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Financial Planning - Financial planning in general. (Moderated)
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Posted by JohnS on April 23, 2007, 11:28 am
am pondering best way to proceed the next 10-15 years or so, as I've managed
to pay off everything (mortgage, loans, debts) and am able to save an extra
2k per month.
my 401k plan is maxed out at 20.5k per year, before tax
my IRA contribution is limited & restricted because of the company 401k but
what money I could place there in previous years is growing nicely
my Roth IRA is maxed out every year at 5k
now, it seems the only way to continue would be to just create a taxable
savings or investment account and not worry about the taxes but sock the 2k
/ month away there or is there a better way?
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Posted by jIM on April 23, 2007, 11:50 am
> am pondering best way to proceed the next 10-15 years or so, as I've managed
> to pay off everything (mortgage, loans, debts) and am able to save an extra
> 2k per month.
>
>
There is a concept called "tax diversification"- having accounts with
different taxable charactoristics to take advantage of tax rules when
you need a withdraw.
For example your Roth withdraws should be tax free during retirement
For example a taxable account could be taxed at rates as low as 5% or
15% based on long term capital gains rates. Dividends are taxed at
similar rates in taxable accounts.
For example the 401k will be taxed at ordinary income tax rates (15%,
25%, 28%, 33%, 35%- depending on income level). The more you
withdraw, the higher the tax rate.
This might suggest contributing the 2k to any/all of the following:
1) taxable account
2) long term care insurance
3) health care spending account
4) real estate
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Posted by JohnS on April 23, 2007, 4:49 pm
jIM wrote:
> 3) health care spending account
are there limits/rules on my establishing an HSA on my own or do I have to
wait for employer plan?
in case it matters, my employer will have one for 2008, enrollment starts in
oct-nov 2007
where can I read more about it?
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Posted by Mark Bole on April 23, 2007, 9:30 pm
JohnS wrote:
> are there limits/rules on my establishing an HSA on my own or do I have
> to wait for employer plan?
>
> in case it matters, my employer will have one for 2008, enrollment
> starts in oct-nov 2007
If your employer offers subsidized, tax-favored, traditional group
health coverage for you and/or your family, I'm pretty sure you are
better off with that. You can't have both.
> where can I read more about it?
IRS Pub 969.
-Mark Bole
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Posted by amy on April 24, 2007, 8:21 am
Mark Bole wrote:
> If your employer offers subsidized, tax-favored, traditional group
> health coverage for you and/or your family, I'm pretty sure you are
> better off with that. You can't have both.
I'm pretty sure one can have both a health savings account and an employer
subsidized
health insurance plan as I am participating in both at the moment. the
difference is
that any deductibles and medical items not covered (ie. dental procedures) are
paid
from my HSA where I pay with before-tax money
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