PetrifiedExPat

Hi all,

I am pretty close to the IRA contribution limits based on married filling jointly income. My employer does not offer a 401k program. My wife is at the limit of her 401k contribution limit, therefore, if our combined income does creep over, and I can no longer contribute to an IRA, what other options are out there? Hedge funds or similar?

Thanks,

H

Rete

You want to save money that is pre-tax money? Is that the goal? You can always open an account with a group such as Edward Jones, Fidelity, etc. and contribute monthly but it won't be pre-tax.

Perhaps you can contribute to a Heathcare Savings Plan if one is offered by your company or hers. Those dollars are pre-taxed and can be used towards retirement if you don't have to use it for healthcare co-pays, deductibles, etc.

PetrifiedExPat

Post-tax is fine, would the accounts you suggest be some sort of hedge fund?

Thank you!

Giantaxe

Roth IRA if not also over the income limits for that. HSA if available at either employer and you have a high deductible plan. Non-deductible IRA contribution. Become over 50 as your contribution limits rise at that point...

PetrifiedExPat

No HSP available. Therefore, I guess the question is what to do with post-tax money that I can not put into an IRA? What are the other options? Not including HSP for one..

H

shiversaint

If it's post tax money that you want to save, then evidence suggests time and time again, you should stick it in a Vanguard index fund. Over 3 years your chance of not losing money is 98% based on market history. Over 5-10+ years, no fund out there with comparable risks outperforms a no fee index fund like Vanguard, ever. Do not be tempted to take a fund manager's advice and give them 1%, as the possibility that they can outperform the market enough to pay their own fee over a period of time is extremely unlikely.

Vanguard is literally the only company worth considering here.

If you're of a nervous disposition, buy some fixed income type assets like bonds.

PetrifiedExPat

This sounds like good advice (as well as from others). I will look into this.

I always come out as moderate in 'risk' tests. I am happy to try something like Vanguard.

S Folinsky

Look into Roth IRA's .They are funded with post-tax income, but then earnings are not taxed .

PetrifiedExPat

The issue being is that I am approaching the combined income limit to contribute to these. Once I pass it, I will no longer be able to contribute...

PetrifiedExPat

How are these taxed..?

shiversaint

Whilst I'm sure I know the answer to this, it's probably better that you review Vanguard's (very good) advice on the matter: https://investor.vanguard.com/investing/taxes/

Something else I forgot to mention, Vanguard is unique in that they are owned by their funds, so purchasing into their funds means you are at the same time, purchasing into Vanguard. That is why they are such a compelling option versus Schwab, Fidelty etc.

edit: By the way, are there children in the picture? Could be worth looking at a 529 if they are expected to goto US college. I don't know the ins and outs of them but there is tax efficiency to be had there.

tom169

Backdoor Roth is also an option.

Owen778

I am happy to recommend Vanguard as the best option for most people, but I think you do Fidelity and Schwab a huge disservice by lumping them and maybe some of the other discount brokerages in with companies like Edward Jones, who really are poor value for money.

Most of my non-retirement investments are with Vanguard, and I'm happy with them. As it happens, though, I've just been looking into opening an individual 401k, for the self-employed, and Vanguard's offering is clearly worse value than those available from Schwab, Fidelity, E-trade, and maybe TD Ameritrade, though you have to be careful to pick low-fee funds.

shiversaint

I was talking about index funds.

Giantaxe

Likely an expensive one tax-wise given the OP's income and the fact that they have been making pre-tax IRA contributions.