Anyone NOT max out their retirement accounts?

[freeazabird]

I was wondering if any of you are for one reason or another not maxing out your retirement accounts and instead using other means of saving for retirement. If so, how are you alternatively saving? And what about retirement accounts turned you off to maxing them?

[Beric01]

I used to not be maxing out my retirement accounts because I didn't want to make my money inaccessible. After I read about Roth conversion ladders I saw no reason not to max out my 401(k) (and my Roth IRA) every single year. The money will still be accessible, so why not get tax savings on it?

I also saw an article somewhere that read that even with BAD funds in your 401(k), it's still usually worth it to use it.

[begood]

We are not maxing out retirement accounts at the moment. My husband is channeling $9100/year into a 403(b) and we're saving $6500 a year now that I'm 50 in an IRA for me (I'm a contract employee). Do I wish he'd max that puppy out to $17,500? You bet I do! We're going to set up a meeting with our tax dude - my husband may be more amenable hearing it from a professional.

It is true that it would cramp our style a little to come up with an additional $8400/year, but I think it would be worth it in the long run - reduce taxes now and have more time to grow.

Now it is true that when we made this move (midlife crisis/downshift/passion job at lower pay), we actually hadn't planned on him putting anything more toward retirement, so he's quite happy with the amount he's putting in - he considers it gravy. And we're spending every dime he makes except for the payroll deducted 403(b) money, so we'd have to cut somewhere to make it happen... or use savings, which is an option. Last year we pulled my IRA contribution straight out of our money market account.

Does it "count" if we use savings instead of payroll deduction? I know we lose the "pretax" part of the contribution by not having it withheld automatically...

[stlbrah]

I max out my 401k to make sure it reaches 17,500 of contributions, and on top of that I get employee profit sharing. Besides the profit sharing (which has great returns), I got to pick my own funds so I have had great returns.


Outside of that, I don't see why I should open a traditional or roth IRA. I am only 26, and not planning to retire in my late 50s. I contribute about 12k a year into a taxable account. If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

[freeazabird]

To expand a little on my original question, I've found the returns on my 401K and IRAs to terrible the past 8 years, so I'm looking for examples of people avoiding these savings vehicles and using other strategies.

[sol]

If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

Um, tax free growth?  Not using a Roth, especially when you are young, is missing a great opportunity.

[johnny847]

I max out my 401k to make sure it reaches 17,500 of contributions, and on top of that I get employee profit sharing. Besides the profit sharing (which has great returns), I got to pick my own funds so I have had great returns.


Outside of that, I don't see why I should open a traditional or roth IRA. I am only 26, and not planning to retire in my late 50s. I contribute about 12k a year into a taxable account. If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

You should definitely open a tIRA or Roth IRA. If you make more than 60k, as a single person, then you are in the phase out of the deduction of traditional IRA contributions, at which point, the value of a IRA is basically eliminated, and should contribute to a Roth IRA instead.

Why contribute to a tIRA or a Roth IRA? Well you've already maxed out your 401k, and save enough to put $12k in a taxable account. But you could get a tax advantage by contributing $5500 of that $12k to either a tIRA or a Roth IRA. The only downside is not being able to access money contributed to a tIRA, and no earnings from the Roth until 59.5 without penalty (but you can pull contributions out of a Roth out at any time) UNLESS you set up a 72t (otherwise known as SEPP - substantially equal periodic payments). This is a not well known method of being able to withdraw money from a IRA or 401k (Roth or traditional) before 59.5 WITHOUT penalty. The calculations are a pita and are incredibly rigid - if you don't withdraw exactly the calculated amount, you face a penalty on all of your withdrawals to date. But you shouldn't let the fact that it's a pita to calculate and rigid in withdrawals be something that deters you from say, FIRE.

Point is, you're putting money in a taxable account when you still have tax advantaged space left. And considering this tax advantaged space is IRA, where you have complete selection over your investment choices, you should always max out your tax advantaged space first.

[johnny847]

To expand a little on my original question, I've found the returns on my 401K and IRAs to terrible the past 8 years, so I'm looking for examples of people avoiding these savings vehicles and using other strategies.

The fact that your IRA performed terribly in the past 8 years has nothing to do with the fact that your investments were held in an IRA. In fact, because it was held in an IRA, it did a bit better than if it were held in a taxable account - taxes on dividends would be a drag on the returns.

With your 401k, it's hard to say, because it really depends on what funds you have available. If you only have managed funds available, all with high expense ratios, and you have no 401k match, then it might be worth considering avoiding the 401k. However, this kind of situation is generally rare. There's usually at least one decent S&P 500 or total US market index fund.

You should definitely continue to use your IRA.  I can't say anything definitively about your 401k.
You could try posting your portfolio holdings over at the Bogleheads forum. There's a ton of great advice over there on the optimal way to invest (once you accept the fact that the chances of you, or even a "skilled fund manager," exceeding the market returns consistently year after year are essentially zero).

[Emilyngh]

To expand a little on my original question, I've found the returns on my 401K and IRAs to terrible the past 8 years, so I'm looking for examples of people avoiding these savings vehicles and using other strategies.

The fact that your IRA performed terribly in the past 8 years has nothing to do with the fact that your investments were held in an IRA. In fact, because it was held in an IRA, it did a bit better than if it were held in a taxable account - taxes on dividends would be a drag on the returns.

With your 401k, it's hard to say, because it really depends on what funds you have available. If you only have managed funds available, all with high expense ratios, and you have no 401k match, then it might be worth considering avoiding the 401k. However, this kind of situation is generally rare. There's usually at least one decent S&P 500 or total US market index fund.

You should definitely continue to use your IRA.  I can't say anything definitively about your 401k.
You could try posting your portfolio holdings over at the Bogleheads forum. There's a ton of great advice over there on the optimal way to invest (once you accept the fact that the chances of you, or even a "skilled fund manager," exceeding the market returns consistently year after year are essentially zero).

I used to only put enough in my 401k to get the max match, and then max out our Roth accounts.   This was b/c (1) retirement seemed so far away and I thought the money wasn't accessible until then, (2) I believed Suze Orman that my tax bracket would be higher later (when in reality we had a higher income then than we probably ever will in our entire lives), (3) I didn't know about the Roth pipeline.

Now, we put all in my 401k and not only save through regular tax rates, but with this are able to keep our earned income low enough to qualify for EITC and Saver's credit.   

I don't completely regret having put the money in the Roth before, b/c we were able to pull from it for our house downpayment (avoiding PMI) and it now serves as a nice way to have an emergency fund that grows tax free.   But, certainly not putting more in it.

[neophyte]

I'm not maxing mine because if I maxed my 403b and my IRA, I'd be left with $7k of my pre-tax salary for the whole year. No idea what that would come out to after taxes, but surely not enough to live on!

[johnny847]

I'm not maxing mine because if I maxed my 403b and my IRA, I'd be left with $7k of my pre-tax salary for the whole year. No idea what that would come out to after taxes, but surely not enough to live on!

You would owe nothing in federal income tax, because standard deduction and exemption is $6200 + 3950 for 2014. Not sure about state, but the standard deduction and exemption in your state is probably around $5k? Varies by state, of course. You would still owe FICA though.
But yea, definitely not enough to live on unless you've got some alternative housing arrangement to live for free/dirt cheap, don't drive to work, etc.

[Thegoblinchief]

Not maxing ours because we have too much debt to pay off still, but by the end of our journey we will be maxing

[Johnez]

I max out my 401k to make sure it reaches 17,500 of contributions, and on top of that I get employee profit sharing. Besides the profit sharing (which has great returns), I got to pick my own funds so I have had great returns.


Outside of that, I don't see why I should open a traditional or roth IRA. I am only 26, and not planning to retire in my late 50s. I contribute about 12k a year into a taxable account. If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

I'm not an expert, starting out here myself, but the reason I opened up my Roth IRA was the fact that I could pull out all original contributions.

After reading that I had to call up Fidelity (where my 401k is also housed, otherwise would have called Vanguard) and started up the Roth.  When talking to my coworkers, friends, former coworkers-none of whom have or have even THOUGHT about a Roth IRA, the number one reason I give is the fact that I could pull original contributions, and without fail the reaction is "Really?!  I thought it was locked away!"  This is invaluable-especially for young people, who might incur some surprise costs down the road.  I plan on using mine to buy a house.  Doesn't sound very mustachian, but hey it's my money.  :)

[wtjbatman]

Not maxing ours because we have too much debt to pay off still, but by the end of our journey we will be maxing

Ditto. Got debt to pay + don't make enough to both pay down debt and max out. Could only max out if most/all debt was gone.

[agent_clone]

I max out my 401k to make sure it reaches 17,500 of contributions, and on top of that I get employee profit sharing. Besides the profit sharing (which has great returns), I got to pick my own funds so I have had great returns.


Outside of that, I don't see why I should open a traditional or roth IRA. I am only 26, and not planning to retire in my late 50s. I contribute about 12k a year into a taxable account. If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

I'm not an expert, starting out here myself, but the reason I opened up my Roth IRA was the fact that I could pull out all original contributions.

After reading that I had to call up Fidelity (where my 401k is also housed, otherwise would have called Vanguard) and started up the Roth.  When talking to my coworkers, friends, former coworkers-none of whom have or have even THOUGHT about a Roth IRA, the number one reason I give is the fact that I could pull original contributions, and without fail the reaction is "Really?!  I thought it was locked away!"  This is invaluable-especially for young people, who might incur some surprise costs down the road.  I plan on using mine to buy a house.  Doesn't sound very mustachian, but hey it's my money.  :)

My equivalent (Australian Superannuation) is locked away for at least another 25 years, and by the time I get there I expect it to be later than 25 years.  Which is why I'm not planning making extra contributions except to get the 17% from my employer.  For that matter if I stay in my current job for another 3 years I should have close what I would need in retirement anyway barring high inflation, though I expect I will be working for another 15+ years as I have a mortgage to pay off and would need money to live off in the mean time as well...

[MoneyCat]

I don't max out my retirement accounts because I don't see much point to it.  Why should I lock away my money until I am 65 when I am planning to retire long before then?  If I have access to my money then I can invest in real estate or businesses and get some actual use out of it right now.  I am okay with paying a little more in taxes right now for the flexibility it gives me.

[johnny847]

I don't max out my retirement accounts because I don't see much point to it.  Why should I lock away my money until I am 65 when I am planning to retire long before then?  If I have access to my money then I can invest in real estate or businesses and get some actual use out of it right now.  I am okay with paying a little more in taxes right now for the flexibility it gives me.

Perhaps you're not in the US, but in the US at least you can access your retirement accounts without penalty at 59.5, not 65. Also, if you search around for the Roth IRA pipeline, you can see how to pull money out of a traditional account, subject to a 5 year lag, tax free. Finally, there is the not well known 72t (otherwise known as the SEPP - substantially equal periodic payments) which under one of 3 rigid formulas, allows you to access money out of a 401k or a IRA penalty free (but not tax free) before 59.5.

[arebelspy]

I'm not, because I'm putting all my money into after tax real estate (owning real estate inside a SDIRA isn't what I'm looking for, personally).  I wish I could max out stuff and meet my RE goals, but alas, I can't.  For people not buying gobs of real estate (i.e. almost everyone), they should max their retirement accounts, no question.

[freeazabird]

I'm not, because I'm putting all my money into after tax real estate (owning real estate inside a SDIRA isn't what I'm looking for, personally).  I wish I could max out stuff and meet my RE goals, but alas, I can't.  For people not buying gobs of real estate (i.e. almost everyone), they should max their retirement accounts, no question.

I am seriously considering your strategy. Could you shed some light on why you decided to go this route? Do you know how much you've invested so far in real estate and what your returns have been like?

[arebelspy]

Could you shed some light on why you decided to go this route?

The timing was right, so I dove in and learned a lot.  Now I feel that I have knowledge that gives me an advantage in an inefficient market.

Do you know how much you've invested so far in real estate and what your returns have been like?

Mid six figures, and double digit annually for 6+ years (and no reason to think it won't continue).

To not have this get too off topic, feel free to start a thread in the RE forums (maybe asking this question, in general, to all the RE investors on the board?) to generate more discussion - unless that answered all your questions, of course.  :)

[Beric01]

To not have this get too off topic, feel free to start a thread in the RE forums (maybe asking this question, in general, to all the RE investors on the board?) to generate more discussion - unless that answered all your questions, of course.  :)

Please do start a thread! I'm all in index funds, but am quite intrigued by all these people in real estate. Is it really better than putting your money in a 401k? How does the risk compare (and the amount of work required)?

[arebelspy]

Please do start a thread! I'm all in index funds, but am quite intrigued by all these people in real estate. Is it really better than putting your money in a 401k? How does the risk compare (and the amount of work required)?

My reply:

To not have this get too off topic, feel free to start a thread in the RE forums (maybe asking this question, in general, to all the RE investors on the board?) to generate more discussion

;)

[Albert]

I live in Switzerland and do pay a maximum contribution to the pension fund (minimum allowed is 5%, maximum 7%) however in principle it would be possible to pay into pension fund for all the years I haven't worked in this country. That would be up to ca 200,000$. No plans on doing that, first because I don't have that much liquid capital and second because I don't want to put all my eggs in the same basket. Just received my pension fund statement, currently promised annuity if I work till 65 is ca 60k in todays dollars. More than enough to live on if I really end up working full time and in the same industry that long. If I want to quit before 60 I have to make my own arrangements anyway.

[MayDay]

We haven't ever had non-mortgage debt, and always contributed the standard 15% to 401ks.  We are just now getting to the point of maxing the 401k, should happen by the end of 2014.

So we haven't been, but only because we just weren't saving enough, period.

[kyanamerinas]

no way! the limit in the uk is £40k and that would leave us £4,000 to live on, before tax (negative after)!

[Caoineag]

To expand a little on my original question, I've found the returns on my 401K and IRAs to terrible the past 8 years, so I'm looking for examples of people avoiding these savings vehicles and using other strategies.

I have probably one of the most expensive 401(k)s of anyone around here. I have fees on top of higher expense ratios and no matching and I still max my 401(k) and get good returns so its definitely what you are investing in, not the savings vehicle that is the problem. The IRA really should not be a problem since you can choose a company with low fees and good products to host that account.

I do have a coworker who "lost" a lot of money during the downturn and she and her spouse chose to go the real estate route since they understood renting better than they understood the stock market. Whatever form of investment you choose to do, you need to educate yourself about so that you can do well.

[TomTX]

Unfortunately, no. Perhaps we can get there by 2016. Minimum outlay just for mortgage + property tax + insurance is ~$16k. Our major luxury is martial arts - close to $5k a year for the family. Car registration and insurance is close to $1k. So, baseline costs (before we eat, drink, use electricity or anything) is something like $22k. Medical expenses in the past 15 months have been high.

We have been working to reduce utility costs - now with Cree LED bulbs in most fixtures, and line-drying most of our clothes. Sealed the attic penetrations this spring. House isn't tiny, but is below average (~1700 square feet for 3 of us.)

[sleepyguy]

It's called RRSP here in Canada.  And because I was an idiot in my earlier years, I'm playing 'catchup' now.  We have a max of 18% pretax income each year.  I put in like 9% for the LONGEST time.  Good thing the contribution room carry's over so I have like 60k room which I'll cap off in a couple of years... sucks I lost all that compound time :(  I'm 35 now so I'm glad i got my shit in gear sooner rather than later.

[seanc0x0]

It's called RRSP here in Canada.  And because I was an idiot in my earlier years, I'm playing 'catchup' now.  We have a max of 18% pretax income each year.  I put in like 9% for the LONGEST time.  Good thing the contribution room carry's over so I have like 60k room which I'll cap off in a couple of years... sucks I lost all that compound time :(  I'm 35 now so I'm glad i got my shit in gear sooner rather than later.

Same boat here. Wasted years spending like mad, now at 36 I finally smartened up. Have a decent amount of RRSP room from the past, but due to my DCPP at work and its pension adjustment I don't get as much contribution room as I used to, only a few thousand a year. Planning to max that out and now that I've finally gotten my Certificate of Loss of Nationality from the US government proving I'm not a US citizen, I will be opening and maxing out a TFSA as well.  Lots to catch up on, but it's finally going in the right direction!

[EarlyRetirementGuy]

I'm not, but only because here in the UK the max is £40k a year and you cant access the pot until 50 earliest. I split contributions between retirement and normal tax-free saving accounts.

[Daleth]

I was wondering if any of you are for one reason or another not maxing out your retirement accounts and instead using other means of saving for retirement. If so, how are you alternatively saving? And what about retirement accounts turned you off to maxing them?

We're not maxing out because we're channeling money into rental properties. Doing so feels like buying money--buying an annuity, basically: we spend X and then forevermore we get Y in rent (with Y increasing periodically), and eventually the mortgage is gone (15-yr ones) so we get Y plus whatever our mortgage payment is.

[BooksAreNerdy]

We are, DHs 401k has a good stock index fund that has a 0% ER, plus a good match, AND they profit share. So, that's a no brainer.

We also max out IRAs for each of us each year. We have both a Roth and trad, different things go in each, depending on tax implications. Now, I am a newbie and just learning, so take what I say with a grain of salt/educate me at will. But we have our bonds and REIT in the Roth and VTSAX in traditional.

After we fill the retirement funds to the max, we fully fund the HSA, which has a low ER an offers a good stock index. We also do a 529 with vanguard for the current child and once #2 arrives we will open a second 529. These will get $1k/yr MAX.

Beyond that we are moving to taxable accts and rentals real estate.

We have $$ goals for taxable accts and retirement accts, and hope we can also throw in a house to live in, plus two rental properties.

[Calvawt]

Until I learned about the Roth conversion I had not been.  I will be going forward.

[stlbrah]

I max out my 401k to make sure it reaches 17,500 of contributions, and on top of that I get employee profit sharing. Besides the profit sharing (which has great returns), I got to pick my own funds so I have had great returns.


Outside of that, I don't see why I should open a traditional or roth IRA. I am only 26, and not planning to retire in my late 50s. I contribute about 12k a year into a taxable account. If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

Thanks for the reply, as well as the others who replied to my post. After some research yesterday afternoon, I have decided to get a roth IRA in addition to my 401k and profit sharing.

The way I see it, I can just do 5500 into roth IRA for a while longer while im working full time, and then stop contributing and let it sit and collect interest for another 25-30 years when I am 59.5. I also anticipate getting a pay bump which will put me into the next tax bracket, so it may help reduce taxes.

I'm not an expert, starting out here myself, but the reason I opened up my Roth IRA was the fact that I could pull out all original contributions.

After reading that I had to call up Fidelity (where my 401k is also housed, otherwise would have called Vanguard) and started up the Roth.  When talking to my coworkers, friends, former coworkers-none of whom have or have even THOUGHT about a Roth IRA, the number one reason I give is the fact that I could pull original contributions, and without fail the reaction is "Really?!  I thought it was locked away!"  This is invaluable-especially for young people, who might incur some surprise costs down the road.  I plan on using mine to buy a house.  Doesn't sound very mustachian, but hey it's my money.  :)

[Spork]

We max our Roths.  But I only put into the 401ks the amount to get the maximum matching funds.  The fund choices are not stellar and are high cost funds.

We do put quite a lot in non-tax advantaged accounts instead.

[Ambergris]

I don't max out, but this is because I'm a lucky devil. My employer offers a required 6% of salary into a 401a plan, plus a 403b, 401k and 457b plan. Of these last three you can put $17500 into the 457b and another $17500 into either the 403b or 401k plan. Add that I also have an IRA, and I'm swimming in tax advantaged space.

[CCCA]

I don't max out, but this is because I'm a lucky devil. My employer offers a required 6% of salary into a 401a plan, plus a 403b, 401k and 457b plan. Of these last three you can put $17500 into the 457b and another $17500 into either the 403b or 401k plan. Add that I also have an IRA, and I'm swimming in tax advantaged space.

Same here.  I work for a university and have both a 403B and 457B.  My wife has a 403B.  We are maxing out our Roth IRAs and more or less maxing out two out of the three accounts (1 403B and 1 457B).  This is the first year we make enough to max out the two accounts ($17.5K x 2 + $5.5K x 2).  Plus I will get a pension when I retire.  It won't be a ton if I retire early since it is based upon the age of retirement, but it'll be something.   

The 457 is a great account because I will have access to the money once I retire (with no penalties, just taxes).  I had been contributing mostly to the 403B but recently decided to switch to the 457 as we started thinking more about early retirement and looking into more of the details.

[johnny847]

I don't max out, but this is because I'm a lucky devil. My employer offers a required 6% of salary into a 401a plan, plus a 403b, 401k and 457b plan. Of these last three you can put $17500 into the 457b and another $17500 into either the 403b or 401k plan. Add that I also have an IRA, and I'm swimming in tax advantaged space.

Same here.  I work for a university and have both a 403B and 457B.  My wife has a 403B.  We are maxing out our Roth IRAs and more or less maxing out two out of the three accounts (1 403B and 1 457B).  This is the first year we make enough to max out the two accounts ($17.5K x 2 + $5.5K x 2).  Plus I will get a pension when I retire.  It won't be a ton if I retire early since it is based upon the age of retirement, but it'll be something.   

The 457 is a great account because I will have access to the money once I retire (with no penalties, just taxes).  I had been contributing mostly to the 403B but recently decided to switch to the 457 as we started thinking more about early retirement and looking into more of the details.

If this is a public university, and the fees in the 457 aren't outrageous, this is a great option for early retirement. However, if this is not a public university, then I would advise caution, because only for governmental 457's are 457 assets held in trust on the behalf of the employees. For non-governmental 457s, if the employer ever goes bankrupt, 457 plan assets can be liquidated to cover debts for the employer.

[dude]

I max out the 401k.  I'll be turning 50 next year, so I will also be maxing out on catch-up contributions ($5500), for a total of $23K/yr (not counting matching funds).

I'll be eligible for a pension in less than 5 years, so between that and 401k, no need for any other investment strategy.

[golden1]

Me...although I am working on it.  I have a plan to max out everything in a few years. 

[lauren_knows]

We don't. For the last few years, we've maxed our Roth IRA's, and the 529 (up to $4000/yr is deducted from state taxes... I refer to that as "max"), and have thrown a generous amount at 401k's.  But, we've been paying down mortgage principle and saving in after-tax places for the last few years knowing that we'd be moving from our townhouse to a slightly-more-expensive single family home.  We plan on doing that next year, and then re-evaluating where our savings goes.

[Hannah]

I'm not, because I'm putting all my money into after tax real estate (owning real estate inside a SDIRA isn't what I'm looking for, personally).  I wish I could max out stuff and meet my RE goals, but alas, I can't.  For people not buying gobs of real estate (i.e. almost everyone), they should max their retirement accounts, no question.

This year is the first year we might not max out our Roths if we buy a rental property. If we don't pull the trigger by March 2015, we will dump into the Roths.

We definitely max out my 401K to reduce our tax burden, but not my HSA. My husband is a student right now, so I'm not sure what type of pre-tax vehicles he could use, but we aren't using those in 2014.

[Gin1984]

I'm not, because I'm putting all my money into after tax real estate (owning real estate inside a SDIRA isn't what I'm looking for, personally).  I wish I could max out stuff and meet my RE goals, but alas, I can't.  For people not buying gobs of real estate (i.e. almost everyone), they should max their retirement accounts, no question.

This year is the first year we might not max out our Roths if we buy a rental property. If we don't pull the trigger by March 2015, we will dump into the Roths.

We definitely max out my 401K to reduce our tax burden, but not my HSA. My husband is a student right now, so I'm not sure what type of pre-tax vehicles he could use, but we aren't using those in 2014.

I was under the impression it is better to max out a HSA than a 401k, if you have a choice because the money in a HSA can come out without taxes, if you are using it for medical and when you pull on your 401k, it is taxed.  After 59.5 a HSA can have money pulled out without a penalty, but if it is not medical, then it is taxed like your 401k.

[Guesl982374]

We are not maxing out our 401ks because we are looking to buy a house outright in the next year or so. Once that happens / we think we are fully funded we will max retirement accounts out again.

[MandyM]

I've already maxed out both my 401K and my Roth this year. Currently socking money into taxable accounts. I've been maxing my 401K for a couple of years, but this is the first year I've front loaded. I plan to retire in 1.5-2 years. I should almost have enough in taxable/roth accounts to get me to 59.5 yo, I will probably need to pipeline a small amount at some point.

[soccerluvof4]

My wife and I max out our 401ks and with me being in my 50th year get to add another 5k. ON top of that I set up a match for employees so we benefit from that as well. As long as we keep the business going and I can be at home and she works only 20-25 hrs a week we will continue this. Unless you have an alternate plan like Arebelspy with Real Estate and or cant make ends meet by investing in your 401k I dont see a reason if there is a company match not to max out. We usually get that done Sept..no later than October. Next year we plan to front load more aggresively.  So lets get that market dip everyone is sure to happen :-)

[Hannah]

I'm not, because I'm putting all my money into after tax real estate (owning real estate inside a SDIRA isn't what I'm looking for, personally).  I wish I could max out stuff and meet my RE goals, but alas, I can't.  For people not buying gobs of real estate (i.e. almost everyone), they should max their retirement accounts, no question.

This year is the first year we might not max out our Roths if we buy a rental property. If we don't pull the trigger by March 2015, we will dump into the Roths.

We definitely max out my 401K to reduce our tax burden, but not my HSA. My husband is a student right now, so I'm not sure what type of pre-tax vehicles he could use, but we aren't using those in 2014.

I was under the impression it is better to max out a HSA than a 401k, if you have a choice because the money in a HSA can come out without taxes, if you are using it for medical and when you pull on your 401k, it is taxed.  After 59.5 a HSA can have money pulled out without a penalty, but if it is not medical, then it is taxed like your 401k.

Smart advice. I haven't looked into it since I would need to open a new HSA (due to crap funds for investing for the work provided one), but I have 2-3 grand sitting uninvested in an HSA anyhow, and I think I can contribute an additional 4K this year above my normal contributions.

[dedratermi]

I maxed out my accounts for 15+ years and now have an amount that I consider to be "plenty".  Combined with the fact that market is at an all-time high, I'm not maxing out anymore.  I just contribute the minimum to get my company match.  With the extra money I'm making double-payments on my mortgage, trying to get it paid off by the time I turn 40.  If the market takes a 20% dump then I might reconsider things.   :-)

I am still maxing out my HSA (in my opinion, HSAs are almost too good to be true).

[frugalnacho]

Does it "count" if we use savings instead of payroll deduction? I know we lose the "pretax" part of the contribution by not having it withheld automatically...

Wait, why do you lose the pretax part?  Doesn't it still reduce your gross income?

[frugalnacho]

I max out my 401k to make sure it reaches 17,500 of contributions, and on top of that I get employee profit sharing. Besides the profit sharing (which has great returns), I got to pick my own funds so I have had great returns.


Outside of that, I don't see why I should open a traditional or roth IRA. I am only 26, and not planning to retire in my late 50s. I contribute about 12k a year into a taxable account. If anyone has any reasons to give on why I should open an IRA or Roth IRA then I would appreciate it.

Why on earth would you put money into a taxable account but not put money into a roth ira?  The money in the roth ira is still your money (and you can withdraw your contributions at any time), and it grows TAX FREE forever.  That's the only reason you should need.