Search found 31 matches

by quenchgum
Wed Sep 16, 2020 7:14 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Thank you all very much for the follow-up round of considerate, thoughtful and personal responses. It’s helpful to hear your perspective and to have it be somewhat doubled down on — i.e., even in this somewhat non traditional situation, the psychological point nonetheless stands as a major considera...
by quenchgum
Wed Sep 16, 2020 2:15 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I feel like one thing I've seen is that my friends who paid off the loans or never had very large loans from the start actually did better in biglaw--probably something about less psychological pressure etc. As someone who has stayed in biglaw for many years now, I think this point cannot be emphas...
by quenchgum
Tue Sep 15, 2020 10:45 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I came across a follow-up question regarding the interaction between the MBDR and the normal backdoor Roth, and was hoping someone could confirm my reasoning if they came across this and had knowledge! Say that my after-tax non-Roth 401(k) amounts accrue interest before I move them to the Roth IRA....
by quenchgum
Tue Sep 15, 2020 10:23 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I came across a follow-up question regarding the interaction between the MBDR and the normal backdoor Roth, and was hoping someone could confirm my reasoning if they came across this and had knowledge! Say that my after-tax non-Roth 401(k) amounts accrue interest before I move them to the Roth IRA....
by quenchgum
Tue Sep 15, 2020 9:33 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I came across a follow-up question regarding the interaction between the MBDR and the normal backdoor Roth, and was hoping someone could confirm my reasoning if they came across this and had knowledge! Say that my after-tax non-Roth 401(k) amounts accrue interest before I move them to the Roth IRA. ...
by quenchgum
Tue Sep 15, 2020 8:17 pm
Forum: Personal Investments
Topic: Just to be clear - Mega Backdoor Roth
Replies: 11
Views: 2377

Re: Just to be clear - Mega Backdoor Roth

Note: To clarify if you were not aware, when you are >= age 50 you qualify for a catch-up contribution (2019 = $6K), but the catch-up contribution is not included in the annual addition limit (2019 = $56K. The catch-up contribution only applies after you have maximized the employee elective contrib...
by quenchgum
Tue Sep 08, 2020 9:17 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Thanks very much to all for your perspectives and thoughts. Is anyone aware of a resource -- perhaps a relatively simple spreadsheet -- that they'd recommend to help model out the tax savings over, say, 30 years at an expected growth of 8% if I were to (1) aggressively prepay the loans in ~3 years v...
by quenchgum
Mon Sep 07, 2020 2:31 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

As a fellow Biglaw worker, is the fact that your 401(k) plan allows after-tax contributions unique to your firm or is this a common attribute that I'm just not aware of? I've been maxing out my pre-tax 401(k) since joining the firm, but I wasn't aware that I could make additional contributions on a...
by quenchgum
Mon Sep 07, 2020 2:09 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Yes, that’s true and a helpful point! My understanding is that since my 401k holds these amounts in separate sub accounts, then I could simply punt the growth portion — if any — toward my tIRA . Please clarify. Do you have money in a traditional IRA account at present? If so, you will be subject to...
by quenchgum
Mon Sep 07, 2020 1:54 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I always thought of my V-10 stint as a highly paid residency—great training from top-of-their-field lawyers with lots and lots of flight hours. But, like a residency, 3-5 years from now you’ll have to look up and decide what you want to do. While I was an associate, I focused on building up a chunk...
by quenchgum
Mon Sep 07, 2020 1:41 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

If your 401k plan has it, the in-plan Roth Conversion is just converting the after-tax 401k contribution to Roth. Some 401k plans have weird restrictions (limited times a year, etc.), some do it online or even automatically, while some require phone calls, etc. For my 401k plan there are no restric...
by quenchgum
Sun Sep 06, 2020 11:52 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I think that the most important thing for you to consider right now is taxes. For somebody with your income, Federal income tax is the lowest that it has been for the last 100 years, and tax rates under current law are scheduled to snap back up in five years. I make no predictions about future tax ...
by quenchgum
Sun Sep 06, 2020 11:48 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I was in the EXACT same boat as you at the same age, same job. Same dilemma. Although my debt was slightly less but I was also earning less than you -- still a lot in those days (early 2000s) at big firms. My choice: I chose to invest first, pay down debt later. Now, just a couple decades later I'm...
by quenchgum
Sun Sep 06, 2020 11:45 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Thanks for the link. I’ve read that article (and others) and they actually are what got me thinking that the MBDR strategy could work in the first place! Many thanks to TFB. The one thing that I can’t figure out is whether/when the normal backdoor Roth contributions are considered “taxable conversi...
by quenchgum
Sun Sep 06, 2020 11:41 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

One minor point, which depends on the retirement plan rules in question. There could be a tax drag on earnings before conversion if done through the mega backdoor Roth method. For example, some plans only permit in service withdrawals once per year. Earnings that accumulate during the year would be...
by quenchgum
Sun Sep 06, 2020 11:35 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

There is no fee to refi - a lot of these companies (First Republic, Earnest, SoFi, etc) actually offer cash incentives to refi. I’m not sure how long the 1.25 would last, but feel comfortable that a higher rate would likely correlate with a strong market, meaning that I could pull from the Roth IRA...
by quenchgum
Sun Sep 06, 2020 11:32 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

The tax benefit of the regular backdoor roth and the MBDR are the same. Regular has just easier execution. Couple mouse clicks to do, the MBDR may be harder depending on your 401k. Many require calls or mailed in forms and/or checks. Personally I just do in-plan Roth conversion for my after-tax 401...
by quenchgum
Sun Sep 06, 2020 6:34 am
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

OP — this blog post will likely address your questions about mega backdoor Roth withdrawal penalties. The author posts here under the moniker “tfb.” on If you can make it work, I like the idea of refinancing to a fixed low rate and then applying all extra money to the backdoor and mega backdoor Rot...
by quenchgum
Sun Sep 06, 2020 5:05 am
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

You should be able to pay off your debt relatively quickly. If I was to do it over again, I would have invested 80% and paid off loans 20%. Or go 50/50. Whatever works for you. Build yourself a plan that pays off your loans by the time you are age 30 or 35. Put the rest in VTSAX. My point is, keep ...
by quenchgum
Sun Sep 06, 2020 4:57 am
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Is there any fee to refi? How long would the ~1.25% variable rate last before it reset? At ~1.25%, I would be more inclined to favor the MBDR. For your emergency fund learn about Series I US Saving Bonds: https://www.bogleheads.org/wiki/I_savings_bonds There is no fee to refi - a lot of these compa...
by quenchgum
Sat Sep 05, 2020 3:15 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

I also don't like carrying debt My car loan, though intentional, is psychologically killing me but I'm forcing myself to let it run for now, because I do like having that money in my taxable account more. What I would probably do in your case: - Put everything in Roth this year - including 401(k). ...
by quenchgum
Sat Sep 05, 2020 3:04 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Do you understand the 5-year conversion rule to limit my ability to withdraw principal from non-taxable conversions (i.e. my MBDR amounts)? If so, that certainly affects my comfort with shoving more money into the MBDR. You'll pay a 10% penalty on conversion principle withdrawn sooner than 5 years ...
by quenchgum
Sat Sep 05, 2020 2:46 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Logically, this plan makes the most sense to me, yes! I was hoping that the Bogleheads would applaud the math and hype me up on this (so that I could also psyche myself up on it). Once I do pivot to a lower-paying job, I'd hazard to say that ~120k is a pretty reliable (and conservative) salary to r...
by quenchgum
Sat Sep 05, 2020 2:35 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

OP is the one who said that he/she is not psychologically comfortable with the debt. I feel like one thing I've seen is that my friends who paid off the loans or never had very large loans from the start actually did better in biglaw--probably something about less psychological pressure etc. OP her...
by quenchgum
Sat Sep 05, 2020 2:27 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Are you able to do the regular backdoor Roth? I would probably do that before the MBDR. Have you considered Series I US Savings Bonds for a portion of your emergency fund? More tax efficient for a high tax bracket. How many months of expenses does $50k represent? I can do the regular backdoor Roth....
by quenchgum
Sat Sep 05, 2020 2:18 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

There's a lot of poor advice on this thread. OP, it's 100% understandable to feel the psychological weight of this amount of debt, but you should strive to look at this analytically, as you are already doing, and not make this decision based on emotion. Dave Ramsey advice is frequently bad advice o...
by quenchgum
Sat Sep 05, 2020 2:08 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Part of the reason aggressive loan payoff is recommended is that the future is unknown, but the reduction in loan principal is. The period you will likely holding the loan is relatively short term (unlike a 30 yr mortgage). Short term investment returns may yield less than 3.25% annually. Further y...
by quenchgum
Sat Sep 05, 2020 2:03 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

If you're uncomfortable with prepaying something as low as 3.25%......what if I told you that after refinancing to a variable student loan post MBA, my wife's student loan is currently 0.18%? I'm in the camp of putting as much in to the MBR as you can and refinancing the student loan to a lower rat...
by quenchgum
Sat Sep 05, 2020 1:50 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

-plan to max out pre-tax 401(k) and HSA by end of 2020 -26 y/o and first year working, so no other assets/debt to speak of I think it's great that you're on track to max your 401(k) and HSA by the end of the year. It also sounds like you graduated in May 2020 and probably just started working. If s...
by quenchgum
Sat Sep 05, 2020 1:21 pm
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Re: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Thanks very much to all for your perspectives. I want to make clear that in ALL cases, regardless of my strategy, I'm maxing my pre-tax 401k and my HSA, will maintain a truly liquid emergency fund of at least ~30k or so, and will continue to live far below my means for the next couple of years (as I...
by quenchgum
Sat Sep 05, 2020 1:05 am
Forum: Personal Investments
Topic: Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)
Replies: 82
Views: 5103

Prepay student loans OR megabackdoor Roth? (26 y/o in Biglaw; 190k salary; 180k debt)

Hi all, I'm an appreciative long-time lurker, and was hoping y'all could help with my question. I'm not sure whether I should use my excess cash flow to aggressively pay down my student loans or if I should instead invest that excess in the market (likely through a megabackdoor roth, which my employ...