I just finished reading JL Collins' The Simple Path to Wealth, which is what brought me here. I have one investment, my tax deferred 401k. I had been contributing 12%, but after reading Collins' book, I realize I need to drastically increase that. I'm 57, and just started the 401k 12 years ago. It has $135,000 in it.
So my question is, should I invest all I can in that 401k, or should I only invest up to what the company will match, which is 4%. Then put the rest in a separate Roth IRA?
The reason I am hesitant to put it all in the 401k is the RMD, required minimum distribution. I want to withdraw by the 4% rule when I retire, and I'm pretty sure the RMD will force me to withdraw a lot more than 4%.
If I put it all into the 401k, then when I retire move it into a Roth IRA, in one lump sum, that would put me into a higher tax bracket. If I just transfer a portion each year, to avoid a higher tax bracket, it seems like that would affect the rate of return adversely, but I'm not certain of that.
That's why I am here asking for advice.
Thanks for any help.
Chuck