You pay taxes twice. Once by paying the loan back in post-tax dollars. And again when you retire and pull the money out of your 401k.

That’s double taxation.

I wanted to do this as well. My employer uses HealthEquity HSA and I have a Fidelity HSA. I did a one time transfer imitated from Fidelity. Unfortunately HealthEquity messed it up and ended up transferring everything and closing my account. It was a pain trying to get it opened back up so that my paycheck contributions could continue.

Anyway, you can do it without any tax penalty. The safest way is to go online to Fidelity and ask them to initiate the transfer. You can in theory do that as often as you wish

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Check the language in your award agreement document.

Yes, there is double taxation.

You put the dollars in tax free. You pull them out. You put them back in as post-tax dollars.

Then you pay tax again when you retire and pull the money out of your 401k.

That’s double taxation.

You only pay taxes twice on the interest portion. There is no double taxation on the principal of a 401k loan. You are missing that the loan distribution itself converts pre-tax to post tax so the dollars you take out equal the dollars you repay plus a little interest.

Now the interest amount would be post tax dollars that are later taxed again whenever the money is eventually withdrawn. That is a tiny disadvantage since one is paying interest to themselves.

This is a common misconception. There is no double-taxation of the money used to repay the principal.

The simplest way to prove this to yourself is to imagine paying back a 0% interest 401(k) loan from the same dollars that are initially disbursed by the loan. Those dollars were not taxed going into the 401(k), they were not taxed when they came out as a loan, and they are not taxed going back into the 401(k). So where is the double taxation?

Since dollars are fungible, the same conclusion above can be applied to any other dollars which pay back 401(k) principal.

You are double-taxed on the interest paid to a pretax 401(k) loan. But because the actual interest goes back into your balance, that extra taxation becomes the only effective "cost" of a pretax 401(k) loan. This tends to not be a big cost as far as loans go. For example, the double-taxation of a 8.5% loan from a pretax account by someone with a 27% marginal tax rate works out to an effective interest rate of 2.3%. That's not terrible.

May I ask what you do?? That's an incredible salary at 28( or any age for that matter)

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If I were you, I wouldn’t do it. Spending what is likely a good majority of your average income on rent isn’t a good idea, unless you absolutely have to move out. But, looking at the post, it doesn’t appear to be the case. Typically, you should aim to have below 30% of your monthly income spent on housing. Obviously, with increased rent/home prices these days, that feat is harder, but the numbers aren’t in your favor. Even if you happen to make maximum commissions in a given month, you would still be spending about 35-40% of your income on housing. And if you don’t happen to make commissions in a given month…good luck. I’m really sorry to hear about your breakup, and I dearly hope that you will heal and find love again soon. But, if I were you, I’d stick around at your parents house until you can find cheaper housing (move to another location, perhaps?) or a pay increase.

Current mortgage lender does not do HELOC's. Also, current mortgage is at 3.5%. I'm not screwing that up lol.

OP, don't do it. I know you think you want to but that amount of stress will weigh on you. Get a roommate. Enjoy the lower payment and set aside the extra you would be spending at $2800/mo so you can really see how much you'd be scraping by.

I'm a decade older than you and in a lower cost of living city but my base is over 3x more than yours and my mortgage is $2100 including taxes and insurance. Not feeling suffocated by housing expenses really is a blessing.

Max. 6% of 300k is 18k, that additional 4.5k shouldn’t be making a difference with your salary and (relatively) modest goal of 75k in 2 years.

With no traditional IRA already existing, you have no worries. Though I'd go and read up on it.

Pro rata rule isn't about double taxing. It's unexpectedly taxing you, because it causes you to accidentally leave some normal post tax money in the traditional IRA and bring some pre tax money with you into the Roth IRA, causing you to have extra unexpected "income".

It only affects post tax traditional IRA contributions, which only happens when you do a backdoor Roth IRA -- your contributions to a traditional IRA become post tax aka nondeductible at the same limit as the Roth contribution income limit . You don't have to worry about it with a Roth ladder or with mega backdoor Roth.

If you preemptively do a backdoor Roth IRA, when you're under that line, all the money in there is pre tax and it doesn't make a difference.

The guideline is mostly that you just need to have an empty traditional IRA by the end of the year if you did a backdoor Roth. The easiest way to do so is typically to do a reverse rollover into a 401k, which will only pull out the pre tax dollars, allowing you to retroactively select the post tax dollars for the conversion if you end up doing the backdoor Roth first, then the reverse rollover.

But that's all extra detail that it sounds like you don't need to know.

Just try and keep the contribution and conversion in the same year for simplicity.

Yeah, no money in an existing traditional IRA. Great! Thanks for the response!

Perhaps you would benefit from some good reading material.

Read this for everything you need to know about Backdoor Roth and Form 8606:

• https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/

Read this list of common screwups and solutions with respect to backdoor Roth. Beware of Screwup #5.

• https://www.whitecoatinvestor.com/fix-backdoor-roth-ira-screw-ups/

Ah, I only have a pre-existing Roth IRA. I haven’t opened a traditional IRA yet. I’m glad this case doesn’t present issues. Thanks for the response.

Not too dissimilar from my situation and I can still save alright for retirement at the same time. I also had to deal with a few issues in the first 6 months of owning. Have an emergency fund in place!

Recently In my city three brand new built homes all sold $220K-$240K all next to each other from the same builders and floor plans. Where are you getting these numbers?

Off topic, it's kinda funny knowing which new homeowner is the best negotiator.

I lost 70k in 2008 from my retirement account through divorce. It was in a moderate aggressive mutual fund. Can you estimate how much it would have grown to now? I am unable to even know how to begin figuring it out. A rough estimate is fine. Thank you in advance.

Edit: this is not just a “what’s gone is gone” but a situation for a “make amends” estimate. I appreciate any input

This is great to know! Will look here too, thank you!

I'm guessing if I want to take out a loan for grad school within the next couple of years this would be a no-go?

I wish I had a better handle on our timeline, but we subscribed into a PE fund and need to be able to wire within 10 business days of capital calls, which can happen at any time. I think we could safely put some into a 6-month CD though - do you what bank is offering the 4%+? I was mostly finding high 3%'s in my search. Thank you!

2k just mortgage or PITI? Either way it’s high but if it’s just mortgage it’s way too high.

Personally I take the approach of being comfortable or as comfortable as I can in a given job but never complacent, it's worth routinely taking a look at local job listing sites and potentially even getting in touch with a recruiter or headhunter if you have a specialized field and feel as if you've capped out your potential growth at a particular place of work.