Pre vs Post Tax

[LearningMustachian72]

Hey,

My wife and I are maxing out 3 retirement accounts (401k, 403b and 457), all pre tax.

Our income levels do not allow us to take advantage of any IRA tax benefits.

My question is, should I put some of our contributions in post tax?  Thinking is if tax rules change in the future or it somehow ends up being beneficial for us to already have paid the taxes in the future.  I expect our income to be less in the future but not substantially and obviously do not know for certain.

Thank you.

[travel2020]

The investment order thread would be a good starting point:https://forum.mrmoneymustache.com/investor-alley/investment-order/

[Telecaster]

^  And I think for the OP, pay attention to the Backdoor roth:

https://www.bogleheads.org/wiki/Backdoor_Roth

I personally wouldn't put make any post tax contributions unless there is a clear plan. 

[cool7hand]

^  And I think for the OP, pay attention to the Backdoor roth:

https://www.bogleheads.org/wiki/Backdoor_Roth

I personally wouldn't put make any post tax contributions unless there is a clear plan.

+1

[Sandi_k]

As someone whose husband ended up injured and only partially employed, it would be useful if we had more in post-tax investments, such as a regular brokerage account.

We're 14 months away from him turning 59.5 - so we have three choices:

- Draw down his Roth account, which is only 5% of our portfolio already;
- Withdraw from his SEP-IRA, and incur the penalty; or
- Withdraw from his SEP-IRA, and establish an SEPP plan for the next 5 years.

If you have any plan of retiring early, I would encourage you strongly to balance some of those investments in post-tax funds.

[LearningMustachian72]

Hi all,

Thank you for the feedback.

My wife’s two accounts are not able to be post tax, so we are keeping those as is.

I am switching my go forward post tax contributions to 30% vs 70% pre tax. I am not able to take advantage of any traditional/Roth IRA tax advantaged. I also cannot fund a mega back door Roth due to employer restrictions.

I am 33 and hoping to retire by 50. I plan to have the same income in retirement as I do now.

 

[moof]

As someone whose husband ended up injured and only partially employed, it would be useful if we had more in post-tax investments, such as a regular brokerage account.

We're 14 months away from him turning 59.5 - so we have three choices:

- Draw down his Roth account, which is only 5% of our portfolio already;
- Withdraw from his SEP-IRA, and incur the penalty; or
- Withdraw from his SEP-IRA, and establish an SEPP plan for the next 5 years.

If you have any plan of retiring early, I would encourage you strongly to balance some of those investments in post-tax funds.

One can also mix and match all of the above.  One can peel off a portion of the IRA for SEPP to cover some base level of expenses (locking yourself in for a minimum of 5 years for that account) then handle lumpy expenses or inflation by using Roth principle, and/or taking a penalty on just those lumpy withdrawals from a separate account not in a SEPP for the next 5 years.  Taking a 10% penalty on only say 10-20% of your withdrawals for a few years is much less painful than on the whole thing.