This is an interesting point I hadn’t considered, thanks.

Having an escape plan is always a good idea, even if no acquisition.

Best of luck to Frank. Building, growing, then selling a business (the REAL product he was creating all along!!!) is a tough & risky route in life. Or… is this an infusion of much needed capital where he probably can’t swing a large bank loan/bond? In which case, the new company has expertise & capital to help Frank achieve the next level…. Is your position capable of being done by the new owners and their staff? Example: payroll processing, HR, etc.

Not sure what to tell you but you need to find more info on what the debt is from and then validate it that it's genuine.

When you have high income, it is true that "pre-tax" retirement savings almost always results in lower overall taxes paid (today's + during retirement). So at that level, you should focus your retirement dollars into either a pre-tax work plan or (if you have no retirement option through an employer) a Traditional IRA. The income restriction on deducting tIRA contributions only applies when you also have a work plan.

But there's a limit to how much pre-tax "space" you're allowed to use. Some people want to put away a lot for their retirement each year, more than they're allowed with regular 401k contributions. Maybe they're behind for their age, maybe they want a fancier lifestyle, maybe they just have no better use for those dollars. So while the tax cost from saving in a Roth may not be ideal, it still could be the best option compared to some non-tax-advantaged account. But again, only after "using up" all your available pre-tax options.

>Currently I'm still below the Roth IRA contribution limit
>
>...
>
>I'm currently in the second highest tax bracket

These two statements are not compatible. The income cutoff where your allowed direct Roth IRA contributions becomes $0 is roughly 1/3rd of the way into 24% tax bracket (give or take a bit between the filing statuses). If you're in the 35% bracket, then you make way too much to use a Roth IRA without the backdoor.

It’s more of an intentional friction thing if your savings isn’t directly attached to the account you spend from.

Drop optima and find a certified public accountant who has worked with the IRS before. A legit accountant that can get everything in order and help you. Optima is a rip off company, as proven by charging you that outrageous amount.

A loan doesn’t help with that in any way

Roth is a sub account type of both IRA and 401k and some others so it's important to clarify exactly what you mean. There is no income limits for a traditional IRA. If you want to contribute more to retirement your 401k's would be a great place to increase if your income is over the income limit for a married couple on a roth IRA. You can each contribute $22,500 to a 401k in 2023. You also have stuff like a back door Roth IRA conversion to look at too. Maximizing your tax advantaged accounts before you taxable invest is the optimal way.

The wiki here also has a flowchart that I think you will find helpful on the order of operations. Index funds and target date funds are great places to invest within these and other account types. I don't see a need at this point to pay an advisor 1-2% a year to give you similar advice when most people can DIY these days with a few hours work if that.

Yep, every 2 weeks means you are going to be before the statement some months and after the statement some months with one of the payments. Yes, find out when your statement posts and pay it down before that day.

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if it's actually 2 weeks you're paying 26 times a year. If it's the 15th and the 1st then it's 24.

One is more every year.

Your dad was likely a contractor, working for himself. He's allowed to deduct the operating expenses of his truck, BUT he has to pay ~15% self-employment taxes PLUS normal income taxes on the net profit. $20K in SE and income taxes is consistent with right around $75K - $80K of net profit, i.e. gross revenue minus documented business expenses.

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Yes, you will lose a proportionally significant amount in taxes and penalties

Question about Step 5. Is increasing for retirement via our work’s 401k mainly for tax reasons vs putting that same money toward a traditional?

You may find our Taxes wiki helpful.

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Your Federal taxable wages would need to be around $98,000 after pre-tax deductions to have $6000 in tax liability with 1 kid. Not sure how you got the numbers you did.

I want to cash out my 401K since I need money for bills/groceries atm, but now I don’t know if I should cause of the penalties they take out

Big banks do have 1 advantage over credit unions

My bank has a 7 state if not more footprint My CU is like 6 counties

You are comparing a traditional IRA/401k to a Roth IRA/401k. For high income individuals, the traditional will be better, yes.

Where the backdoor Roth comes in is once you have maxed out the traditional IRA/401k. If you have additional money that you want to contribute but exceed the limits for a traditional 401k, and make too much for a deductible traditional IRA contribution. Then you need to compare to putting it into a regular taxable investment account. And a Roth IRA will come out better than that.

No, where did you get that impression from? Are you looking at publication 15t?

I’m not sure what you’re asking

Sounds like 401k balance is too low to be kept where it is now that your employment has been terminated.

If you do not roll those funds over into an IRA or 401k with your new employer by 5/8/2023, you will be issued a check for the balance and your account will be closed.

From there, you could deposit it into your bank and accept the taxes and penalties if that is what you wish

If you want the money sooner, you’ll have to fill out a distribution form with your brokerage and have the money withdrawn/direct deposited to your bank.

Again, a rep from the brokerage can answer all of these questions

But based on federal income tax table they should be withholding about $6,000 in federal tax.

I would get a consultation with an independent financial advisor. Talk with however many it takes to find someone you like and trust. I was told early on a financial advisor is like like going to the doctor. It doesn’t always seem necessary but preventative care is worth it compared to one trip to the ER. That advice has helped me tremendously.