XP: No 401k option

[isabel]

Edit: never mind! He found out this morning they’re starting a plan in July and he’s eligible to contribute after 6 months of employment. We’ll just contribute to an IRA in the meantime. I’m glad this isn’t a long term loss.

DH recently took a job that does not have a 401k option. We make too much to contribute to Roth IRAs and can't do a backdoor Roth because we have existing IRAs in place. I am most concerned about the impact on our taxable income, but also how we set aside what we were previously contributing (the federal max). Employer contribution loss isn't really a concern because his previous job only had a small match for a brief period of time and then suspended it when covid hit. My high employer match, plus annual bonus match, helps make up for this.

So my questions are -

1) What can we do about the loss of tax-advantaged savings? Are there ways to reduce our taxable income?
2) What is the best way to save the contributions we were previously making? A traditional IRA?

eta: Bonus question - his company is based in Israel, but has an office in Texas. They don't have very many employees in the US. All payroll and benefits are handled through ADP. Is this something the company could set up only for their US-based employees?

(Accidentally posted this on MM Moms, so this is a cross post.)

[ellipses84]

That’s good news and it sounds like you got your answer. Definitely set aside the money and figure out how you can make a big 2022 contribution in 6 months (not sure if it can come directly out of the last couple paychecks because some places put a % max limit). Also factor in how much he contributed at his last job in 2022 so you don’t go over the max.

If you couldn’t contribute to a 401k, you’d just want to invest. That wouldn’t help you from a pre-tax perspective but a lot of people make part of their Portfolios post-tax anyways (like for Roths). If you had an option for an HSA for medical, you can overfund it and use it as a pre-tax retirement account.

[isabel]

Jun 1, 2022 10:30:49 GMT -5 ellipses84 said:

That’s good news and it sounds like you got your answer. Definitely set aside the money and figure out how you can make a big 2022 contribution in 6 months (not sure if it can come directly out of the last couple paychecks because some places put a % max limit). Also factor in how much he contributed at his last job in 2022 so you don’t go over the max.

If you couldn’t contribute to a 401k, you’d just want to invest. That wouldn’t help you from a pre-tax perspective but a lot of people make part of their Portfolios post-tax anyways (like for Roths). If you had an option for an HSA for medical, you can overfund it and use it as a pre-tax retirement account.

Thanks for your input!

I've got our budgeting tool set up to fund what we need to set aside monthly. We'll be able to at least contribute his two checks in December (maybe three if he can enroll in November, but guessing it doesn't work that way) up to whatever the max contribution available through the system. Mine is 75%, so I'm guessing his is similar. It won't get us all the way there from what he's already contributed, but should be pretty close.

I'm relieved that we'll at least have close to our normal tax-advantaged savings for the year.

And yeah, I think I'm going to go ahead and max my HSA funding. I can only do the single max since he and the kids are on his insurance, but it's something to help offset as well.