401k?
Which is best option to choose? My salary is ~180k and TC of $300k (the majority of the difference is tied up in stocks haven’t sold) Pre tax? Roth? Any other advice for managing money? LinkedIn matches 50%, so will def choose to max out 401k. Thanks!
At that salary level, pretax. Then max out a back door Roth IRA. Withdraw from both in retirement
Has the new tax law changed back door roth rules?
Don’t think so, otherwise there would have been a lot more coverage about it. But you bring up a good point, the backdoor Roth won’t be around forever but lucky for us, the government is slow as fuck to make decisions and changes.
Assuming you already have a decent emergency fund (say 6 months of expenses) and no high interest debts like credit cards, then maxing out your 401k (especially with the awesome match you have) is the way to go. I would go with pre-tax money (traditional 401k) and choose a low cost target-date fund. If you can afford it, I would invest the IRA limit of $5,500 too in a non deductable IRA (you're way over the income limit for deductable) and immediately roll that amount over to a Roth IRA. Repeat every year. Retire rich.
Why not Roth?
Yeh why not roth ira
Put it all in crypto. The Chinese central bank has been purchasing US stocks since 2009 in an effort to artificially drive up US markets. This is a bait and switch effort aimed at wealth redistribution. Start getting out of dollar-based assets since the risk of a dollar revaluation is high. Crypto prices will skyrocket when this happens. Already have for those in the know.
Please stop
Assuming LNKD has the same plan as MSFT, now, you can sock away $18500 (traditional or Roth) + $27000 (Roth mega backdoor) + $9250 (matching funds) this year. With $300K TC, you should be able to afford maxing that out.
Anyone able to explain this Roth Backdoor stuff in plain English?
There is an income limit on who can contribute to a Roth IRA. There is a super easy method to get around this restriction. You contribute to a traditional IRA, and covert it to a Roth IRA.
Thanks everyone for the great help!! If I were to do the Roth mega back door, is this pretax contribution to the 27k limit? Or it’s coming after I already paid taxes on my salary?
Roth backdoor is after tax contributions converted to Roth. Traditional is the only type of contribution that reduces current year taxes.
Thanks!! Do I need to select some plan to make this happen? Or I just need to do on my own from my savings account?
Also what is the difference between mega back door and back door?
Mega backdoor is via 401k if your plan offers it and the amount you can contribute is generally much higher (Microsoft allows $27K this year). Regular backdoor is via IRA and is limited to $5500 (plus catch-up if you're eligible). The limit is on contributions, BTW, conversions are unlimited once the money is in the account.
Make sure u check vesting policy for your company as if you leave before vesting date of company contributions you are going to lose all the free money.
MS, and presumably LI, is immediate vest