Investing · Module 11 of 11
Choosing where it goes
Which account to fill first, which investments to keep where, and how to do it all if you work for yourself.
Key terms in Choosing where it goes
- Roth conversion
A Roth conversion is a move of money from a traditional IRA, or another pre-tax retirement account, into a Roth IRA. It can be done by rollover or by transfer between institutions. In the United States the converted amount that was never taxed is included in income for that year, and conversions cannot be reversed.
Source: Internal Revenue Service, Retirement plans FAQs regarding IRAs
- SEP IRA
A SEP IRA is a United States retirement arrangement in which an employer, including a self-employed person, contributes to traditional IRAs set up for eligible workers. Only the employer contributes, and the employees always own the funds fully. It has few filing requirements, which makes it attractive for small or variable-income businesses.
Source: Internal Revenue Service, Simplified Employee Pension plan (SEP)
- SIMPLE IRA
A SIMPLE IRA is a United States retirement plan for small employers, usually those with 100 or fewer employees. The name stands for Savings Incentive Match Plan for Employees. Workers can defer part of their pay, and the employer must make either a matching or a fixed contribution, with all contributions vesting immediately.
- One-participant 401(k)
A one-participant 401(k), often called a solo 401(k), is a traditional 401(k) covering a business owner who has no employees other than possibly a spouse. The owner acts as both employee and employer and can contribute in both roles. Without common-law employees, the plan does not need to pass nondiscrimination testing.
Source: Internal Revenue Service, One Participant 401k Plans
Every term on Lever is in the money glossary.
About this module
Choosing where it goes is part of Investing, one of 15 subjects in Lever. It’s a short run of 6 lessons, about 15 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Investing
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1
Why money cannot sit still
Why cash slowly loses value, what it means to put money to work, and which money shouldn’t be invested at all.
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2
What risk actually is
What risk really means, why higher returns come with bigger swings, and how much ups and downs you can live with.
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3
What you can actually own
Stocks, bonds, funds and index funds explained, plus the yearly fee that never sends you a bill.
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4
Actually starting
Open the account, start small, invest a set amount on a schedule, and keep an eye on fees.
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5
The days you cannot pick
Why staying invested usually beats trying to time the market, and why the latest news is a poor guide.
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6
The account with a tax break
Retirement accounts with tax breaks, free money from an employer match, and paying tax now or later.
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7
Limits, locks and deadlines
How much you can put into tax-advantaged accounts, the cost of taking money out early, and the deadlines to know.
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8
Moving it and naming it
What happens to your retirement account when you change jobs, and accounts meant for one specific purpose.
5 lessons -
9
Spending what you saved
How much you can take out each year in retirement without running out, and why the order of good and bad years matters.
5 lessons -
10
The mix that shifts
Choosing your mix of investments, rebalancing when it drifts, and all-in-one funds that do it for you.
7 lessons
Try this module
It’s part of Investing. Lever will bring it to you when you’re ready, or you can go straight there.