Is setting up a 401K a good idea when approaching FIRE?

[nara]

My husband and I are both business owners and have a SIMPLE IRA that we max out every year (12,500 x 2). I'm considering setting up a 401k potentially so that we can contribute our entire W4 salaries. However, we are looking to FIRE hopefully within the next 5 years and I am wondering if contributing so much into accounts that are inaccessible until our 60's is a good idea. I know this question probably gets asked often here--but any more personal advice here for our situation? I'm worried we'll have nothing to live off of for the next 30 years.

[Valhalla]

You probably should share more info, such as age, net worth, how much liquidity you have / need, what your annual expenses may be... that will be a much better discussion. I don't think there is enough info right now to tell.

[letired]

It might be worth reading up on how the ways to access your retirement accounts 'early'.

https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

[VolcanicArts]

I have set up several 401ks in the past. The best match I got was not really that great 6% of my pay matched dollar for dollar. I think up front 401ks look like a good option, but for mustachians planning on RE they aren't that great. The most obvious problem is many of us will be retiring far before 59.5 years so we will get hit with a 10% penalty on everything which will really cut into profits. The second issue is the hassle with portability and drawing money out quickly. The third issue is government tampering which is bound to happen sooner rather than later, who knows what rules they are going to change, if tax benefits will remain, will penalties be increased, will contribution limits be changed etc. Another negative is the high fees and the lousy selection of funds. Sure you can make money on it if done right, but due to uncertainty, the withdrawal penalty, and lost opportunity cost, you are essentially working backwards. I am guaranteed to take my money out within the next several years, so even though a 401k is an option for me, I will not be using it.

[Gimesalot]

I am wondering if contributing so much into accounts that are inaccessible until our 60's is a good idea.

Search for Roth Pipeline.  It is a way to get the money out of your 401k WITHOUT penalties, fess, and in many cases taxes.  GoCurry Cracker has a good explanation on his blog of how he pulls it off.  The main requisites are that you have 5 years of living expenses in a taxable brokerage account or another easily accessible account.  Also, you must have a Roth IRA to use to roll-over the 401k.  It's easy.     

[TheAnonOne]

I am wondering if contributing so much into accounts that are inaccessible until our 60's is a good idea.

Search for Roth Pipeline.  It is a way to get the money out of your 401k WITHOUT penalties, fess, and in many cases taxes.  GoCurry Cracker has a good explanation on his blog of how he pulls it off.  The main requisites are that you have 5 years of living expenses in a taxable brokerage account or another easily accessible account.  Also, you must have a Roth IRA to use to roll-over the 401k.  It's easy.   

It is astonishing how many people here still don't know about this. Or really, seemingly have not read even the most basic blog posts.

[Bobberth]

If you are able to set up your own 401k and actually get your income down to zero, you will be able to do some interesting planning with traditional 401k contributions and Roth 401k contributions and possibly some other planning while you have low/er income. It will give you lots of options and possibilities.

[nara]

If you are able to set up your own 401k and actually get your income down to zero, you will be able to do some interesting planning with traditional 401k contributions and Roth 401k contributions and possibly some other planning while you have low/er income. It will give you lots of options and possibilities.

We are not eligible to contribute to a Roth IRA. Would this be a problem? Or would are you referring to contributing to a Roth post-retirement?

[Bobberth]

If it's your 401k plan, you can set it up to allow regular contributions, Roth contributions and to do in-service distributions for back-door Roth. If you could really put all of your income in it, having a low tax bracket can set up other opportunities elsewhere as well. Lots of moving parts with lots of possibilities.

[h82goslw]

If you are able to set up your own 401k and actually get your income down to zero, you will be able to do some interesting planning with traditional 401k contributions and Roth 401k contributions and possibly some other planning while you have low/er income. It will give you lots of options and possibilities.

We are not eligible to contribute to a Roth IRA. Would this be a problem? Or would are you referring to contributing to a Roth post-retirement?

You can do a Roth....just not the standard one.  You can do a back door Roth by opening a non-deductible IRA and then immediately converting it to a Roth.  Bogleheads.org is a font of knowledge for investing......more detailed info than you'll find here.   I would suggest you go there and read the wikis. 

[nottoolatetostart]

I am wondering if contributing so much into accounts that are inaccessible until our 60's is a good idea.

Search for Roth Pipeline.  It is a way to get the money out of your 401k WITHOUT penalties, fess, and in many cases taxes.  GoCurry Cracker has a good explanation on his blog of how he pulls it off.  The main requisites are that you have 5 years of living expenses in a taxable brokerage account or another easily accessible account.  Also, you must have a Roth IRA to use to roll-over the 401k.  It's easy.   

It is astonishing how many people here still don't know about this. Or really, seemingly have not read even the most basic blog posts.

I completely agree. There are so many  resources out there to get this info.