Education fund

[Offthebeatenpath]

        I want to thank you for your blog and all of the time and effort you put into helping others learn from your journey!  I am relatively new to the world of FIRE (really finance in general) and am working on learning as much as I can.  I have a few questions, and I wasn't sure exactly where to put them as they seem to need a bit of background.  I was hoping you might be able to give me some ideas or perhaps point me in the right direction when you have some time. 
 I am 39 years old, married and working full time +.  Salary $170,000
My husband's job was recently cut down to part time and shortly the company will be closing.  Salary currently $33,000
We have 2 children ages 3 and 10 months. 
My husband has a 401k with approx $115,000, another 401k with about $50k. 
I have a 403b that I max out with $403,500  a SEP with $8730 and an IRA that I just opened with $200
         I max out my 401k, I save 10% of every paycheck and I am currently putting an additional 2.2% of my paycheck into a high yield savings account that I would like to use to invest.  We have $5500 that we would like to put somewhere for our children's education.  My husband and I agree that we would like to invest the money outside of the traditional 529 plan.  We do live in NY, so there are tax advantages to placing money in the 529...  I read your post about what you are doing for your son and would like to invest in Vanguard funds.  The place where I'm stuck is knowing where to put the money.  I originally opened the new IRA with the intention of doing a Roth conversion with the post-tax dollars that I'm placing in the account.  I know that I would have to convert the SEP as well and pay taxes on that this year, too.  However, I'm not sure if now is the time to do a conversion like that, knowing that later our income will dive drastically and with that, our tax rate.  So, now, I'm thinking perhaps I invest for our family in the IRA and wait to convert?  I am also unsure if I should place the money that we'd like to use for their education in an IRA or if I should just use a brokerage account?  I have so many questions.  I'm reading as much as I can every day to try to understand and take charge of our money and how it grows.
        I really appreciate you taking the time to read this and I would be grateful for any thoughts that you might have on where to go from here.  Thank you!

[gocurrycracker]

Roth conversions are best done when you have little income. The peak earning years are for contributing to Traditional accounts.

At nearly $200k annual income you guys are firmly in the 22% tax bracket. Contributing $18500 to a 401k will save you $4k in taxes (+NY State taxes.) Put at least that amount into a Traditional IRA and you save another $900 in taxes. Put that $900 into your husband's IRA and save another $200 in taxes.

If you have more $ to save then you can make additional IRA contributions or put it in a Vanguard brokerage account (or both.)

See Jim Collins' book for more: https://www.gocurrycracker.com/book-review-the-simple-path-to-wealth/



As for where to save for college, money is fungible. If you have $5500 in your savings account or a brokerage account or an emergency fund or under your mattress, it is the same.

If you choose to invest it as the kids are 15+ years away from college, then a brokerage account has easier access than an IRA. A 529 might save you a small amount of taxes at the expense of flexibility.

[Offthebeatenpath]

Thank you!  That clears up a lot of questions for me. I do want to invest the money for their education.  I am just finishing up Collins' book. I actually started it based on  reading your recommendation in that post.  What a great book!  I still have a number of questions, but i think they are more tax related now.  Do you have any recommendations on a good tax book?  I really appreciate your time and your thoughts!

[gocurrycracker]

I'm not certain about a great tax book. Most of what I've learned about taxes is through the process of filing our annual tax return.

IRS 101 in this post might be helpful:
https://www.gocurrycracker.com/turbocharge-savings/

And overall this piece outlines our long term tax minimization strategy:
https://www.gocurrycracker.com/never-pay-taxes-again/

[Offthebeatenpath]

Thank you!  I really appreciate it!