Where to invest after maxing out 401(k), HSA, and ineligible for Roth IRA?

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  • #91540 Reply

      My husband and I will officially be over the income limit to contribute to a Roth IRA in 2024. Our combined income will be around $272k. Where is the next best place to start investing if our 401ks and HSAs are maxed out? Are there any more tax-advantaged options available to us or will we have to invest any extra in a taxable account?

      From my understanding, we don’t get any tax benefits now if we contribute to a Traditional IRA after maxing out our 401ks. But if we put money into a Traditional IRA does that leave the option open for a backdoor Roth?

      #91541 Reply

        I’ve been exploring this exact question, here’s what I got:

        1. Max 401k (23k each)
        2. Max HSA (8,600 yr for fam)
        3. IRA — do backdoor roth (7k each)
        4. 529 to get max state tax credit (7,500/yr)
        5. STR loophole: buy one house per year late Q3. Cost seg. Self manage in Q4. Convert to PM Q1 following year. Rinse repeat.
        6. Solo 401k (must have ACTIVE income, can only contribute 25% of that as the “employer” up to 24k/yr (would need to make 184k to max)
        7. Mega backdoor roth 401k (not permitted by employer)
        8. Bonus ideas: Pay all mortgages twice monthly (not tax related but will save $$ on interest!)
        9. Have researched whole life but I still feel like it’s not worth it… brokerage is next for me to bridge any years between early retirement & 59.5
        #91543 Reply

          Oh, the problems of being high earners. Totally feel your pain.

          No one wants to hear us complain though.

          We just put loads of it into investment accounts.

          Start a business for tax deductions though if that is what you are looking for.

          I at least have that.

          But there are ways when you start to take it out. We can controle what we make and just need to watch tax brackets.

          If you keep gains down under $94k in one year, you can pay 0% cap gains tax.

          Investment property has some great tax advantages too.

          There are ways, but great job!

          Have you seen: Where to invest house sale proceeds for growth? Mid-50s couple, college saved

          #91544 Reply

            If you don’t currently have a trad you could start contributing after tax dollars and do a backdoor Roth. Or you can contribute to a brokerage, if you want to save some on taxes in there then you could look in to muni bonds.

            #91545 Reply

              Check if your 401k offers after tax contributions and in plan conversion. This is the mega backdoor Roth.

              #91546 Reply

                If you have kids to send to college, – 529 plan. Otherwise, saving in an after tax brokerage account.

                #91547 Reply

                  You can contribute to a Roth IRA regardless of income, through the backdoor, a tax loophole. Just add the money to a traditional IRA and immediately convert to Roth. It’s simple. We do it every year.

                  Just make sure you don’t have an existing rollover or traditional IRA or you’d run into the pro rata rule. If you do then roll that money to your 401k to clear the path for the backdoor.

                  That’s an extra $14k ($7000 each) we can grow tax free.

                  Don’t miss: With 7k saved for a house down payment and expecting a pension next year, should I invest or keep saving in a savings account?

                  #91548 Reply

                    Think if you like I bonds option.
                    It won’t make your tax liability less, but will grow with no taxes till you redeem 30 years max.

                    #91549 Reply

                      Try to consider index universal life its tax free account.

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