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After 7 years in my profession, I'm finally in a high paying position. I was reminded recently that I needed to be "accumulating wealth", which got me to reading articles. One of the things that came up multiple times was Roth IRAs. Ok, so I looked into it. Lo and behold, I saw that once you make over $125k, what you can contribute starts to go down. Then at $140k, it stops altogether?! I find myself have suddenly leapfrogged into the low end of that bracket.

After searching for information about the "why" of it, I found something that said that at this point, Roth IRA may not be the best idea. Say wha...?

After I get my debts paid off and some emergency funds squared away, and buy a house, I'll be able to put > $3k per month to whatever money-growing ventures.

So, what am I to be looking into at this point? Most of what I've read seems to be centered around sub-$100k or so incomes and "makes less sense" for incomes starting to get above that. I don't want to do something less than ideal, but I'm finding it hard to find specifics.

edit: Company does have a 401k, I figured it was a given I'd be contributing to that, so I didn't mention it. I will clarify in the future. Company matches 4%. Unless I should just put all the extra each month into the 401k, I was assuming different growth options might be good in addition to it.

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  • Does your company offer a 401(k)? If so, does it offer a match? What about an HSA (which is often treated as another retirement account that is earmarked for medical expenses)?
    – D Stanley
    Nov 7, 2021 at 2:45

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So, what am I to be looking into at this point? Most of what I've read seems to be centered around sub-$100k or so incomes and "makes less sense" for incomes starting to get above that. I don't want to do something less than ideal, but I'm finding it hard to find specifics.

There is a number where if your income is below that then the idea of a Roth makes perfect sense. The income tax is either zero, or very low. So you pay the tax on that income, and then the money you pull out of that when you retire is 100% tax free. You expect that the rates you will pay in your retirement years will be higher.

There is a higher number where if you make more than that, and you believe that the taxes rates in your retirement years will be lower than the tax rate you are paying now it makes sense to defer taxes now and pay them in the future by using the traditional (non-Roth) retirement accounts.

Some people will even get money into their Roth accounts by making a non-deductible traditional deposit and then do a backdoor conversion to a Roth. They do this because they make more than the US government allows regarding direct deposits into a Roth IRA.

As people progress though their working years the Roth vs Traditional split may change. There may even be years that they will do a little of both.

In your question you didn't even mention a 401(k). This is a big opportunity to invest for many workers. The annual contribution limits in the 401(k) are higher ($20,500 in 2022) than the IRA ($6,000 in 2022). For workers over age 50 the catch-up limit is $6,500 in 2022, for the IRA it is $1,000. The 401(k) also has the key component of an employer match.

Many (most?) companies have a Roth component as well as the traditional pre-tax option to their 401(k).

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  • Edited. Company does have a 401k with 4% match. Will contribute when eligible (3 months).
    – User51610
    Nov 7, 2021 at 15:02
  • Is that $20k max contribution figure for employee only, or combined employee + employer?
    – User51610
    Nov 7, 2021 at 16:14
  • You can put that much ($20,500 if under 50) into a combo of Roth and traditional 401(k). There is a higher limit that covers both the employee and the employer of $61,000 in 2022. irs.gov/retirement-plans/… Nov 8, 2021 at 11:46

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