Why get an IRA if you have a (401)k?

[matthias10000]

@kshell Lesson I learned was you can keep that $ forever only if you keep the HSA forever. As soon as I left for better insurance the HSA Bank people started eating their monthly maintenance fees. Ended up just withdrawing it all to repay myself for old medical expenses and closed that crap bank account.

 

[sherylj]

@matthias10000 Just move the hsa elsewhere

 

[dreamasamemory2002]

@matthias10000 You can open another HSA with low/no fees at a different institution and transfer the old HSA funds into it, rather than spending them.

 

[rando]

@kshell You are not missing anything. HSA’s are good but have been grossly over hyped by this community. They are not “better” than an IRA (which is more flexible and likely has better fund selection).

 

[noothername]

@rando That depends on your provider. My HSA is through Fidelity and it’s exactly like my IRA in terms of investing in whatever funds I want. It did use ti be through HSA Bank, which only offered a limited fund selection

 

[rando]

@noothername Yea. I mean no point debating it because anything even remotely negative or nuanced about an HSA gets downvoted to the nether here, which is why I think they are overrated (not bad).

But yea, Fidelity would be a better choice for sure. We have HealthEquity or whatever it’s called.

Anyways, when people speak to their advantages “triple tax protected!!” they at the same time understate their limitations. That’s why they should never be prioritized, IMO, over a IRA. After? Sure!

 

[noothername]

@rando You’re getting downvoted because you’re wrong lol, limited fund selection isn’t a characteristic of HSA’s, just some providers.

 

[rando]

@noothername It’s a common characteristic. They also have huge limitation that are overseen by those who promote them over IRA’s.

And no, subs are tribal. It’s common to get downvoted for some topics that go against tribal narrative and not every one of those is wrong.

But all said, HSA’s are not bad! (Just not as good as IRA’s!).

https://ournextlife.com/2018/06/25/hsa

 

[resjudicata]

@fire_starter OP is missing faster growth possibilities with IRA.

Extreme example:

IIRC, Peter Thiel made his $6000 Roth IRA to 5 Billions ! This is the record so far!!

That is not possible with 401k limited funds.

 

[busywriting]

@resjudicata Yea by buying a shit ton of PayPal stocks below their value. Not something a normal person can do.

 

[matt2000]

@mitchrad A regular IRA allows you to sell assets without triggering a taxable event, and lets you buy any stock you want vs a workplace 401k where often you can only pick certain mutual funds.

Say you bought 10k of one stock in a regular IRA, if it does grow to 100k, you can sell it all at 100k and invest in other stuff without paying taxes on the 90k gained.

 

[hmd]

@matt2000 Some workplaces offer a self-directed 401k

 

[matt2000]

@hmd Yes, in that case it's just an extra ~$6500 you can contribute to an IRA and can rebalance tax-free (usually can't deduct if you make more than 80k AGI)

 

[tabler]

@matt2000 Does that mean you can withdrawal from an IRA before retirement without penalty?

 

[matt2000]

@tabler No. You can rebalance the portfolio without penalty (aka sell and keep cash, or sell and use cash to buy other stocks), but you can't take distributions from it.

 

[tabler]

@matt2000 I have my 401k contribution maxed out and I've been investing the other excess into stocks and indexes. I think I know the answer now but I should be doing a Roth instead because I'm going to get double taxed aren't I? And I can essentially buy the same indexes through my Fidelity Roth?

 

[matt2000]

@tabler Whether you can or not really depends if your workplace 401k plan allows self-directed investing or has the kinds of index funds you want to invest into.

As for whether you should do a Roth 401k or a 401k, it's really a lifestyle question. You do generally get more in retirement with a Roth 401k, but you will be paying more taxes now and having less take-home $. For some people who can't afford it, they might need the extra take-home for bills and stuff, and therefore traditional 401k would be better than Roth. But if you're certain you don't need the money until retirement, roth 401k is better.

You can use the Roth Modeller on Fidelity to decide whether Roth is worth it or not to you. https://nb.fidelity.com/#/public/nb/401k/tools/calculators/rothmodeler

 

[tomline]

@mitchrad Diversification of retirement vehicles. 401k can be maxed out. Gotta put it somewhere.

Backdoor Roth it.

 

[mitchrad]

@tomline What is the advantage of the backdoor Roth though over stocks if you’re still contributing post tax?

 

[cjk123]

@mitchrad You get to take it out tax free once you reach retirement age.

Edit: assuming you are talking about a roth