Question

Hey gang, I just started a new job and my 401k doesn’t start for six months. I’ve been maxing mine out for 6 yrs and now I don’t have the option to contribute for 6 months. Aside from Roth, are there any options I’m not thinking of to deposit post tax income for retirement that won’t have gains taxed (like a Roth)? Thx!  

Answer 1

Does your job have an HSA you can contribute to immediately? If so, not only are the contributions pre-tax, but the gains are not taxed either.  

Comments

Thanks for the tip. Unfortunately not, I was finally ready to go HSA this year ant they don't have it as an option. they are a small company so maybe not there yet.  

Answer 2

6 months will leave you with a few months left in the year, I would set some money aside from each paycheck into a regular savings account right now and build up a pile of money. When the contribution eligibility kicks in I would divide the max by the number of pay periods you have left and kick that amount in per pay period. Then use the money pile to even out your cash flow. Won’t be perfectly dollar cost averaged for that 6 months but you’ll still hit your max for the year.  

Comments

@iconostasis23 What you're saying is to stockpile cash savings to rely on for the few months he can contribute so he can aggressively max out his 401k contributions via paycheck, correct?  

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@uuge6 Right. You'll have paychecks that are smaller when you're making the jumbo contributions at the end of the year. Save the extra that you have per check during the period that you're not contributing to even out cash flow and avoid debt during the jumbo contribution period.  

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That's a good idea! I just wanted to make sure I was understanding you correct.  

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@iconostasis23 @uuge6 And here is the power of the group. Yes, simple and easy. Thanks!  

Answer 3

Just to be safe I would double check with HR. My current work would let me put in whatever I wanted but wouldn't match my contributions for 6 months. Hopefully this is the case at your work so you don't have to back load the last half of the year.  

Comments

I was thinking this too. I get why they wouldn't match it right away, not sure why you can't contribute your own money though.  

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Mmmm. this is another really good point. I will check with HR if I can contribute without the match.  

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@smaragd - I work in HR. Most organizations typically allow new employees to contribute from Day 1 regardless of match eligibility. In fact, this is the approach I took when I started with my new employer about a year-and-a-half ago. You should definitely confirm your plan guidelines before making a decision. If you are prohibited from contributing inside six months, @iconostasis23’s suggestion appears to be a good solution.  

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@hesiod I’m going to print that out for reference in future negotiations with my wife.  

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@iconostasis23 As well you should. ✊