After tax 401k

[DoctwoB]

Is there a way to contribute all 60.5k pretax instead of only 20.5k pretax with the rest post tax for my 401k?

There should be. Most employer contributions or profit sharing (or you contributing the employer portion as an independent contractor) will be pre tax unless specified otherwise.

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[Lamount]

Is there a way to contribute all 60.5k pretax instead of only 20.5k pretax with the rest post tax for my 401k?

Depending on where you work, they may offer the opportunity to have more than one tax-deferred retirement plant… this is the case where I work.

 

[medgator]

Is there a way to contribute all 60.5k pretax instead of only 20.5k pretax with the rest post tax for my 401k?

If in a big group, shouldn't be hard, look up a safe harbor plan

 

[Burt Radnolds]

Other tidbits, remember that if you choose to convert some pre tax 401k to Roth, executing during a massive stock market drop can play heavily in your favor. Or, during an unexpected down year for earnings.

And, as mentioned earlier, Roth is an asset protection strategy. Post tax dollars are worth much more than pre tax. Retirement accounts are protected from creditors.

 

[RadOncDoc21]

This thread should be a sticky somewhere. Thanks all for your contribution. I’m going to need to take some time to digest all of it but appreciate the level of work you guys have done.

 

[evilbooyaa]

Most plans do allow you to roll over your pre-tax match to an after-tax ROTH. I did it for the first time this past year. . . Was expensive. . . .. But at 36, my wife and I have like $400K in ROTH accounts.

My responses in this thread are basically trying to justify why what I am doing is best for me. This line resonates with me - trying to justify that if I just keep doing what I am already doing it and have a mix of pre-tax (employer match) and post-tax (personal contributions to Roth) then I am "diversifying" my retirement... makes sense, right?

 

[jondunn]

I think you have to do what makes sense for you. some people over think it and there is a sense of FOMO that arises. Ultimately, the fact that you're doing both sets yourself up pretty well.

I call it WCI syndrome. A cousin to 'Rise and Grind' syndrome

 

[NITRAS]

My responses in this thread are basically trying to justify why what I am doing is best for me. This line resonates with me - trying to justify that if I just keep doing what I am already doing it and have a mix of pre-tax (employer match) and post-tax (personal contributions to Roth) then I am "diversifying" my retirement... makes sense, right?

I can understand your plan of action.

At my stage in life, I have only so much I can put in tax advantaged retirement accounts. My work has a 403b, and a match into 401k, and a back door ROTH IRA. I’m basically limited to $20.5k in 403b, my match (I’m not sure how much it is. . Say $12.5k) and $6k in IRA.

That is like <$40k/year in qualified retirement accounts. If I put them in ROTH, I effectively have invested more than if I put them in traditional.

Again, I think if you want to put some in traditional accounts to hopefully pay a lower tax rate at retirement, I say go for it. I don’t know what tax rates will be when i retire. My plan is to have an 8 figure net worth at retirement, so I really doubt I will pay less.

 

[evilbooyaa]

I can understand your plan of action.

At my stage in life, I have only so much I can put in tax advantaged retirement accounts. My work has a 403b, and a match into 401k, and a back door ROTH IRA. I’m basically limited to $20.5k in 403b, my match (I’m not sure how much it is. . Say $12.5k) and $6k in IRA.

That is like <$40k/year in qualified retirement accounts. If I put them in ROTH, I effectively have invested more than if I put them in traditional.

Again, I think if you want to put some in traditional accounts to hopefully pay a lower tax rate at retirement, I say go for it. I don’t know what tax rates will be when i retire. My plan is to have an 8 figure net worth at retirement, so I really doubt I will pay less.

Yeah, that's the thing - yes my mortgage and all car monthly expenses are hopefully paid off by retirement, but I'm still going to want to pull like $250k a year (or more if market allows) if I can during retirement, especially as medical expenses will start to mount as I get older, so I just don't know that my marginal tax rate (assuming it stays as low as the 37% national rate) is going to change all that much.

 

[deleted1111261]

250k a year in todays dollars ??
Damn you live large
I don’t spend that much on a family of 4 and paying my folks mortgage

 

[udrag14]

Yeah, that's the thing - yes my mortgage and all car monthly expenses are hopefully paid off by retirement, but I'm still going to want to pull like $250k a year (or more if market allows) if I can during retirement, especially as medical expenses will start to mount as I get older, so I just don't know that my marginal tax rate (assuming it stays as low as the 37% national rate) is going to change all that much.

Gotta have that 7 million for that. Good luck. You better buy some leveraged ETF if you aren't saving a buttload.

 

[RSAOaky]

Gotta have that 7 million for that. Good luck. You better buy some leveraged ETF if you aren't saving a buttload.

Saving a buttload? 75k saved per year at 7% return over 30 years is $7MM. That's not an insignificant amount of money to save but in the context of a highly compensated physician I don't feel like it's a buttload either!

 

[jondunn]

highly compensated physician

TheWallnernus says not true/can't count on it!

 

[evilbooyaa]

Gotta have that 7 million for that. Good luck. You better buy some leveraged ETF if you aren't saving a buttload.

Don't you even care when I retire, or how many years I want it for? How did you reach 7 million as a number?

250k a year in todays dollars ??
Damn you live large
I don’t spend that much on a family of 4 and paying my folks mortgage

If I shoot for 250 and can "only" get 120 or 180 that's not a bad problem to have. Not sure I'm going to actually need it all, and it's too soon for me to start game planning that (maybe soon?) but not sure why we'd expect less.

Saving a buttload? 75k saved per year at 7% return over 30 years is $7MM. That's not an insignificant amount of money to save but in the context of a highly compensated physician I don't feel like it's a buttload either!

Is that including 403b contributions? Or just stock market plays?

 

[thecarbonionangle]

The ideal scenario is an employer who offers profit sharing with roth 401k option plus a cash balance plan.

Say you choose to do roth option for your contribution to 20.5k of post tax dollars at your current 35-37 pct tax bracket. Your employer then puts in the rest usually pretax to the max of 61k. This is plenty of diversification to put away some roth and way more pretax.

Cash balance plan is basically a different question. Most are set up to allow the boomers to put away even more money pretax (can be hundreds of thousands to them) and the young ones a limited amount predetermined. You need to be at a place with the money and resources to cover the cost of actuary and maintaining this plan. the plans are usually set up such that after a few years the plan is ended and you get to roll this money into your account of choosing, either and IRA or a backdoor roth, essentially allowing you to put away even more money.

I dont know many with these options. These opportunities in our field are dwindling. Our tax code was designed by old white men to benefit their kind. The boomers in our field eat their young. C’est la vie

 

[jondunn]

Our tax code was designed by old white men to benefit their kind.

youre telling me sis

 

[RSAOaky]

Don't you even care when I retire, or how many years I want it for? How did you reach 7 million as a number?



If I shoot for 250 and can "only" get 120 or 180 that's not a bad problem to have. Not sure I'm going to actually need it all, and it's too soon for me to start game planning that (maybe soon?) but not sure why we'd expect less.


Is that including 403b contributions? Or just stock market plays?

75k a year, with a 7% growth rate, and neglecting any tax drag (which should be relatively small if you invest in tax efficient low dividend funds which you should be), will yield 7MM in invested assets over 30 years. If you use a safe withdrawal rate of 3.5% that's a $245k draw down annually, with a more conservative 3% that's $210k draw down annually.

As for how much this amounts to post tax, that depends on future tax code and how your money is invested. As the tax code is now, for someone who is married, drawing down $250k from a pre-tax fund, your average (not marginal) tax rate would be 16.8% (keep in mind no FICA tax on 401k withdrawals). That means $250k pre-tax = $208k post-tax. This is the worst case scenario based on the current tax code. If you throw in Roth withdrawals (reduces your taxable distributions) and sale of post-tax investments (only pay taxes on capital gains and at the generally lower capital gains rate) your post-tax money will be somewhere between $208k and $250k.

You can fiddle with these numbers however you want. None of this is set in stone and no one can predict the future.. Historical returns (which I would not expect) have been ~10% per year. Someone made a comment a few posts back about how 7% is an overly optimistic number. If you're more conservative use 6% or even 5%. Also keep in mind these numbers are not adjusted for inflation, but they also don't factor in social security withdrawals which, assuming it still exists, would quite significant for someone who has worked 30 years contributing the max.

Lastly, 208k a year post tax is a lot of money. Assuming your house and car is paid off, that means you have $17.3k a month to spend on whatever you want at an age where you probably have everything you want already.

 

[udrag14]

Don't you even care when I retire, or how many years I want it for? How did you reach 7 million as a number?



If I shoot for 250 and can "only" get 120 or 180 that's not a bad problem to have. Not sure I'm going to actually need it all, and it's too soon for me to start game planning that (maybe soon?) but not sure why we'd expect less.


Is that including 403b contributions? Or just stock market plays?

4 percent withdraw rate is approximately 25 x yearly spending.

If aiming for FIRE, 30 to 33 x yearly spending is how much you need.

 

[udrag14]

Saving a buttload? 75k saved per year at 7% return over 30 years is $7MM. That's not an insignificant amount of money to save but in the context of a highly compensated physician I don't feel like it's a buttload either!

That assumes 30 years and 7 percent return. Future estimate on spy is 4-6 percent annual return.

Fun fact, we are -8 percent on SPY this year.

 

[RSAOaky]

That assumes 30 years and 7 percent return. Future estimate on spy is 4-6 percent annual return.

Fun fact, we are -8 percent on SPY this year.

Use whatever estimates you want. If you want to use 4, use 4. If you want to use 10, use 10. If you want go all in on SPY rather than something total market, whatever floats your boat. It doesn't change the fact that you should be putting the money you can afford to save into the market with an asset allocation that matches your risk tolerance. These are just projections. Maybe they're right and you hit your number in 30 years, maybe the market rallies and you hit it sooner. Neither changes the fact that you retire when you have enough money to retire and if you don't have enough you either need to spend less or work more. Who cares if SPY is -8 for the year? Markets go up. Markets go down. It's what they do. Average annualized returns take all of this into account. Fun fact, when the pandemic started SPY was -30%.

 

[deleted1116990]

That assumes 30 years and 7 percent return. Future estimate on spy is 4-6 percent annual return.

Fun fact, we are -8 percent on SPY this year.

Wouldn't that suck to have 15 years of the stock market returning zero compared to inflation again like it did late 60s to early 80s.
The people who got rich riding the decade long bull market of the 2010s annoyed me acting like all you had to do was mindlessly invest in SPY and let it ride. They simply got lucky with timing. I'm not saying that was the wrong thing to do. Just that it was annoying to act like those returns were expected. So far, it is looking far preferable to finish your medical training in 2010, start investing and buy a house then, than in 2020, especially if you went into rad onc.

 

[seper]

Agree, put some extra money in leveraged ETF’s now… 7% annual growth over 30 years, for sure

 

[udrag14]

Use whatever estimates you want. If you want to use 4, use 4. If you want to use 10, use 10. If you want go all in on SPY rather than something total market, whatever floats your boat. It doesn't change the fact that you should be putting the money you can afford to save into the market with an asset allocation that matches your risk tolerance. These are just projections. Maybe they're right and you hit your number in 30 years, maybe the market rallies and you hit it sooner. Neither changes the fact that you retire when you have enough money to retire and if you don't have enough you either need to spend less or work more. Who cares if SPY is -8 for the year? Markets go up. Markets go down. It's what they do. Average annualized returns take all of this into account. Fun fact, when the pandemic started SPY was -30%.

That was my fun fact. Gotta have fun with it.

Here is my other fun fact. If you invested in Nikkei index in 1989, you are still not even.

The reality is VTI, VOO, or whatever blended index fund works really well for a majority of people. The general trend is up. 2020 and 2021 were just crazy years so we may have some correction/low years to compensate.

Also, read Buffet story if you want to see the power of compounding interest. It is pretty informative. You basically want the market stagnant in your growth phase and then rocket closer to retirement.

 

[udrag14]

Agree, put some extra money in leveraged ETF’s now… 7% annual growth over 30 years, for sure

Timing can matter here for leverage especially with 3x. I would definitely read up on hedgiefund [sucks now] or using 200 day moving average.

I do think 2x is safer if you want to contribute overtime.

 

[DoctwoB]

That was my fun fact. Gotta have fun with it.

View attachment 353704

Here is my other fun fact. If you invested in Nikkei index in 1989, you are still not even.

The reality is VTI, VOO, or whatever blended index fund works really well for a majority of people. The general trend is up. 2020 and 2021 were just crazy years so we may have some correction/low years to compensate.

Also, read Buffet story if you want to see the power of compounding interest. It is pretty informative. You basically want the market stagnant in your growth phase and then rocket closer to retirement.

This. A prolonged stretch of limited or negative returns would not hurt the new doc all that much (assuming gains occur later on). It would really hurt the doc that is 20 years in and maybe 5-10 years from retirement.

 

[RSAOaky]

That was my fun fact. Gotta have fun with it.

View attachment 353704

Here is my other fun fact. If you invested in Nikkei index in 1989, you are still not even.

The reality is VTI, VOO, or whatever blended index fund works really well for a majority of people. The general trend is up. 2020 and 2021 were just crazy years so we may have some correction/low years to compensate.

Also, read Buffet story if you want to see the power of compounding interest. It is pretty informative. You basically want the market stagnant in your growth phase and then rocket closer to retirement.

Sorry my post was made a bit in haste and in retrospect came off unnecessarily combative. My main point is to control the things that you can control and to not worry unnecessarily about the things you can't. We sometimes approach things from the "am I saving enough" viewpoint when we should look at the inverse which is "am I spending too much." If you're spending within reason and saving all you can, then it doesn't really matter whether your return will be 6% or 7% a year because that's something you have no control over. I actually should issue a mea culpa though, I agree with you that 6% is probably a more accurate annualized return.

As for 3x leveraged ETFs, it's probably out of the scope of this discussion but any time someone says "gain X% guaranteed" my danger sense naturally tingles. HEDGEFUNDIE's thread is a good one though I stopped reading it a long time ago and it got very long in the tooth. Totally agree with you about sequence of returns but again, control what you can control and restrict your fun money (i.e. 3X ETFs) to 10% of your portfolio.

 

[udrag14]

Sorry my post was made a bit in haste and in retrospect came off unnecessarily combative. My main point is to control the things that you can control and to not worry unnecessarily about the things you can't. We sometimes approach things from the "am I saving enough" viewpoint when we should look at the inverse which is "am I spending too much." If you're spending within reason and saving all you can, then it doesn't really matter whether your return will be 6% or 7% a year because that's something you have no control over. I actually should issue a mea culpa though, I agree with you that 6% is probably a more accurate annualized return.

As for 3x leveraged ETFs, it's probably out of the scope of this discussion but any time someone says "gain X% guaranteed" my danger sense naturally tingles. HEDGEFUNDIE's thread is a good one though I stopped reading it a long time ago and it got very long in the tooth. Totally agree with you about sequence of returns but again, control what you can control and restrict your fun money (i.e. 3X ETFs) to 10% of your portfolio.

No offense taken. I just want to add my random facts in.

I think leverage is good but need to be done in little doses like you suggested. Also, leverage early in a 20 year horizon is great, but remember only need a 33 percent drop to theoretically wipe out 3x leverage [not totally true because it is actually 2.7x].

 

[fiji128]

Saving a buttload? 75k saved per year at 7% return over 30 years is $7MM. That's not an insignificant amount of money to save but in the context of a highly compensated physician I don't feel like it's a buttload either!

If you need 30 years at these wages to retire your doing it wrong.

 

[RSAOaky]

If you need 30 years at these wages to retire your doing it wrong.

I didn't say my timeline was 30 years, just playing with numbers here. Obviously save more for less time or less for more time, whatever fits your lifestyle. Some people enjoy work, I'm not one of them. I have a great job but if I could retire yesterday I would. I have 10-15 left in me, 20 if things don't go as planned or I pick up expensive hobbies.

 

[Ray D. Ayshun]

Have more, want less. I just upped my retirement by like 500K+ ($125,000 now + interest) by deciding I don't want that 911 I always thought I'd get at this point.

 

[metallica81788]

Have more, want less. I just upped my retirement by like 500K+ ($125,000 now + interest) by deciding I don't want that 911 I always thought I'd get at this point.

 

[thecarbonionangle]

Have more, want less. I just upped my retirement by like 500K+ ($125,000 now + interest) by deciding I don't want that 911 I always thought I'd get at this point.

You saving for the pagani? 911 for losers?

 

[Ray D. Ayshun]

You saving for the pagani? 911 for losers?

 

[medgator]

You saving for the pagani? 911 for losers?

Rimac sista.... Sweet note and will run circles around a veyron, chiron or huayra

 

[Ray D. Ayshun]

Rimac sista.... Sweet note and will run circles around a veyron, chiron or huayra

Is rimac sista Italian for sausage fest?

 

[medgator]

Is rimac sista Italian for sausage fest?

Was referring to carbon as "sista"

The Rimac is the nevera iirc