Ira

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icekitsune

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I saw a new posting about ira and decided to ask for help with my situation/advise. I'm working full time and have maxed out my 401k both my contribution and my company. I also maxed my hsa plan (though people told me that wasn't a good idea). The only thing I have is a checking account which generated $10 in my past year. I was recommended to do a roth ira at vanguard and maybe move my money to a American express or discover account with 0.8Apr. I guess that would be my emergency/savings and will not be touched. Let me know if that sounds reasonable . I looked into CD and traditional ira and backdoor ira but I'm really confused. I was told there was no point in traditional ira since I already maxed 401k and there are federal limits to traditional Iranian and 401k combined. I'm looking to get the boglehead book. Possible adviser?

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Backdoor Roth IRA Tutorial

http://www.rothira.com/what-is-a-backdoor-roth-ira


I would stay away from CDs. You would get more return if you put that money in almost any growth fund

"I was told there was no point in traditional ira since I already maxed 401k and there are federal limits to traditional Iranian and 401k combined."
People are saying there is no point in trad IRA because you do not get any tax deduction since you maxed out 401k. you can contribute $18000 in 401k and $5500 in ira but you will not get tax deduction on $5500 but let just say you put $13000 in 401k and $5500 in ira then you would get tax deduction on ($12000+$5500=$18500) 18000 only and you will not get tax deduction on remaining $500.
 
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These are the different types of retirement accounts:

- 401k. $18k max. Contributions not taxed, but you will pay taxes on withdrawals.

- Deductible Traditional IRA. Income phaseout for singles $62-72k, married $99-119k, so most pharmacists are not eligible. Anyway, the taxation is the same as a 401k: contributions not taxed, but you will pay taxes on withdrawals.

- Non-deductible Traditional IRA. No income limit. No tax deduction, and earnings (not the original contribution) will be taxable on withdrawal. These are really only used as part of the backdoor Roth process to get around the income limit of the Roth, because you can convert to a Roth tax free.

- Roth IRA. Income phaseout for singles $118-133k, married $186-196k, but if you are over you can do the backdoor Roth process for the same result. You are contributing after-tax money so there is no tax deduction, but all growth and withdrawals are tax free. Basically the opposite taxation to a 401k. The 401k usually works out better so max it out before you do a Roth IRA.

You can only contribute $5,500/yr total across any type of IRA.

For cash and emergency funds, I recommend the Ally Bank Online Savings Account which pays 1.05% APY and you can make withdrawals at any time.
 
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