Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Thanks Debra.

Does your employer match contributions on an annual or paycheck basis? In many 401K plans, maxing out 401K contributions early results in a loss of some employer matching. Are you really able to contribute your entire bonus to the 401K? It depends on the plan. My employer plan limits contributions to 16% per paycheck.

Good points. No matching contributions unfortunately. I am aware of the matching limits that would change the strategy considerably, but they are not applicable in my case, I wish they were! I am allowed to contribute the entire amount of the bonus, up to the IRS limit, in one swoop. I did this successfully last year.

Deductible taxes (for federal) include real estate, state and local taxes. Does the $4,500 estimate for taxes include all of these?

My state has no income tax, and local - well, I don't really know for sure yet. I move to the new area in a few weeks, but I don't think it's going to be much different than where I am now. Where could I go to check on local taxes in the new area?

Did you pay any points for the mortgage?

Yes - I don't recall how many, and all the paperwork is at work. It came out to about $1200 though. Good point about including the points, I'll have to recalculate with that included.

You don't list a ROTH IRA as an option, so I am assuming that your income does not allow it.

I am actually eligible for ROTH contributions as well. However I already have significant retirement holdings, started 10 yrs ago, in a Traditional IRA, and every time I do the math about converting to a Roth it comes to neutral advantage for me to do so. So my Traditional IRA contributions have now been replaced by the 401(k) contributions, and I enjoy the tax deduction from that. Any leftover monies can go into a Roth. I did not do it this past year, because we were accumulating cash for the house downpayment.

Thanks for your comments. This is my first time down this financial path.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.