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Old 04-09-2010, 09:52 AM
 
Location: Boise, ID
5,111 posts, read 9,267,157 times
Reputation: 4411
Default After 401k and IRA, what is next?

If a person has a fully funded 401k and a fully funded IRA, and no debt, what is the normal next investing avenue? Are there any other tax sheltered investing methods?

I'm not at that point yet myself, but its not something I've seen really discussed on here, everyone always just talks about 401k and IRAs, so I was curious what comes next.

*Edit* Darnit, I meant to post this in the investing forum...feel free to move it. Sorry about that.

Last edited by Lacerta; 04-09-2010 at 10:00 AM..
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Old 04-09-2010, 10:07 AM
 
Location: Las Flores, Orange County, CA
26,365 posts, read 51,661,319 times
Reputation: 16192
Some people might have said variable annuities. Me, I'd rather stick it in something like an index fund or growth mutual fund.
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Old 04-09-2010, 11:34 AM
 
559 posts, read 891,250 times
Reputation: 467
Well, if you're in a position where you have no debts, fully funded annual retirement plans, and leftover money, I have this one special investment idea:

Lyle Lanley: Well, sir, there's nothing on earth
Like a genuine,
Bona fide,
Electrified,
Six-car
Monorail!
What'd I say?

Ned Flanders: Monorail!
Lyle Lanley: What's it called?
Patty+Selma: Monorail!
Lyle Lanley: That's right! Monorail!
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Old 04-10-2010, 01:44 PM
 
Location: Chicago (Albany Park)
644 posts, read 1,284,453 times
Reputation: 504
Health Savings Account
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Old 04-10-2010, 02:17 PM
 
Location: Las Flores, Orange County, CA
26,365 posts, read 51,661,319 times
Reputation: 16192
Quote:
Originally Posted by Thepreacherswife View Post
Health Savings Account
Yep, I forgot that one (Flexible Spending Accounts at work?)

Here's my question. Why is money in FSA forfeited at the end of the year? Why is there a rule that forces people to estimate how many FSA eligible expenses are planning on having? What's the benefit? Why not just give it back if you don't use it (even though it will be taxable)?
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Old 04-10-2010, 03:06 PM
f_m
 
2,290 posts, read 4,921,104 times
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Quote:
Originally Posted by Thepreacherswife View Post
Health Savings Account
Yes, you can set aside $3,050 for a single and up to $6,150 for a family, pre-tax money. It can only be spent for health care costs without penalties.

Ultimately, your investment choices for 401k and IRA are probably more important than a small percentage more set aside for retirement, however the pre-tax thing is beneficial since it lowers the taxable income.
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Old 04-10-2010, 03:09 PM
f_m
 
2,290 posts, read 4,921,104 times
Reputation: 821
Quote:
Originally Posted by Charles View Post
Yep, I forgot that one (Flexible Spending Accounts at work?)

Here's my question. Why is money in FSA forfeited at the end of the year? Why is there a rule that forces people to estimate how many FSA eligible expenses are planning on having? What's the benefit? Why not just give it back if you don't use it (even though it will be taxable)?
The benefit would be for people who have ongoing health care expenses, perhaps child services or diabetes, special medication. Also, employers may fully/partly fund this account (perhaps knowing they might get the money back) so the employee could potential be getting more money in this situation.
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Old 04-10-2010, 03:40 PM
 
Location: Las Flores, Orange County, CA
26,365 posts, read 51,661,319 times
Reputation: 16192
Quote:
Originally Posted by f_m View Post
The benefit would be for people who have ongoing health care expenses, perhaps child services or diabetes, special medication. Also, employers may fully/partly fund this account (perhaps knowing they might get the money back) so the employee could potential be getting more money in this situation.

So why the forfeiture clause?
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Old 04-10-2010, 08:15 PM
 
Location: Chicago (Albany Park)
644 posts, read 1,284,453 times
Reputation: 504
Quote:
Originally Posted by f_m View Post
Yes, you can set aside $3,050 for a single and up to $6,150 for a family, pre-tax money. It can only be spent for health care costs without penalties.
Until you turn 65. Then you can spend it for anything without penalty, although you would pay regular tax on the distribution (medical expenses still come out tax-free).
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Old 04-11-2010, 05:42 AM
 
Location: Vermont
4,554 posts, read 8,310,800 times
Reputation: 1769
if you are putting 20k a year away are we assuming you do not apply to contributing to Roth?
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