence that it can be done while still working. I would confirm this with a tax expert.
Katie R. You will have to take required minimum distributions from your inherited IRA, but this is a great vehicle for added retirement savings. The amount depends on your father's age at death. In this forum, I can only give general advice. Where are you in your mortgage cycle: interest rates, how much longer do you owe. You have a great gift from your dad, so I understand how important it is to honor and protect this money. If either of you do not contribute the max to retirement, begin now as you will have money to supplement your reduced salary. That is the first piece of advice. Spend some of the inheritance with a fee only adviser in your area. napfa.org will have a list. There is no hurry, put it in savings or in the CMA account until you work with someone to set a plan.
Tony C, great question: There are many online calculators to determine the best way and time to take SS. Keep in mind, that every year you wait, your SS benefits increase by 8%. So, it may be wise to do a break-even analysis based on longevity to determine whether it is best to take at 62, or wait. Since you have other sources of income, it may be beneficial to wait. Further, there are many strategies, such as file and suspend to determine whether it makes sense for one of you to begin benefits while the other waits, etc.
Mark: Georgia does not have an inheritance tax and it does not have an estate tax (as of now) for individuals who pass away after 01/01/05. I would confirm the titling on the joint savings account to determine whether it passes wholly to you upon your mother's death (joint tenants with rights of survivorship) or her half goes according to her will (tenants in common titling)
Unicorn, yes, you can. Between the two you are still limted to the $17,500 or $23,000 depending on your gae.
We have found that options are somewhat limited in most 401ks, so to open the investment selection up via an individual 401k make sense.
TRJD, being a grandmother of two, I can guarantee you that it is an added expense. Have you talked to your credit card companies as to setting up a payment plan? Are you paying anything regularly on the credit cards? The best strategy is to pay something, even the minimum amount on the highest rate credit cards. It is a very tough problem as you will have problems buying a home or other life moves while this hangs over your head. Kiplinger is going to post on this forum an article addressing getting out of debt. The worst thing you can do it to ignore it. Good luck and be proactive!
Unicorn: I was correcting the spelling in my message, but since you let me know, your max, as you know, is $17,500
Samy, most definitely, we are a well-versed bunch! Each advisor charges fees differently. For your specific question, it may be wise to seek out one who charges hourly.
Brad: I am not familiar with the Ohio PERS and SERS plans, but since these plans may be linked with a future pension benefit, I would contact the plans directly to determine the pros/cons of rolling any plan benefits to an IRA. If there is no pension benefit, and these a strictly 403(b) plans, you can roll the funds to an IRA and have open access to many types of mutual funds. Your current 401(k) likely has limited investment options.
Lauren, I agree with you on not having back up savings while paying off cc with 0% interest. Are you making regular payments on the CC with 0% interest? I recommend that you make some payment each month, but first priority is to build up your savings account, that will give you the flexibility to pay off cc when 0% ends...be very careful on keeping track of the date, then use savings to pay off the balance.
Brad: for your second question- The best way to save for a house is to put the funds in a high-yield savings account (check out online banks such as Capital One or Ally). In this low interest environment, that means a measly 1%, but since you know the funds are needed in the next few years, you shouldn't take the risk of investing in the stock market, which is very volatile.
Catherine: You should be able to bring this concern up with your advisor. As advisors, one of things we should be able to do is "justify" our fee be being able to get you a return where you find value in our fee. By going on your own via Vanguard leads me to believe you do not have enough faith in your advisor.
Michael: NAPFA advisors can give you focused answers for a one time fee. Some of them work on an hourly basis, just look in your area. They have different hourly rates , e.g. from about $150 to about $300 or so / hour. I couldn't say with this amount of information how much time this would take. As far as tax on future contributions that would be difficult as we don't know what either taxes or contributions will be.
Nick: I recommend keeping an emergency savings fund of at least 6-12 months of expenses in cash. Unfortunately, you will be earning very low interest rate on these funds, but you can have the peace of mind that funds are there in cash of an emergency. In addition, I would start paying down the student debt more aggressively. Maybe use $1k-$3k for now towards the student debt and keep the rest in savings. It's never to early to start saving for retirement, but I would put the emergency fund and student loan debt at the forefront.
MMM, we just posted an article from Kiplinger on Credit Card debt that might help. But, I would aggressively make monthly payments while you are newly employed (I assume) and before you rise up to the spending of someone making over $100k. ( this almost always happens) I do not recommend transferring to 0% cc as they often have too many fees. Read the article posted by Andrea in this forum and soldier on paying as much as you can. Make it your new life goal to pay this off:)
Jamie One of the things you have to weigh is the tax benefit you are getting today by making pre-tax contributions to Traditional 401k. being so young leads me to believe you may be better off with the larger percentage to traditional, especially if you do not have other tax write-offs. We have been recommending the Roth 401k to our older clients who have larger 401ks and IRAs. By introducing the Roth 401k to these folks we are potentially diversifying their future tax liability
Aitchpe, that question is very broad. What do you mean by a legacy for the family? Are you talking about using your RMD for a charitable gift? as far as I know, that is the only way to avoid taxes on rmd. Write a little more detail about your idea for a "legacy"
ExPat: A great consideration. The strategy with converting often comes down to whether you can pay the taxes with other funds outside the 401k (because the hit one takes with paying taxes from the account is a larger time period to make up the difference). Your situation certainly leans towards doing the analysis. Keep in mind, and you may know this, that simply converting alone may push you into a higher tax bracket.