Author Topic: Selling Taxable to Fund Pre-Tax 403(b)/457?  (Read 551 times)


  • 5 O'Clock Shadow
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Selling Taxable to Fund Pre-Tax 403(b)/457?
« on: October 12, 2017, 04:29:42 PM »
Hello everyone,
Long time reader, first time poster! I would love all of your opinions on whether or not I should continue to sell taxable funds in order to fund my workplace 403(b) and governmental 457 account.

A little about me:
Married, early 30ís
MFJ, very much within the 15% tax bracket
Emergency fund: 5k
I make a little over 45k a year total, wife works from home part time for around $7-$10k depending.
We have one child.
No debt except for a mortgage.

Taxable: Just shy of 100k, index funds

Roth IRA: Around 75k, index funds
I currently save + sell taxable to fully fund those for both my wife and myself each year.

457 Ė Just started putting in 1500 a month, pulling around 300 per month from taxable to reach that figure until annual raises get me there.

Pension will vest in another two years.

Work is saying we may get some low-cost options in the 403(b) soon, like Vanguard.

So I have three questions:
1. Is there any downside in taking more money out of taxable to put into the pre-tax 403(b), as long as I am able to continue funding the ROTH each year? So I would be maxing the 457, and then putting more into 403(b). Iíd start with about $500 and see how it goes, but ultimately keep about 30k in taxable as the taxable account dwindles.

2. Does it make sense for me to put so much in pre-tax accounts? Outside of cost-of-living raises, I donít expect my income to go much over $50k. Weíll never be super high earners, but should have a decent amount of funds in retirement. I donít plan on ever not fully funding our ROTH IRAs, but didnít know whether pre-tax accounts would be preferable over taxable accounts for us, given our low income and tax bracket.

3. When using taxable to fund the work accounts, would it be better to dollar cost average OUT, like withdraw the money only as I need it? Or should I withdraw a chunk all at once the estimated amount I will need in order to fund work tax advantaged, to avoid any big dips?

For Question #2 I initially thought the former, because then it doubles like an additional emergency fund, but am now thinking the latter because since Iíll be taking it out and then putting it right back in, itís not like Iíll have to worry about any market dips. Thoughts?

Answers to any or all of the above would be greatly appreciated! Thanks for reading!