.Hoodooguru wrote: . . . . At the time I made the decision [to stop contributions], I did it because I couldn't afford to make the contributions. Now I'm doing it [restarting contributions] for (perceived) tax advantages.
. . . . . . My work provides me . . . a 457(b) plan (no match), . . . . . . . I anticipate that our income will increase $10,000-20,000 in the next couple of years.
Before we had kids, we maximized our contibutions to the 457(b) plan because we were both working full time and were in a higher tax bracket. . . . . . . We have also religiously contributed the maximum amount to Roth IRAs each year and continue to do so. . . . . .
My current concern is that we have over $100,000 invested in a taxable account (TSM), which we could effectively move to the 457(b) by making aggressive contributions from my salary and selling the funds (to live on).
. . . . .
Am I crazy to think that, during this period of time when all of my taxable income is at or below the 15% income tax bracket and I'm able to harvest all of my stock-gains at the 0% rate, I am probably better off paying income tax now as opposed to contributing $17,500 per year to my 457(b) and paying income taxes later? To be clear, contibutions to the 457(b) would effectively come from the taxable account, thereby reducing my taxable investment exposure in the near-term.
Hoodooguru wrote: . . . . . My initial thought is that we are likely to have significant taxable assets at retirement even if I maximize my 457(b) contributions (due to increase earnings and inheritance). Plus we will have my pension, which should be more than enough to live off of (especially once the mortgage is payed off). We live pretty simply, and I don't see that changing too much as we get (even) older. I recognize that things like unforeseen medical issues among other things might complicate that picture, however.
Also, I don't think a contribution this year and/or next year will have a tremendous impact on our taxable assets. Once both kids are in school full time (public school), our day-care costs will decrease significantly and my wife will be able to significantly increase her work hours (and income). Plus I am likely to be earning more as well. If this is correct, our increased earnings will go to the 457(b) and we'll leave the taxable accounts alone (more or less).
ruralavalon: I fully agree that fully funding our Roth IRAs is our first priority. And I intend to maximize my 457(b) contributions with future earnings increases. And I now think I'm agreeing that I should draw down our taxable to fully fund my 457(b).
Hoodooguru wrote:If I stick it out with my current employer until I retire at around 67 (25 years from now), it is fairly safe to estimate that we could receive a pension of around $65,000 per year, plus both of our social security payments [...]
pingo wrote:Hoodooguru wrote:If I stick it out with my current employer until I retire at around 67 (25 years from now), it is fairly safe to estimate that we could receive a pension of around $65,000 per year, plus both of our social security payments [...]
Is this right? I have no idea how it all works, but my employer retirement pension documents say that there's some kind of "windfall provision" or something that will prevent recipients from receiving at least part (or all? or a large portion?) of social security. Other posters will know for sure, or perhaps you could look into it...?
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