Author Topic: Maxing out 401k and IRA before end of January  (Read 3366 times)

CollegeStache

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Maxing out 401k and IRA before end of January
« on: January 29, 2015, 06:54:10 PM »
So I've gone super aggressive at the start of 2015 and as of tomorrow, I'm going to have my 401(k) maxed out for year 2015! This was helped with a 10k bonus from 2014 that was deferred to this year by my company.  On top of that, a side business has brought in 60% more revenue than any other month since its inception (about a year ago), which I've been able to use to fully fund my Roth IRA and fund 3k into my SEP-IRA.  I owe this aggressiveness and shift in money placement to MMM and these message boards.  I enrolled in a graduate study program last year primarily for personal fulfillment (I am on a stipend and not paying anything for school), but with an initial expectation that I would use my savings to sustain.  However, based on performance of my side business, my thinking is now focused on actually growing my wealth (albeit with a significantly reduced salary compared to previous years) while I am in school and actually exiting school with a substantially increased net worth.  What a great feeling.

climber1

  • 5 O'Clock Shadow
  • *
  • Posts: 48
  • Location: Silicon Valley
Re: Maxing out 401k and IRA before end of January
« Reply #1 on: January 29, 2015, 11:27:27 PM »
Congrats! It will take me a bit longer, but my 401k should be maxed out by my first paycheck in February. This is a combination of bonus and 100% of paychecks so far. Will be much quicker in future years since my bonus was smaller due to only working at the company for part of 2014. I have the cash on hand to maximize both my 2014 and 2015 IRAs. However, I am waiting on a meeting with my CPA for some tax planning advice before deciding whether to put it into a Roth or traditional so I haven't funded them yet.

CollegeStache

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Maxing out 401k and IRA before end of January
« Reply #2 on: January 30, 2015, 05:47:05 AM »
Congrats! It will take me a bit longer, but my 401k should be maxed out by my first paycheck in February. This is a combination of bonus and 100% of paychecks so far. Will be much quicker in future years since my bonus was smaller due to only working at the company for part of 2014. I have the cash on hand to maximize both my 2014 and 2015 IRAs. However, I am waiting on a meeting with my CPA for some tax planning advice before deciding whether to put it into a Roth or traditional so I haven't funded them yet.

Awesome, way to go!  I'm intrigued by the possibilities for the next 11 months and finding new savings targets.  I haven't opened a taxable brokerage account, so it seems like that's the next logical step as a place for me to put additional savings during the year. 

Ed Mills

  • Stubble
  • **
  • Posts: 113
  • Location: Merida, Mexico, Chattanooga, TN & Swampwater, GA
  • Join the FI Revolution Y'all!
    • The Millionaire Educator
Re: Maxing out 401k and IRA before end of January
« Reply #3 on: January 31, 2015, 02:57:21 PM »
This thread instantly caught my eye...nice!  My wife and I have been front-loading our 403b / 457 accounts for about 10 years.  Every January and February we would have 100% of our paychecks deposited in our retirement accounts.  From there we would smooth out our contributions as needed.  If we had the cash cushion, we would go a few more months at full throttle. 

Your extreme version of front-loading is truly bad ass!  I love it!   
« Last Edit: January 31, 2015, 03:02:50 PM by Ed Mills »

CollegeStache

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Maxing out 401k and IRA before end of January
« Reply #4 on: February 02, 2015, 12:37:58 PM »
This thread instantly caught my eye...nice!  My wife and I have been front-loading our 403b / 457 accounts for about 10 years.  Every January and February we would have 100% of our paychecks deposited in our retirement accounts.  From there we would smooth out our contributions as needed.  If we had the cash cushion, we would go a few more months at full throttle. 

Your extreme version of front-loading is truly bad ass!  I love it!

Awesome, Ed.  This is a great feeling and one that I'd like to get used to.  It's the first year that I've done this, so I am excited to see the fruits of my labor if I am able to continue this for another 10 (or more) years like you've done.  To maintain my discipline, I definitely need to come to a decision regarding where to park additional savings once I max these out.  I have a SEP-IRA that I can incrementally fund as a side business continues to generate revenue (can max out at 25% of revenue), but besides that I believe I will open a taxable brokerage account. 

Curious to know experiences of others regarding treatment of their taxable account in terms of investment mix versus their tax-advantaged retirement accounts.

Ed Mills

  • Stubble
  • **
  • Posts: 113
  • Location: Merida, Mexico, Chattanooga, TN & Swampwater, GA
  • Join the FI Revolution Y'all!
    • The Millionaire Educator
Re: Maxing out 401k and IRA before end of January
« Reply #5 on: February 02, 2015, 06:34:15 PM »
Quote
Curious to know experiences of others regarding treatment of their taxable account in terms of investment mix versus their tax-advantaged retirement accounts.

CollegeStache, I have $0 in taxable accounts these days.  I plan on starting a small account this year.  Since we can stay probably keep our income within the 15% tax bracket, we would pay little to no tax on the dividends and capital gains from our taxable accounts, right?   

Mississippi Mudstache

  • Handlebar Stache
  • *****
  • Posts: 2162
  • Age: 36
  • Location: Danielsville, GA
    • A Riving Home - Ramblings of a Recusant Woodworker
Re: Maxing out 401k and IRA before end of January
« Reply #6 on: February 05, 2015, 10:32:52 AM »
Very nice. Maxing out the 401k in January would be a bad idea for me, since I only get the full company match for pay periods in which I contribute at least 6%. So, I just set my contribution at 25% and I'm letting it roll.

RWD

  • Magnum Stache
  • ******
  • Posts: 3913
  • Location: Mississippi
Re: Maxing out 401k and IRA before end of January
« Reply #7 on: February 05, 2015, 11:25:45 AM »
Very nice. Maxing out the 401k in January would be a bad idea for me, since I only get the full company match for pay periods in which I contribute at least 6%. So, I just set my contribution at 25% and I'm letting it roll.

I believe that's how my company works as well.