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    Advice about IRA and 401K confused

    I just started my new job. My company says they will match 401K only after 1 year of employment. I was looking at Robinhood Gold as well, I see a 3% match on annual contribution on IRA.

    Correct me if I'm wrong.
    I want to max my investments and also save a lot on taxes. I make around 115 base a year in Chicago. Need some serious advice.

    So far I have maxed out my HSA so I'll be contributing 3900 this year because my company is going to contribute 500$. I see the limit for HSA is 4.4K.

    My rent and other expenses would cost around worst case 3K. So with the rest, I want to aggressively invest. I can spend sometime on Robinhood regularly but going forward I don't think I would have enough time to do market research and invest well, so I'm looking for some investment advice.

    From what I understand if I withdraw money from 401K or Roth I should be paying taxes and 10% penalty right. So I want to check how do y'all plan and what recommendation do you give me?

    Advice about IRA and 401K confused
    byu/NefariousnessSea5101 inpersonalfinance



    Posted by NefariousnessSea5101

    4 Comments

    2. MuffinMatrix on

      1st you need an emergency fund setup. In a HYSA. Around 6 months worth of expenses.

      You want to aim around around 15% into retirement each year.

      Then invest in your 401k up to the matching. Thats free money.

      Then max your HSA. (assuming by ‘HRA’ you mean HSA)

      Then max a Roth IRA. Not through Robinhood, You need to pay for RH Gold to get that matching. Stick with true brokerages… Vanguard, Fidelity, or Schwab.

      If you still have more, go back to try maxing the 401k.

      Anything after this you can invest in a taxable brokerage.

      For those investments, you want the 3-fund portfolio: total US market + total international + bonds (which you get later in life)

      Why would you withdraw early? The entire point is to have that money for retirement. If you need money sooner, keep it in a regular brokerage.

    3. sunrag1 on

      Once you have 3-6months of savings amount then If you are single and earning more, maxout 401K. You save tons of taxes now.

      Maxout HSA if eligible.

      if money available then invest in trad IRA to save more taxes (again if eligible). Else contribute to Roth.

      If money is still available then invest in brokerage account.

    4. SubstantiallyC on

      Contribute to a Roth IRA at Robinhood. You don’t need to spend time researching stocks. Don’t buy individual stocks. You can buy ETFs in your IRA at Robinhood. The match from Robinhood (>$225) is worth a lot more than the cost of Robinhood Gold ($50).

      Don’t withdraw from your 401k and pay taxes and penalties. You don’t owe taxes on Roth IRA withdrawals and you don’t owe penalties up to the amount of your contributions, but don’t withdraw if you can help it.

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