Author Topic: How much is too much (retirement account contributions)  (Read 2510 times)

zedpol

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How much is too much (retirement account contributions)
« on: October 21, 2014, 11:11:34 AM »
Hi everyone,
  My work has a unique benefit that I qualify for this year.  Work offer two retirement accounts we can contribute to each year with a separate limit of 17.5k
1) 403b.  17.5k limit pre tax dollars, grows tax free and withdrawals are taxed as ordinary income
2) 457b   17.5k limit (in addition to my 403b)  pre tax dollars, grows tax free and withdrawals are taxed as ordinary income

 traditional IRA and do a roth conversion every year
5.5k

Wife
1) 403b - 17.5k
2) Traditionial IRA with roth conversion 5.5k

Combined gross income is right around 400k
Take home is 21k per month, spend about 8k per month on everything including saving for children for college.

  We definitely have the cash flow to do the 457b plan but I'm wary of putting too much money in retirement accounts and not be able to use the money for early retirement.  My wife and I are currently 35 and 34 and would like to have the option of exiting from the work force around 40-42.  Currently have about 600k in liquid assets and no house.  200k a student debt at 2%.  Plan on just paying the minimum forever. 


Anyways,  How would you guys do the retirement account funding?

Thanks,
Z

Psychstache

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Re: How much is too much (retirement account contributions)
« Reply #1 on: October 21, 2014, 11:33:46 AM »
457s can be taken penalty free once you have severed employment, you would only pay tax on it as ordinary income. A 457 is an early retirees best friend.

With 400K gross I would max out all of them.

Gone Fishing

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Re: How much is too much (retirement account contributions)
« Reply #2 on: October 21, 2014, 11:38:12 AM »
With your income, I would defer everything possible.  According to the IRS (http://www.irs.gov/pub/irs-tege/rollover_chart.pdf) you can roll your 457b into a TIRA.  Once you do that you can start your IRA ladder, detailed in the first link of my signature, to access your money without penalties, and most likely at lower tax bracket.   

Gone Fishing

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Re: How much is too much (retirement account contributions)
« Reply #3 on: October 21, 2014, 11:39:16 AM »
457s can be taken penalty free once you have severed employment, you would only pay tax on it as ordinary income. A 457 is an early retirees best friend.

With 400K gross I would max out all of them.

If this is the case, you would not want to roll the 457 into a TIRA, as I previously stated, but the ladder method would still work well for your 401(k).
« Last Edit: October 21, 2014, 11:41:39 AM by So Close »

zedpol

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Re: How much is too much (retirement account contributions)
« Reply #4 on: October 21, 2014, 11:44:24 AM »
Ksaleh,  thanks for the info.  I haven't found a great resource for the 457b yet,  the HR guys seems a bit lacking.

So Close,  mine isn't a governmental 457b so I don't think I qualify for the rollover to a TIRA.  I'll look into it more


Thanks,
Z