Related Posts
Community Builder
Thoughts on purchasing leads?
Off Topic : 1) When Does a software engineer start financial planning for retirement since the our Career span is only 15-20 years on average.
2) How much and which schemes to invest to mitigate the risk?
3) How much do we need for retirement? Tata Consultancy Infosys Mindtree IBM Wipro Capgemini Cognizant HCL Technologies
Is simplify healthcare is good company to join?
More Posts
Your firms most underutilized/unknown benefit?
Conversation Starter
Best Hyatt in Hawaii (ideally Kona or Maui)?
Additional Posts in Personal Investment Chatter
Conversation Starter
Is this for real?
Rising Star
Rising Star
Rising Star
Enthusiast
Conversation Starter
New to Fishbowl?
Download the Fishbowl app to
unlock all discussions on Fishbowl.
unlock all discussions on Fishbowl.
Dump it in 401k
At ZS we don’t have the option to do this with our bonuses, in the case you do do this, but if you can’t you can just allocate a bigger % / or 100% of your paycheck that comes at the same time of the bonus so you can basically contribute using the bonus
How is your emergency fund looking? How about medium term savings (like a house down payment)? I usually recommend Roth > 401k employer match > emergency fund > HSA (personal preference) > high yield savings account if you have a housing/car goal > 401k max > investing
This is super clear! My emergency fund is full, and I’m sitting on plenty of cash with how the market is now. Roth maxed, employer contributes regardless of mine, and I put everything else into investments. No car / no plans for a car or house soon
Pro
Do you have the option to contribute it to a Roth 401k? You’re very young. What’s your annual income including retirement contributions and bonus? If you end up being in the 12% income tax bracket or lower based on your AGI, then put it in a Roth 401k.
Pro
Assuming you’re single and not MFJ, you would be either in the 22% or 24% tax bracket. It’s up to you and your projection if you want to put it in a Roth 401k or traditional 401k. At those rates, I would put it in a traditional 401k and invest the rest in an individual bromate account when you max out.
In the vast majority of cases it makes sense to fund your traditional (not Roth) 401(k), irrespective of how much you make now and how much you anticipate making later. The reason is three fold: 1. Your immediate marginal income tax rate goes down (your taxable income goes down), 2. The tax that you would have paid if funding a Roth 401(k) is never going to come back, 3. When you retire, you can convert your 401(k) to a Roth IRA, by paying very little to no tax on the entire value of the account.
So by funding a Roth 401(k) you not only lose out on the tax dollars you pay upfront but also years of growth on those lost dollars.