401k (Retirement Plan Through Employer)
With your employer
Pre-tax contributions
Deducted from payroll
$20.5k annual limit (revised up from $19.5k)
Limited in investment options (mutual funds)
Penalties if withdrawn before age 59.5
Roth IRA (Retirement Plan When You're Young or Making Under a Certain Income Limit)
6k per year annual limit if under age 50
Post tax contributions
Income limit (129k if single). Penalty if you contribute too much or over this income.
Withdrawals after age 59.5 tax free
Regular IRA (Regular Retirement Plan)
6k annual limit
Post tax contributions
Non deductible
Freedom to choose anything to invest in
Penalties if withdrawn before age 59.5
Withdrawals are deferred tax (whatever income tax bracket you are at when you're over 59.5)
Rollover IRA (When You Change Jobs)
Roll over your old 401k from a previous employer into a rollover IRA
Instead of being limited in investments, you can now invest in anything
Pre tax contributions
Amount in the plan is only what you rolled over from a previous employer, cannot contribute more separately
Penalties if withdrawn before age 59.5
Withdrawals are deferred tax (whatever income tax bracket you are at when you're over 59.5)
529 Plan (Education)
Can be for yourself or for your kid - can change beneficiary
Can open multiple plans
Can choose which state you want to do
NY plan: 5k deductible per year. If you leave NY, then you lose this benefit
Contribute post tax
No upper annual limit
Up to 16k considered a gift, from a tax POV
Gains and withdrawals are tax free IF it is for education only
Take note of upfront fees, deferred fees, and management fees / operational fees
Individual Investment/Brokerage Account (For Fucking Around)
Post tax contributions
Gains and withdrawals are taxable especially be careful with short term gains (day trading)
Can invest in anything, whenever
E.g. Wealthfront, Robinhood, Fidelity
Series I Savings Bonds (Inflation Hedge)
Subject to federal tax, exempt from state and local tax
Withdrawals for qualified education expenses are federally taxable
Annual interest rate linked one part fixed one part to inflation. Inflation adjusts every 6 months according to CPI
Minimum hold 1 year
Redeem before 5 years = forego last 3 months interest
Buy here, up to 10k annually
Series EE Bonds
Guarantees 2x principal in 20 years
~3.5% annual return
Federal tax exempt if withdrawals are for education
HSA (Healthcare Spending Account)
Enroll through your employer during an open enrollment period
Pre-tax contributions
Can only withdraw for medical expenses not paid by your high deductible health insurance policy
Funds rollover year to year
Can withdraw post age 65 for non medical expenses, will owe income tax
Annual contribution limits of $3,650 (2022, it changes annually)
Period products count too!!!
Employers can contribute to HSA
FSA (Flexible Spending Account)
Pre-tax contributions
Employers cannot contribute to FSA
Consider FSA if you do not have a high deductible health plan
FSA funds do not roll over
Cannot have both unless you have an HSA and LPFSA (dental and vision)
Check annual contribution limits
Crypto (For Really Fucking Around)
Coinbase, Gemini, Binance, etc.
Yield farming
High yield interest accounts like Gemini Earn
Everything at your own risk
Potential to lose everything you invest, and more.
Investing with Your Company
If you can lever up that would be nice too
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