Using savings to cash flow a 457 question. Bad idea?

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fortfun
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Using savings to cash flow a 457 question. Bad idea?

Post by fortfun » Tue May 22, 2018 10:15 pm

Earlier today, I asked if using savings to cash flow a Roth IRA was a bad idea (next 2 years). The consensus seemed to be invest the savings NOW! What would people say about using savings to cash flow a 457 for the remainder of this year and first six months of next year? If it makes any difference, the two funds are Vanguard Mid and Small Cap (.05 & .07 respectively). They would help make up the US Stocks portion of my AA (along with Large US stocks in my 401k). I expect to be in the 12% tax bracket this year and next (and in retirement). If I don't do this, I'll just use the savings on Vanguard Tot Int. Stocks. Thanks!

His 401k maxed.
Her 403b and 457 maxed.
Roth IRAs maxed.

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FiveK
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Re: Using savings to cash flow a 457 question. Bad idea?

Post by FiveK » Tue May 22, 2018 10:46 pm

If you have more cash than you need (your call on "need") for an emergency fund, then "converting" the cash to tax-advantaged accounts (your choice of traditional or Roth - whichever seems better) with good investment options makes sense.

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fortfun
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Re: Using savings to cash flow a 457 question. Bad idea?

Post by fortfun » Wed May 23, 2018 9:07 am

FiveK wrote:
Tue May 22, 2018 10:46 pm
If you have more cash than you need (your call on "need") for an emergency fund, then "converting" the cash to tax-advantaged accounts (your choice of traditional or Roth - whichever seems better) with good investment options makes sense.
Thanks FiveK. It still makes sense if it will take approx. 1 year to draw down?

terran
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Re: Using savings to cash flow a 457 question. Bad idea?

Post by terran » Wed May 23, 2018 9:51 am

This definitely makes sense. Get it in as fast as you can (by upping your withholding to your 457), but if it takes a year then that's what it takes. My wife's job allows mega-backdoor roth (after tax contributions followed by in service rollover to roth), so we're doing what you're asking about to get money into that.

MotoTrojan
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Re: Using savings to cash flow a 457 question. Bad idea?

Post by MotoTrojan » Wed May 23, 2018 10:02 am

Believe OP wants to know if you should invest it now in taxable. I would, but front loading is even better.

Also all you really need to compliment Large cap with vanguard funds is their small. It’s 50/50 mid/small anyway. Just some advice if you want to simplify. Or use the proper extended market fund if available.

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FiveK
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Re: Using savings to cash flow a 457 question. Bad idea?

Post by FiveK » Wed May 23, 2018 11:57 am

fortfun wrote:
Wed May 23, 2018 9:07 am
FiveK wrote:
Tue May 22, 2018 10:46 pm
If you have more cash than you need (your call on "need") for an emergency fund, then "converting" the cash to tax-advantaged accounts (your choice of traditional or Roth - whichever seems better) with good investment options makes sense.
Thanks FiveK. It still makes sense if it will take approx. 1 year to draw down?
Yes. Happy drawing!

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