Maxing Retirements - House Savings?

[LearningMustachian72]

Hey, we are maxing our retirement accounts at $58,500 annually (401k, 403b and 457), which is roughly 50% of our income.

My question is, we want to move into a larger house in the next 5-10 years.  Is there a tax efficient way to save outside of these accounts for a down payment of $100k or any creative ways (e.g. margin loans)?

I can pull out of 457 early with no penalty but do not like the idea of paying additional income taxes.  Any thoughts/tips so I can prepare for this would be much appreciated!

Also, although we could bump up our savings rate, we do not want to as we enjoy our current lifestyle.

Sidebar...should I start investing my 401k in a Roth 401k so that we have a mix of pre and post tax investments?

[seattlecyclone]

Would the down payment be something you basically get back as soon as you sell your current house? In that case a 401(k) loan is worth considering. We made use of one of those to tide us over for the few months that we owned two houses, and put the money back after the first one sold.

The question of whether it makes sense to contribute to Roth accounts basically is a question of what you expect your marginal tax rate to be in retirement compared to now. In predicting your retirement tax rate, consider how much you expect to pull from pre-tax accounts based on contributions you've already made (and contributions you definitely plan to make to pre-tax in the future), and also consider the additional marginal rates that arise from ACA tax credit phase-outs if you plan to get your health insurance that way during FIRE.

[LearningMustachian72]

Yes, that’s a good point.  A 401k loan is likely a good option.  Thanks!

[ericrugiero]

Yes, that’s a good point.  A 401k loan is likely a good option.  Thanks!

Pay attention to the times when you need to pay they 401K loan back immediately.  If you leave your job or get fired I believe you have to pay it back in full immediately. 

[slappy]

Yes, that’s a good point.  A 401k loan is likely a good option.  Thanks!

Pay attention to the times when you need to pay they 401K loan back immediately.  If you leave your job or get fired I believe you have to pay it back in full immediately.

I believe this is plan specific.

[TomTX]

Yes, that’s a good point.  A 401k loan is likely a good option.  Thanks!

Pay attention to the times when you need to pay they 401K loan back immediately.  If you leave your job or get fired I believe you have to pay it back in full immediately.

I think it's pretty rare to be shorter than 60 days - and as mentioned, depends on the specific plan documents.

[LearningMustachian72]

Yeah, my policy states it has to be repaid in 60 days if you quit or are terminated. Feel safe currently but definitely something to consider when the time comes.

Are there any other downsides of a short term 401k loan? E.g. repaying back into it with after tax dollars, etc?

[PDXTabs]

Yes, that’s a good point.  A 401k loan is likely a good option.  Thanks!

Pay attention to the times when you need to pay they 401K loan back immediately.  If you leave your job or get fired I believe you have to pay it back in full immediately.

I believe this is plan specific.

Yup, the plan can require that the loan get paid back immediately. But the one time I actually did it they were happy to setup a monthly ACH.