Okay, yeah, that stinks a little! Was hoping to put it in the 401(a) and just let it do its thing lol. Would you recommend a Roth or Traditional IRA? I don’t feel like my salary will get much higher than it is now tbh. I really lucked out with this last promotion — I think I’ve already hit a lofty ceiling for my line of work.

Yes!

Maxing out your Roth IRA when you have $2k going into your HYSA is a no-brainer.

Oh, and you have until April 18, 2023 to max out your Roth IRA for the year 2022. So no huge rush to get it done before the end of the year.

Probably yes.

The IRS hasn't issued guidance on what "when the original installation of the item is completed" means. However, basic statutory construction says that it does not mean "placed in service" because those two terms appear in 26 USC section 25D.

To me, "placed in service" means everything is done and the panels are producing. Accordingly, "when the original installation of the item is completed" must mean something before "placed in service" and to me, the only reasonable thing is not yet turned on or not yet approved or given permission to operate by the utility. But that's just my guess.

Thanks! This is really helpful. Based on my other retirement accounts, would you recommend I try to max out the IRA each year? (Or is that unnecessary?) I usually save around $2000 a month after all my expenses, which I’ve been putting in a HYSA because I don’t know what else to do with it.

Employers do set the limits for 401a plans so looks like I was wrong and you won’t be able to adjust the contribution. Start with an IRA (through any financial company) and contribute as much there as you can (up to 6500/yr).

I’m not actually sure if you’d be able to contribute to retirement beyond the IRA through tax advantaged accounts, that’s a question for HR or somebody with more financial literacy than myself.

Thank you! Good to know I wasn’t too far off with my understanding… We have a handbook for with all the formulas for calculating pension benefits, and it makes me really nervous and unsure about the future... I like working here but who knows what will happen in 40 years! It’s a relief to know that in a worst-case-scenario, I should back my 8%.

Also, I just confirmed my DC plan is a 401(a), if that makes any difference. We had open enrollment this past month for benefits, and there wasn’t an option to adjust the contribution. I’ll have to look into it more because I’d definitely like to contribute additional money if possible.

>(i.e Can I open my own retirement account separate from my employer? And if so, should I?)

Yes you can.

You can't open a 401k or anything, but you can open an IRA on your own and invest inside that tax-advantaged retirement account. You can contribute up to $6,000 for 2022, and that's increased to $6,500 in 2023.

A helpful post:

https://www.reddit.com/r/personalfinance/comments/a1fsa3/i_want_to_open_a_roth_ira_but_i_dont_know_where/

Imagine that you never spend the $10k disbursed by the loan. Then for every dollar of principal that you repay via payroll deduction, you transfer a dollar from the original loan amount into the bank account where your paychecks are deposited.

How would that above scenario look different from one where you could instead make loan repayments from the original principal rather than payroll deduction? It wouldn't. Your bank account would have the same ending balance, and you'd see the same amount of taxes being withheld (and ultimately taxed) from each paycheck.

How can you be double-taxed if the money used to repay the principal is never once taxed until you withdraw it in retirement?

I do. It’s just sad because my retirement spreadsheet says I’m further from retirement after 50k contributions

$2800 is a lot for (presumably) a one bedroom apartment pretty much no matter how much you make imo. At least look to drop it down to around $2000 to save yourself $800 a month

This is great advice right here

The way to think about this sub is like an extremely conservative aunt or uncle. The sub is never going to be comfortable with anyone paying anything more than 1/3rd of their salary for rent. And in your case it's like 50 percent to 93 percent of your take home salary.

That being said, I've known folks pay higher than 1/3rd and do okay for many years. So it's really upto you. If you reliably get commissions of at least 2500 each month, i think its not unreasonable.

I guess I don’t understand why you would want to do that. The only benefit of these ROTH/401k plans is to save on taxes. And the government puts strict limits on them.

Why not just put any excess money you want to invest in normal stock account?

Mortgage and rent are completely different ballgames as long as you arent planning on selling your house every 5 years. You are storing away the value of that payment in you net worth, if you can afford to live on the rest its not a poor move. Rent is flushed down the toilet every month, youll never see the value of that cash again once that month ends, which is why paying rent at any elevated rate, no matter how much income you have, is a poor idea.

[deleted]

Looks like you’re understanding is correct.

The DC most likely is a 401k (or 403b or 457 but they’re all more or less the same). You most likely can adjust the DC contribution even if it’s not immediately obvious, at the very least you should be able to adjust upwards (until you hit that accounts maximum contribution).

The DB is the more confusing part but there’s zero work to do on your end if you work with the state until retirement. That is what you’re contributing to a pension fund that all public employees in your state are paying into and will receive benefits from when you retire.

The 8% you are paying is really only relevant if you stop working for the state before retirement, as that’s the amount that they’d refund you (plus interest earned) if you withdrew your funds.

On your state’s retirement website there should be a formula that breaks down your pension calculation. It will likely involve your years of service and your highest average salary and some pre determined factor to give you a monthly payment that you’ll receive from retirement until you die. Usually you have to work for ~30 years to get this immediately when you retire. Typically that payment will amount to slightly less than your average pay (at 80k mine would be 72k).

So, when you retire, you’d have two streams of income, the pension (determined by your states formula), and your DC account (determined by your investments and their performance). Combined these should amount to comfortable living as is, but it’s never a bad idea to save more (either through an IRA or by increasing your contributions to the DC if it’s possible like I’m assuming it is).

The DC part can and will pretty easily be able to rollover to your next company plan should you stop working for the state before retirement. The DB part can get messy and I’m not person to give insight there.

[deleted]

Yes I don't think there would be any double taxation for a loan from a Roth account.

It’s not worth the stress of rent and utilities. Keep saving. Get to 50k and hopefully by then prices might be lower.

[deleted]

Let’s say you put $10k pre-tax dollars into your 401k.

Then you take a $10k loan out. The loan repayments come out of the post-tax part of your paycheck. Aka, now you are putting taxed dollars back into the 401k to replace the pre-tax dollars you took out.

When your loan is over you put in $10k to repay the loan… but it was no longer tax free. The repayments weren’t pre-tax dollars. You paid taxes on those dollars.

Now, when you retire and pull the 401k money out you will pay tax on that $10k again. That’s double taxation.

Well, if you were to get an unsecured personal loan, CC cash advance or 2nd lien HELOC, you would be looking at much higher rates than a traditional mortgage anyway. You also mentioned you wanted to use the money to start a business, if you already have something going on that front, you can look into a SBA loan. Given what you said, you don't have a lot of options.

How are you putting them in as "post-tax" dollars if you are literally using the same pretax dollars that were dispersed as the original loan principal? When are they ever taxed, other than when withdrawn in retirement?

[removed]

[deleted]