Thumb of Michigan | SDfarmer44 - 4/6/2024 14:25
I work 100% on farm so no 401k, my wife works in town and has a 401k. we fully fund both roth iras, and max out the match on her 401k. if I have more to invest, what should be the order? looking at self employed 401k, HSA, and 529s for 3 kids. would you skip any of these over the others or what order would you fund them and why? I should also mention this is non farm money, any farm money I make extra goes right back into the farm portion, this is only personal money from her job, or side jobs I do.
Self-employed 401(k) can have a Roth provision.
You don't mention your rough age, but I'll suggest a Roth 401, first. You can fund at a much higher level than a IRA (Roth IRA).
You're doing well to max fund the matching on the 401(k).
Next max fund HSA and don't touch for medical expenses if possible. Sometimes called a back door Roth after age 65.
529's can be a positive/negative, as mentioned can affect financial aid (unlike 401, Roth 401, IRA, Roth IRA and HSA).
Next what is called a non-qualified account(s). NQ accounts are not income tax deductible or income tax-free (except tax free bonds). I'd suggest investments that give you more growth (capital gains taxation) verses dividends (income tax rates), where possible. Hint: one reason I like Berkshire Hathaway, no dividends all capital gains of a diverse portfolio of companies. Some folks will take issue with this advice. However, I stand by it, NQ investments can affect financial aid.
Continue to invest in farm, however it to can affect financial aid.
With your goals, you need to remember one size doesn't fit all (what works for one, doesn't mean it will work for others). Your situation could be equated to a game of chess, you 'give up' some things to gain others.
If you are going to have debt, have it against investment property (farmland), not your house. A house isn't counted in the FA contribution, whereas the 'net' farmland can be (net value minus loan amount). Same applies to second home/vacation home.
One thing that I always felt strongly about in my advice for clients in my financial planning practice, is you can 'borrow' for education, but not for your retirement.
HTH, others flame away.
|
Retirement/ investing
