Tricky Retirement Shuffling as I try and jump jobs

Submitted by Highwayman1717 t3_127v9gm in personalfinance

To start, I’m 32 and have a ways off. I am in the process of interviewing and am looking to change jobs, but there is some trickiness with my IRA and 401k. My current job pays biweekly, meaning two extra paychecks a year. I always used those paychecks to fill my Roth and trimmed my payments to hit the limit while the rest of my 20% went to my 401k.

Now I realize…odds are, my next job won’t have that pay style and I am months behind. I threw a lot of spare cash in, it looked hopeless to match what my 20% goal. Those extra checks mean by year-round paychecks are lower…and I can’t afford to top off my accounts. Then I realized I could stretch my payments to April and have some breathing room.

Now things are ‘steady’ but there are some decisions to make if I jump right away, or am here until I get that extra paycheck.

If I stick around a bit: The extra check is in June. I could drop it in my IRA solely to end the contributions at the calendar year for convenience, but there’s also no ‘cost’ to doing my contributions May-April.

If I jump soon: I’m in a good pattern to top off my IRA and hit my overall goal, a larger check means I get a couple hundred back and can budget normally again for myself. But that extra hundred has to be used next year for my IRA payments, and I shouldn’t budget around it. Which means again, bump the payments back to January-December solely just because? Make my emergency fund eight months instead of six?

Meanwhile…whatever the 401k policy is, I’ll save up a while until I qualify and can do double payments once I qualify. And if they have an HSA, that has to get maxed with anything I can throw. Match the company match, then Roth, then HSA, then anything left to hit 20% to 401k again.

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Werewolfdad t1_jefz2l0 wrote

I don’t understand what you’re asking. Pay cadence doesn’t matter unless you’re living paycheck to paycheck

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Highwayman1717 OP t1_jefz8c2 wrote

Biweekly means there are two months where I get an extra paycheck, lowering the year-round checks and giving you two little windfalls to manage. I used those for my IRA until now.

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Werewolfdad t1_jeg0dja wrote

That doesn’t matter. If you’re paid less frequently you just get more money in each check

Sounds like you need to buy three dozen eggs and you’re agonizing over buying three dozens or two packs of 18 when it’s the same price

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Highwayman1717 OP t1_jeg0mi2 wrote

To an extent, absolutely. Bigger snag is not having 4 grand in the extra checks to fill the Roth and scrambling to fill it without cutting hobbies and travel. Now that it’s ‘okay’…Little details as you said, like calendar timing and how to shift to new accounts.

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Werewolfdad t1_jeg0t9t wrote

The four grand is in your new checks

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Highwayman1717 OP t1_jeg0z2k wrote

Absolutely! But do I use it to get ahead and back to the calendar schedule, etc.

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Werewolfdad t1_jeg1cg2 wrote

Get ahead of what?

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Highwayman1717 OP t1_jeg1l6n wrote

I’m contributing on a May-April schedule next year because I had to hustle to pay the limit this year due to this jump. I could add enough to change the payment schedule back, or keep it the same schedule because the only benefit is clearer scheduling and the money can go elsewhere.

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alwayslookingout t1_jegn80w wrote

You’re making this so much more confusing than necessary. The 401K and HSA are the only two accounts that matter because they’re pulled from your paychecks each month. Your IRA can be contributed whenever you have the money. Hell, you have until April of next year to fill up the prior year’s IRA.

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