And how long until you can't contribute? I see a lot about what the minimum for the max contribution is but nothing about what the max AGI is where you can't contribute at all.

[Edited on November 15, 2014 at 9:52 AM. Reason : A]

11/15/2014 9:48:49 AM

Depends, you'll have to do an IRS worksheet to figure it out depending on income, but...

http://www.rothira.com/roth-ira-rules

[Edited on November 15, 2014 at 10:10 AM. Reason : chart didn't really copy/paste well.]

11/15/2014 10:09:04 AM

I get a negative number which I assume means I can't contribute or I did it wrong. Ah yeah it says not eligible without even doing the phase out. I had found a phase out page with the formula.

Anyway... Looks like 401K lets you contribute until you've hit $260K in income earned for the year and the SEP-401K has higher limits.

[Edited on November 15, 2014 at 10:31 AM. Reason : A]

11/15/2014 10:26:52 AM

^ i don't think you are understanding the 401k annual compensation limit correctly - you can max out a 401k and make well over 260k

http://www.irs.gov/Retirement-Plans/401k-Plans-Deferrals-and-matching-when-compensation-exceeds-the-annual-limit

11/15/2014 11:09:30 AM

I swear I saw somewhere that you could contribute until you hit that max. I'm probably conflating what I've seen for the Self Employed one, which I can't find anything about now other than the Fidelity link I posted.

11/15/2014 12:12:23 PM

I think you misread.

Quote :

"Example: Mary, age 49, whose annual compensation is $360,000 ($30,000 per month), elects to defer $1,458 per calendar month, up to $17,500 for the 2014 year. Mary may contribute to the plan until she reaches her annual deferral limit of $17,500 even though her compensation will exceed the annual limit of $260,000 in September. Employer matching contributions If your plan provides for matching contributions, you must follow the plan’s match formula. Example: Your plan requires a match of 50% on salary deferrals that do not exceed 5% of compensation. Although Mary earned $360,000, your plan can only use up to $260,000 of her compensation when applying the matching formula for 2014. Mary’s matching contribution would be $6,500 (50% x (5% x $260,000)). Although Mary makes salary deferrals of $17,500, only $13,000 (5% of $260,000) will be matched. She must receive a matching contribution of $6,500 (50% x $13,000) under the terms of the plan."

http://www.irs.gov/Retirement-Plans/401k-Plans-Deferrals-and-matching-when-compensation-exceeds-the-annual-limit

11/15/2014 2:14:45 PM

The whole income limits thing on the roth always seems so stupid to me. When they are an issue you're already in a high tax bracket at those income levels anyway, and they're not going to let you invest a measly $5000 of already taxed money? Kind of silly.

Luckily we still slide under for now since they use magi or whatever, plus i make extra on non taxable per diem that doesn't get counted toward magi.

11/15/2014 9:12:56 PM

I was recently on the phone with fidelity trying to find some tax advantage options for after the annual contribution is maxed on the 401(k).

They informed me of a "back door" Roth (I am ineligible for a Roth IRA). Here, you invest in a traditional (but non-deductible) IRA, and then they convert to a Roth after the investment is made.

Anyone here familiar with this? While bankrate has some of the ins and outs detailed in the link below, I'm interested if anyone has any firsthand experience (either as an investor or as an advisor)

http://www.bankrate.com/finance/retirement/drawback-one-type-roth-conversion.aspx

11/19/2014 3:26:18 PM

my wife and I also make too much for a roth, and our financial advisor is going to do all the backdoor roth stuff for us.

i read the link above, but all of the "downsides" appear to be tied to screwing up the execution vs it actually being a poor strategy.

That said, I probably would not attempt it myself. I never started a roth back when I made less, and didn't know about the backdoor until a few months ago, so I stuck to just maxing out my 401k and then attacking debt.

12/3/2014 12:48:46 PM

most of the large guys that you can open one up with - vanguard / fidelity / etrade / etc have some pretty simple forms to fill out to convert

12/3/2014 12:52:05 PM

Lending Club IPO, anyone?

12/3/2014 6:19:03 PM

LC IPO was mentioned in the stock thread in the lounge - not sure it really ties in with retirement all that much since it's only 350 shares

12/3/2014 11:06:19 PM

^^ Yep yep

12/4/2014 1:03:47 AM

I opened my Fidelity account. What do I do now for the Lending Club IPO?

12/4/2014 12:34:08 PM

Were you invited by lending club?

12/4/2014 2:06:28 PM

Yes, and I followed the email and signed up per the account. See nothing about how many shares I get, just looks like a normal stock account.

Did it take a few days?

12/4/2014 2:43:33 PM

Did you get the follow up email?

Key Steps

Step 1 Open and fund a Fidelity brokerage account.

Step 2 Review the Preliminary Prospectus, which describes Lending Club, the initial public offering and its potential risks.

Step 3 Complete the FINRA Rule 5130 Qualifying Questions.

Step 4 Enter your Indication of Interest.

Step 5 Confirm your Indication of Interest after the registration statement has been declared effective and the offering has priced.

Step 6 Pay for any shares allocated to you within 3 business days of the first day the stock trades on the NYSE

To learn more or participate in the offering, please access the directed share web site <uniqueLink>

12/4/2014 3:06:21 PM

been thinking about a slightly more aggressive strategy to "retire" at ~45 instead of 55. I'll have to spend some time reviewing drawing down from 45 to 59.5 in terms of taxable accounts, and roth IRA principal (and our withdrawal rates would be a little lower than I originally planned on) versus early-mid 50s to 59.5.

I also keep debating getting into rental properties as part of our retirement strategy, but given the time I want to retire, the risk of getting stuck with un-rented properties or vampire account drains via repairs still causes me to shy away a bit just given the time frame we want to retire. I'm most likely just being overly conservative there.

The reality is that I really cannot see either of us stopping work completely, I just see us retiring from this kind of work or this kind of work full time year in and year out. Even a small amount of income is a HUGE boost to stretching the savings out since we live on a pretty small % of our actual gross income.

12/4/2014 3:38:34 PM

Where are 4, 5, 6? I am sure I got 1.

12/4/2014 4:56:38 PM

You have to click that link in the email from two days ago.

^^ Pretty agressive. I think I'd prefer to still work til 55 and be stuck with a baller nest egg than retire at 45 and possibly run out of money, but like you said it makes a big dif if you still work some. I kept telling my old coworker that if his wife went back to work, even part time for like 15K a year or something, it would make an impact.

12/4/2014 5:23:43 PM

My thinking may be currently fueled by the fact that this past 6 months (and probably the next 9 or so) have been the most stressful my job has been

But yes. That's what I meant is that, at 45, I don't see us completely stopping work 100%. Based on the amount that we actually live off each year, I think we could retire a little earlier, with the caveat that it is understood one or both of us is doing some sort of part-time work, contract work, or consulting to bring in $X during those years. The target number we would need to hit is pretty small though so it wouldn't require much work. Still have plenty of time to see how our invests and incomes evolve over the years though.

12/4/2014 6:30:01 PM

Yeah, I've looked at scenarios that would allow me to retire pre-50, but it would be pretty tight. I could pretty conceivably do something that I've heard of others doing, which is work part time in a non-traditional sense. Work during the late fall, winter, and early spring and then travel or vacation for the other half of the year.

The longer I go without having a wife or kids the more I'm starting to see this as a possibility. I don't really need the same size retirement savings as someone with those same ties.

12/5/2014 1:28:29 AM

Quote :

"I also keep debating getting into rental properties as part of our retirement strategy, but given the time I want to retire, the risk of getting stuck with un-rented properties or vampire account drains via repairs still causes me to shy away a bit just given the time frame we want to retire."

It's risky, but also, IMO...the best way to ensure that you have some income coming in with the possibility of getting a nice lump sum when you sell the house 15-20 years down the road. A lot depends on your rental market, however. The rental market in my area is ridiculous, so it's impossible not to make money, even with crappy, run-down houses. With the current low rates, it's really something I'm trying to get into in the next couple years. I need to hit a big case or two to give me some capital to work with.

I'm also in the "want to retire as early as possible boat". I'd love to be done by 50, but I don't know how realistic it is. Best case scenario is to have a few investment properties, keep building the Roth and wife's 401k, and build my firm to where I can just work a case or two a month and live off of that. My first restaurant is doing well, but I don't know if its realistic enough to think I can repeat that several times without giving up the other stuff (the firm and investment properties).

One of my restaurant bosses is about 15 years away from cashing in and opening up a bar in the Virgin Islands. I told him to keep me in mind as a partner. Pushing really hard to be ready for that...

12/5/2014 10:00:33 AM

^^
Yeah. As far as a wife goes, it kind of depends. I make more than she does, but we are on the same page financially and we do save extra money by living together and working together vs. me on my own. We do not have any kids though.

As far as the part-time or seasonal work goes that is exactly right. One thing for the kind of work I do that is somewhat of a negative during my working years is that I am project based. So far, I have had continuous work for the entire 7.5 years I have been here, but that is not always the case for everyone. However, that situation also provides a great opportunity for contract work down the road. I know a ton of guys who 'retire' only to then periodically come back for 6 months here and there for various projects and make some pretty darn good money in the process without having to worry about their career as a whole and often not putting in any OT. So that is definitely an opportunity I am relying on at least being an option.

^ our rental market has been pretty good as well and we certainly have a bit of capital built up - I've just been afraid to commit it. We have seriously thought about trying to build a house downtown or do a major renovation but just are not sure when (partially it depends on if our careers keep us here long term or not). So we've thought about buying a house for the lot or for reno but renting it out until we decide what we want to do with it. If we decide to demo and build or renovate, at least someone else was helping to pay the house down during that time.

[Edited on December 5, 2014 at 11:55 AM. Reason : ]

12/5/2014 11:52:03 AM

So I've been thinking more about our early retirement. Obviously I've stated before we are currently maxing 401ks, maxing Roth IRAs, and then investing some beyond that. I've been kind of wondering whether we should back off of our 401ks slightly and instead funnel some of that money into our taxable index funds account.

If you assume the same gains but look at slightly higher fees in the 401k vs taxation in the index funds I think it is questionable on whether I see a monetary benefit by doing this if you consider pulling the money out at the same point in time (still non-penalized distributions). However, if you throw another wrinkle of looking at early retirement (55, possibly even 45 as discussed), then I wonder is the extra early liquidity worth the potential slight overall decrease for a couple like us? If so, where is the balance point? Do we invest 15k in the 401k and shovel the other 3k-minus taxes into taxable accounts? 17/1?

Just kind of rambling here philosophically I guess, but wondering if others have done a similar analysis.


[Edited on February 13, 2015 at 9:53 AM. Reason : ]

2/13/2015 9:48:15 AM

Can't you take 401k dist at 55?
Are you just worried about retiring at 45 and having 90+% of your money tied up in retirement funds?

2/13/2015 11:14:06 AM

in short, yes that's the main driver to what I'm thinking about.

To take anything out of a 401k at 55 though, don't you have to 'retire' on or after 55? Otherwise if you retire earlier than 55, it's still 59.5 I thought. Could be wrong of course.

2/13/2015 11:55:14 AM

Damn, looks like you are right about the 55 thing. That seems like a pretty dumb rule.
At our age I feel as though we'd be better off paying taxes now, so I'm, maxing out my roth 401k.
I'll worry about putting more money in taxable investments if needed as I get closer to retirement.
Regarding your other comments above, I feel that avoiding paying long term capital gains is enough of an incentive to keep putting money into retirement accounts. I view taking your proposed approach would result in more than a "slight overall decrease" in addition to the fact that the "slightly higher fees" you mention seem to be a non issue with very well run 401k accounts like Fidelity.

Personally I think I'd rather "risk" retiring at 55 with a huge nest egg vs retiring at 45 when statistically one of you is likely to live to be 90. I'd probably want around 5 mil banked unless you plan on living a fairly minimalistic lifestyle which is def not in my long term plan.

[Edited on February 13, 2015 at 2:33 PM. Reason : ]

2/13/2015 2:29:44 PM

Some of "you people" obviously make way more money than I would have expected. Either that or you plan to be extremely frugal for the last 40 years of your life or plan to die much earlier.

[Edited on February 13, 2015 at 3:30 PM. Reason : .]

2/13/2015 3:30:29 PM

I guess it depends on what you consider frugal. We are cheaper or more thrifty than some, but we still splurge on items that make us tick like traveling, art, and furniture.

Assuming we live to 90ish or so, I've based our retirement spending basically on what we live like now minus a few small items but plus additional costs for health-care etc. Additionally, there are curves out there that kind of show how spending actually slopes down later in retirement which makes sense (medical costs tend to rise though during this same period of time). I think we will travel more toward the beginning, but later in life I think we will be happy living in a small paid-for house or apartment/condo close to amenities as long as there is a lot of local culture.

In any case it's probably Option 1 coupled with the fact we aren't planning to have kids. My wife and I have been very fortunate with our jobs and my wife also has a freelance gig on the side as well. Who knows how things will continue throughout our entire careers of course.

[Edited on February 13, 2015 at 3:45 PM. Reason : ]

2/13/2015 3:43:58 PM

^^

It's all about compound interest.
I started at 22 so have a huge start over someone who didn't start until 30 or even *gasp* 40
I also worked throughout college so had a nice little bankroll when I graduated + no student debt
Was driving a 98 civic up until last year and bought a house for about half of what I could afford
I love to travel but that's done for mostly free too thanks to airline miles and hotel points
I've adjusted my lifestyle slightly throughout the past decade, but never anything too extreme

2/13/2015 4:07:59 PM

yeah I will have to say that *small* lifestyle changes can amount to a lot of savings without really giving up much. we live very comfortable but still save a large portion of our income.

2/13/2015 4:14:28 PM

don't forget to account for inflation

2/13/2015 4:54:32 PM

The precursor to retiring early is not having kids. I was on the retire-early track too, with not that much effort, until day care and college expenses were staring me in the face.

I should also mention that my parents paid for my college, which was instrumental with the "not much effort" part. And which is why I am certainly going to save for my kids' college.

[Edited on February 14, 2015 at 9:00 AM. Reason : .]

2/14/2015 8:53:40 AM

yeah you won't see my shy away from the fact that not having kids helps that part. I don't expect those with kids to be able to follow the same path.

And, David0603, thanks for the feedback earlier. I pretty much agree with you but just wanted to throw that out there. I think what I will do is scale back our additional principal contributions on the house and instead funnel those into our vanguard account to help give us some slightly better liquidity.

2/16/2015 2:55:49 PM

CalledtoArms...there is always 72t for a portion of your IRA accounts if you have a big enough nest egg yo make it feasible.

Another thing is to ask your employer if you can make after tax 401k contributions, NOT ROTH, they are two different animals. There are some neat things you can do if its an option.

3/26/2015 12:10:18 PM

I really haven't had any coaching on how to save, but this is what I do...

-Roth TSP plan at 5% contribution per pay period, with employer matching that (comes out of every paycheck) [edit: 100% of TSP money is in the G-fund...I'll admit I am very unfamiliar w/ the different types of funds, but I'm nervous about terms like "high risk"]

-I have a BofA checking account, and a separate Ally savings account that I push money to every month; this account is mainly to save $ toward a down payment on a house when I finally buy one, or for any other emergency purchases (car trouble, etc)

The Ally account is because they have a better interest rate (~1%) than BofA's savings accounts (~negligible), and also because it's more of a pain to transfer money back to checking lol


what else I should be doing? I'm not necessarily trying to retire by a particular young (low-50s) age, but obviously don't want to work forever either

[Edited on July 5, 2015 at 6:01 PM. Reason : TSP info]

7/5/2015 5:54:22 PM

Move everything to the L 2050 fund.

[Edited on July 5, 2015 at 6:15 PM. Reason : and invest more than 5%]

7/5/2015 6:14:59 PM

Start your budget with you retirement and savings and work the rest of it from there.

In other words, subtract at least 10% that will go to your 401k, subtract your contributions to a Roth ($100 per week), and then another 10% that should go to liquid savings, and then whatever you're saving for a house downpayment.

Now work the rest of your budget from there.

7/5/2015 10:04:54 PM

is that a normal thing to put everything into the L 2050? (assume I know nothing about financial stuff, if you haven't already)

mind briefly explaining your suggestions? thanks!

7/6/2015 8:57:14 AM

Quote :

"100% of TSP money is in the G-fund...I'll admit I am very unfamiliar w/ the different types of funds, but I'm nervous about terms like "high risk"

Yeesh, you've probably missed out on 10's of thousands of gains if you've been there a while and have a decent balance. I talked a friend out of that fund 2010ish and he's been very happy that I did. Are you old or something?

Quote :

"is that a normal thing to put everything into the L 2050? (assume I know nothing about financial stuff, if you haven't already) mind briefly explaining your suggestions? "

Yup.

Quote :

"The L Funds' strategy is to invest in an appropriate mix of the G, F, C, S, and I Funds for a particular time horizon, or target retirement date. The investment mix of each L Fund becomes more conservative as its target date approaches."

So they manage the fund composition and thus your amount of risk based on when you want to retire. You're currently positioned with 0 risk, like you're about to retire, instead of someone who isn't going to retire for 30 years.

If you think the market is artificially high and is most probably going to correct/go down then by all means, leave it in the G. But then you're moving into something akin to day-trading your TSP which I know I'm not knowledgeable enough to do. I know some people who do though...

7/6/2015 1:15:25 PM

Yeah, a lot of people choose the targeted retirement date plans and put their entire contribution in that fund. The fund manager (or algorithim) does all the necessary shifting of asset types as the retirement date gets closer. Traditionally you should have more money in equities early on in your career and shift to less volatile investment vehicles like bonds/cash as you get closer to retirement.

The rest of what I was suggesting is pretty straightforward. You want, at minimum, to receive the full match from your employer, so contribute that to your employer sponsored retirement plan. You want to try to maximize your allowable contribution to a Roth IRA to grow tax free money (again, you can select a low involvement thing like a targeted retirement date fund as well from Vanguard). You definitely want to have enough liquid to cover 3-6 months of living expenses. After that if you have additional savings goals, like a down payment for a house, you set that aside too.

You want to keep all of this money out of your budget. You shouldn't even consider that stuff when you start figuring out how much you can spend. Get in the habit of living off less than you earn early and try to make it as low a percentage as you can. Don't be a miser, there's no point in being so thrifty that you're miserable, but don't spend like you don't have a tomorrow to worry about either.

7/6/2015 1:32:27 PM

what are yall's opinions on the other funds? (F/C/S/I)

sounds like since I'm closer to the start of my career, I should put it in something more high risk/reward?



nevermind, I see what L 2050 is now, I thought it was like this thing completely separate from G/F/C/S/I



[Edited on July 6, 2015 at 3:20 PM. Reason : ]

7/6/2015 3:09:34 PM

My current allotment is still:

70% - S Fund (Small Cap)
20% - C Fund (S&P 500 match)
10% - I Fund (International)

I think I need to put down the crack-pipe of the S fund though.

7/6/2015 3:41:51 PM

I use a 80/20 ratio of C/S funds. Also have some F fund in addition to the I.

7/7/2015 1:24:46 PM

real quick, Can you move funds from you 457 to your 401k without penalty?

10/19/2015 2:41:20 PM

yes, but you would lose the ability to withdraw prior to 59 1/2 w/o penalty.

10/19/2015 4:38:15 PM

plan is 457>401k>rental property through a 401k loan

10/19/2015 10:04:57 PM

another quick unrelated question. what's the minimum amount of equity required to start a HELOC?

10/21/2015 1:25:25 PM

I'm out.

10/21/2015 4:46:40 PM