Dear
Graduate:
1. Claim
Single-1, or Single-0, on your Form W-4 for federal and state withholding. Do NOT
claim more than 1 exemption.
2. Participate
in your employer’s 401(k) or 403(b) plan.
If cash-flow permits, contribute the maximum, which for 2014 is $17,500. If you cannot contribute the maximum try to
contribute at least enough to qualify for the maximum amount of any employer
matching contribution. If your employer
offers a ROTH 401(k) or 403(b) option choose this option. As an alternative, if you are contributing
the maximum put 50% in a “traditional” account and 50% in a ROTH account.
3. If
you contribute toward the cost of employer-paid group health insurance premiums
via payroll deduction, and you are offered an option, elect to have your
contributions be treated as “pre-tax”.
4. Participate
in your employer’s medical expense Flexible Spending Account (FSA). Be conservative and start with $1,000. You can increase your contribution in
subsequent years once you get a handle on your annual out-of-pocket medical
expenses.
5. If
you have any cash from graduation gifts left over open a ROTH IRA account and
use this money to fund your 2014 contribution.
The maximum you can contribute to an IRA, “traditional” and ROTH
combined, for 2014 is $5,500.
6. Take
an empty coffee can, or other form of “piggy bank”, and put it in your
bedroom. Each week put $10, $20, or $50
in this “bank” (if you choose $20, but $20 in each week). On January 2nd of 2015 take the money that
has accumulated in this “bank” and contribute it to your ROTH IRA for tax year 2015. Continue this practice for 2015 and
subsequent years.
TTFN
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