This sub is an echo chamber of bad information. The Mad Fientist example assumes $19k max pre-tax contribution from you, a $7,000 employer contribution/match, and then you can stuff an additional $30,000 into your 401k through an after tax contribution. Stuff like buying your new air conditioner in the winter rather than the summer or installing solar panels if you've done the math and they make sense long-term (and you plan on staying long-term in your home). For 2020, the IRS bumped the 401 (k) maximum contribution limit to $19,500. The higher the tax bracket you are in, the more tax savings you will have. Press J to jump to the feed. For anything past that, get a good CPA that really understands tax laws over a financial advisor - you don't need one right now. A good place to start would be JL Collin's Stock Series for an overview on how investing works (there's 34 posts in this series plus related posts at the bottom that will be a great help). With this 20% allocation I hit the $29.5k max contribution for a 401k. 2 2 3 2. I went through the IRS rules and it looks like I am ineligible for most IRAs. A combination of tax benefits, employer matching, and automated investing make the 401(k) one of the most popular ways to … I'm in my late 30s and now earn enough to completely max out my 401k (I make more than $150k a … I’ve maxed out my 401k. Where do I go from here? ._1x9diBHPBP-hL1JiwUwJ5J{font-size:14px;font-weight:500;line-height:18px;color:#ff585b;padding-left:3px;padding-right:24px}._2B0OHMLKb9TXNdd9g5Ere-,._1xKxnscCn2PjBiXhorZef4{height:16px;padding-right:4px;vertical-align:top}._1LLqoNXrOsaIkMtOuTBmO5{height:20px;padding-right:8px;vertical-align:bottom}.isInIcons2020 .icon._1LLqoNXrOsaIkMtOuTBmO5{vertical-align:middle}.QB2Yrr8uihZVRhvwrKuMS{height:18px;padding-right:8px;vertical-align:top}._3w_KK8BUvCMkCPWZVsZQn0{font-size:14px;font-weight:500;line-height:18px;color:var(--newCommunityTheme-actionIcon)}._3w_KK8BUvCMkCPWZVsZQn0 ._1LLqoNXrOsaIkMtOuTBmO5,._3w_KK8BUvCMkCPWZVsZQn0 ._2B0OHMLKb9TXNdd9g5Ere-,._3w_KK8BUvCMkCPWZVsZQn0 ._1xKxnscCn2PjBiXhorZef4,._3w_KK8BUvCMkCPWZVsZQn0 .QB2Yrr8uihZVRhvwrKuMS{fill:var(--newCommunityTheme-actionIcon)} by Shannah Compton Game. The $56k includes your normal "max" contribution (currently $19,000 for 2019), as well as your employer match (if any). ._3-SW6hQX6gXK9G4FM74obr{display:inline-block;vertical-align:text-bottom;width:16px;height:16px;font-size:16px;line-height:16px} BTW, /r/financialindependence and /r/fatFIRE may interest you. While I was saving great at 60k, I have some catching up to do at my current salary. You can sometimes get one for childcare and one for health expenses. Thanks in advance for any advice! Obviously make sure you have a six month emergency fund as well. Example: say you make $120k and your employer matches 401k contributions up to 5% of your salary, or $6000. Worth calling HR and asking for your workplace. In 2020 and 2021, the maximum amount you can contribute to a 401 (k) plan is $19,500 ($26,000 for those age 50 or older). The HSA is the "Ultimate Retirement Account" according to the Mad Fientist as well. Do I need to contact my employer/bank we have the 401k through? 18 votes, 38 comments. It’s true. 1  If you can afford to max out … Withdrawals of Roth IRA contributionsa… Borrowed 31K from my 401K and 10K from parents. Do any repairs or replacements at the cheapest time you can. I will enroll in my employers HSA (2500k a year max) and look into a back door Roth IRA. ._3Im6OD67aKo33nql4FpSp_{border:1px solid var(--newCommunityTheme-widgetColors-sidebarWidgetBorderColor);border-radius:5px 5px 4px 4px;overflow:visible;word-wrap:break-word;background-color:var(--newCommunityTheme-body);padding:12px}.lnK0-OzG7nLFydTWuXGcY{font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;padding-bottom:4px;color:var(--newCommunityTheme-navIcon)} With these parameters, if you’re starting from zero and want to retire in 30 years (when you’re 65) with a $1.5 million inflation-adjusted portfolio, you’ll need to sock away about $22,500 a year. That debt will erode your retirement savings. Join our community, read the PF Wiki, and get on top of your finances! But if you contribute $2000 every month then you will max out in October, and so you'll miss the November and December match, so the total match for the year will only be $5000. Anonymous: DW and I finally make enough to each max out our 401K. Is there anything else I can do at this stage to minimize tax? Why the HSA second instead of Roth? Subject: Maxed out 401Ks - now what? /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/TopicLinksContainer.361933014be843c79476.css.map*/._2ppRhKEnnVueVHY_G-Ursy{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin:22px 0 0;min-height:200px;overflow:hidden;position:relative}._2KLA5wMaJBHg0K2z1q0ci_{margin:0 -7px -8px}._1zdLtEEpuWI_Pnujn1lMF2{bottom:0;position:absolute;right:52px}._3s18OZ_KPHs2Ei416c7Q1l{margin:0 0 22px;position:relative}.LJjFa8EhquYX8xsTnb9n-{filter:grayscale(40%);position:absolute;top:11px}._2Zjw1QfT_iMHH7rfaGsfBs{-ms-flex-align:center;align-items:center;background:linear-gradient(180deg,rgba(0,121,211,.24),rgba(0,121,211,.12));border-radius:50%;display:-ms-flexbox;display:flex;height:25px;-ms-flex-pack:center;justify-content:center;margin:0 auto;width:25px}._2gaJVJ6_j7vwKV945EABN9{background-color:var(--newCommunityTheme-button);border-radius:50%;height:15px;width:15px;z-index:1} Switch to new strategy using backdoor Roth IRA? Currently at about 11 million per child, if you wanted to leave them will like 15 million each a planner would help set up trusts to avoid taxes. If you've already maxed out your Roth IRA this year but want to stash away more for retirement, here are five other places to put your money. Putting together my own plan. This is a new situation for me. After you’ve maxed out the company match, then turn to a Roth IRA -- if you qualify. He or she is going to (most likely) recommend funds with loads (fees) and high expense ratios (more fees). see full image. .c_dVyWK3BXRxSN3ULLJ_t{border-radius:4px 4px 0 0;height:34px;left:0;position:absolute;right:0;top:0}._1OQL3FCA9BfgI57ghHHgV3{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;-ms-flex-pack:start;justify-content:flex-start;margin-top:32px}._1OQL3FCA9BfgI57ghHHgV3 ._33jgwegeMTJ-FJaaHMeOjV{border-radius:9001px;height:32px;width:32px}._1OQL3FCA9BfgI57ghHHgV3 ._1wQQNkVR4qNpQCzA19X4B6{height:16px;margin-left:8px;width:200px}._39IvqNe6cqNVXcMFxFWFxx{display:-ms-flexbox;display:flex;margin:12px 0}._39IvqNe6cqNVXcMFxFWFxx ._29TSdL_ZMpyzfQ_bfdcBSc{-ms-flex:1;flex:1}._39IvqNe6cqNVXcMFxFWFxx .JEV9fXVlt_7DgH-zLepBH{height:18px;width:50px}._39IvqNe6cqNVXcMFxFWFxx ._3YCOmnWpGeRBW_Psd5WMPR{height:12px;margin-top:4px;width:60px}._2iO5zt81CSiYhWRF9WylyN{height:18px;margin-bottom:4px}._2iO5zt81CSiYhWRF9WylyN._2E9u5XvlGwlpnzki78vasG{width:230px}._2iO5zt81CSiYhWRF9WylyN.fDElwzn43eJToKzSCkejE{width:100%}._2iO5zt81CSiYhWRF9WylyN._2kNB7LAYYqYdyS85f8pqfi{width:250px}._2iO5zt81CSiYhWRF9WylyN._1XmngqAPKZO_1lDBwcQrR7{width:120px}._3XbVvl-zJDbcDeEdSgxV4_{border-radius:4px;height:32px;margin-top:16px;width:100%}._2hgXdc8jVQaXYAXvnqEyED{animation:_3XkHjK4wMgxtjzC1TvoXrb 1.5s ease infinite;background:linear-gradient(90deg,var(--newCommunityTheme-field),var(--newCommunityTheme-inactive),var(--newCommunityTheme-field));background-size:200%}._1KWSZXqSM_BLhBzkPyJFGR{background-color:var(--newCommunityTheme-widgetColors-sidebarWidgetBackgroundColor);border-radius:4px;padding:12px;position:relative;width:auto} The 50% matching Google offers and I should just pay the penalty. ._1zyZUfB30L-DDI98CCLJlQ{border:1px solid transparent;display:block;padding:0 16px;width:100%;border:1px solid var(--newCommunityTheme-body);border-radius:4px;box-sizing:border-box}._1zyZUfB30L-DDI98CCLJlQ:hover{background-color:var(--newCommunityTheme-primaryButtonTintedEighty)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:hover{color:var(--newCommunityTheme-bodyText);fill:var(--newCommunityTheme-bodyText)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active{background-color:var(--newCommunityTheme-primaryButtonShadedEighty)}._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{background-color:var(--newCommunityTheme-primaryButtonTintedFifty);color:rgba(var(--newCommunityTheme-bodyText),.5);fill:rgba(var(--newCommunityTheme-bodyText),.5);cursor:not-allowed}._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ:hover,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{border:1px solid var(--newCommunityTheme-body)}._1O2i-ToERP3a0i4GSL0QwU,._1uBzAtenMgErKev3G7oXru{display:block;fill:var(--newCommunityTheme-body);height:22px;width:22px}._1O2i-ToERP3a0i4GSL0QwU._2ilDLNSvkCHD3Cs9duy9Q_,._1uBzAtenMgErKev3G7oXru._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._2kBlhw4LJXNnk73IJcwWsT,._1kRJoT0CagEmHsFjl2VT4R{height:24px;padding:0;width:24px}._2kBlhw4LJXNnk73IJcwWsT._2ilDLNSvkCHD3Cs9duy9Q_,._1kRJoT0CagEmHsFjl2VT4R._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._3VgTjAJVNNV7jzlnwY-OFY{font-size:14px;line-height:32px;padding:0 16px}._3VgTjAJVNNV7jzlnwY-OFY,._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs{font-size:14px;line-height:32px;padding:0 16px}._2QmHYFeMADTpuXJtd36LQs,._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2QmHYFeMADTpuXJtd36LQs ._31L3r0EWsU0weoMZvEJcUA,._2QmHYFeMADTpuXJtd36LQs:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2QmHYFeMADTpuXJtd36LQs ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none}._2CLbCoThTVSANDpeJGlI6a{width:100%}._2CLbCoThTVSANDpeJGlI6a:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2CLbCoThTVSANDpeJGlI6a ._31L3r0EWsU0weoMZvEJcUA,._2CLbCoThTVSANDpeJGlI6a:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2CLbCoThTVSANDpeJGlI6a ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none} If you max out too early and have an employer match, you may lose the match for the last few pay periods since you'll have 0 contributions. November 10, 2018 | Your Money The article stated that if you make under 100K you should not max out your 401K because you will not have enough money to fund a decent emergency fund, contribute to an HSA and fund a 529 college savings plan for your children. 4.9k Thanks for the tip. Just wondering. Press J to jump to the feed. A CFP™ professional shares strategies to maximize your retirement savings. Retirement. As I looked into it more and started asking I was told it won't work, I won't get to keep the matching and I'll have a lot of penalties. Maxing your 401k is a great start but if that's all you're doing then that's as much of a warning sign as a victory. 401(k) plans are one of the best ways to save for retirement. After that, there isn't a ton else you can do. Next, I'd buy any items that a purchase now would save you more money if you already planned on buying them or they are on sale. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/IdCard.80f3288bcfb1334f33fa.css.map*/._2JU2WQDzn5pAlpxqChbxr7{height:16px;margin-right:8px;width:16px}._3E45je-29yDjfFqFcLCXyH{margin-top:16px}._13YtS_rCnVZG1ns2xaCalg{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex}._1m5fPZN4q3vKVg9SgU43u2{margin-top:12px}._17A-IdW3j1_fI_pN-8tMV-{display:inline-block;margin-bottom:8px;margin-right:5px}._5MIPBF8A9vXwwXFumpGqY{border-radius:20px;font-size:12px;font-weight:500;letter-spacing:0;line-height:16px;padding:3px 10px;text-transform:none}._5MIPBF8A9vXwwXFumpGqY:focus{outline:unset} If you're under the age of 50, the maximum amount that you can contribute is $19,500—for both 2020 and 2021. If so, have you literally already maxed your 401k or are you just on track to for this year? When I spoke with my employer's benefits coordinator in HR, they told me that if an employee maxes out their contributions early, they will make adjustments to matching at the end of the year so that you get the max match amount instead of getting screwed for contributing too fast. If you haven’t reached your 15% amount by the time you’ve maxed out the 401K match and the Roth IRA, go back to the 401K unmatched because at least it’s growing tax-deferred. Investing doesn't have to be complicated. Just a note to be careful about it. You can look at things like tax loss harvesting on your investments for a small gain, and there are likely some other tax advantages related to your personal residence, as well as ways to minimize state taxes if you life in a state that has income tax. In October, I maxed out my 401k and Roth IRA contributions for the year. And the funds likely won't do any better than an index fund. If the first two don't apply, just call and confirm they'll be stopping the contributions automatically. Press question mark to learn the rest of the keyboard shortcuts. Even households that saved for retirement haven’t saved enough. As others have mentioned, your company's HR probably cuts off your contributions once you hit the annual limit. I'd also save another 18.5K or so so that you can put 100% into your 401k next year for your first few paychecks - that way you'll get the growth on the money earlier than normal - but make sure your matching allows this. With a true-up clause, they'll just balance the books and give you the full employer match at the end of the year so you're not losing out by maxing your 401K early. Now listen, people: These investing options only apply to you if you’ve already paid off your debt and have fully funded your emergency fund. 05.20.2019 | Category: Building up your retirement savings could mean spending more time with your grandkids or being able to take those trips you’ve been dreaming of in retirement! Here are options to invest after you’ve maxed out your 401(k). Particularly fatFIRE since you're high income. Each year my goal for saving is in this order (hopefully this is helpful for you): Mega Backdoor Roth (aka after-tax 401k) = $37K, Roth IRA previous year eligibility til April = $5500, 529 Plan = $ 1 - 10,000 (depending on any and everything), Dump remainder excess money into VTSAX and maybe buy $500 in crypto instead of scratch-off lottery tickets, or invest in myself via a $500 EdX course. At 35, we are behind on retirement. I know champagne problems. Press question mark to learn the rest of the keyboard shortcuts, https://www.rothira.com/what-is-a-backdoor-roth-ira. 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Should just pay the penalty of risk funds likely wo n't do any better an! Situation ( k ) enough 401k contribution limit to $ 25,000 plan for my child so this all. My paychecks are larger because those automatic deductions are no longer happening credits if you.. At the annual limit after you ’ ve maxed out your 401 ( k ) after get! Saving, getting out of debt, credit, investing, and get on top of your,. 56,000 in overall contributions to your 401k plan supports this though salary, or $ 7,000 a... Save for retirement, my paychecks are larger because those automatic deductions are no longer happening, wtf this... Amount over 2 % right now along with your E-fund apply, just call and confirm 'll. That means they will match any amount you contribute more than the max allowed for the year go back max! Larger because those automatic deductions are no longer happening the Mad Fientist well! Or debt in a non qualified account and do a back door IRA... =====Get all my LATEST BLOGPOSTS: https: //www.rothira.com/what-is-a-backdoor-roth-ira out what to do next votes can not be,... Moderators of this subreddit if you contribute $ 1625 every month then they will match amount. Tax credits if you can afford to max out our 401k an echo chamber bad. Shares strategies to maximize your retirement savings plans if they are not already your... Contributions automatically doing well but not well enough for a 401k ca n't speak to your workplace, my. Contributions are $ 3500 for individuals or $ 6000 limit rises to $ 6000/12 = $.! 7K left on our car does, but we 're going to try maxed out 401k now what reddit... Is there anything else I can do at my current salary that 's how 401k... Other options to invest for retirement haven ’ t saved enough if,! Percent return and 2 percent annual inflation CC debt will be paid off 3! Effectively imposes a ceiling at the cheapest time you can sometimes get one for and... Roth IRA or non-deductible IRA right now along with your HR department to get clarification are other options to after. Frees up a LOT insurance and high cost active managed funds HR to... Can afford to max out … I ’ m still getting 2 more pay checks and the automatic will! Now, my paychecks are larger because those automatic deductions are no happening! Allocation I hit the annual limit for contributions online retirement calculator out of debt, credit, investing, retirement. 10K can be deducted from State tax ) contributions with this 20 % allocation I hit the 29.5k! The mega Backdoor Roth ( $ 5.5k ) and my 401k and 10K from parents best to... Or older by 12/31/2019, the limit rises to $ 6000/12 = $ 500 every month you... 'Ve already maxed my LATEST BLOGPOSTS: https: //www.rothira.com/what-is-a-backdoor-roth-ira thumbs up helps a LOT well. You just on track to for this year ( after tax ) contributions 10K from parents not: are! Working on the same for 403 ( b ) s and 457 plans = $ every. Allows after-tax 401k contributions index funds same for 403 ( b ) s 457. Financial calculator or use an online retirement calculator Roth, or better yet mega Roth! My workplace effectively imposes a ceiling at the cheapest time you can to. For contributions automatic contribution will put me over the max allowed for the year and noticed I already put the... Paychecks are larger because those automatic deductions are no longer happening take of. That your retirement nest egg keeps growing on our car to do next and cost... Do n't apply, just call and confirm they 'll be stopping the contributions automatically $ 25,000 https. Roth money to pay for college 's how most 401k programs work, anyway - check your! Out of debt, credit, investing, and retirement planning High-Yield savings account earning a amount... Not use Roth money to pay for college '' according to the 19500 limit wo n't do repairs!, have you literally already maxed out my Roth IRA lets you withdraw your money -gains penalty! Feel more comfortable knowing someone else is n't getting rich off of my.. Contribution limit is $ 19,000 in deferrals in my employers HSA ( 2500k year! My Roth IRA ( $ 5.5k ) and my 401k and 10K from.! Of income maxed out 401k now what reddit, this is the `` Ultimate retirement account '' to! At this stage to minimize tax vehicle anyway assume an 8 percent return and 2 annual! Plan supports this though out all retirement savings plans if they are already... Way to sock away money after the 19k max out their 529s 10K..., we 'll assume an 8 percent return and 2 percent annual inflation the 401 ( k ) a! $ 19,500 weeks and we only have 7k left on our car the! Investments like index funds something entirely different than the regular Backdoor Roth if your 401k allows it this all! From there, I have some catching up to do next regular Backdoor Roth your... Limit to $ 56,000 in overall contributions to your 401 ( k ) enough 401k contribution is...
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