Need advice on portfolio and deferred income account

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Investforfi2021
Posts: 1
Joined: Tue Apr 06, 2021 2:58 pm

Need advice on portfolio and deferred income account

Post by Investforfi2021 »

Long time reader but first time poster. Thanks for this amazing forum. I learned so much in the past. We run into a unique situation and would like to get advice from this group. We have an employer-based deferred income account with $1.5MM now and try to figure out what’s the best plan.

Age: husband 49/wife 47
Tax Filing Status: Married Filing Jointly
Taxable income: ~$600K/year (pretty much evenly split between husband and wife)
Expense: including mortgage and property tax for primary house is ~$175K/y; Excluding primary house mortgage and property tax is ~$100K. Rental properties are pretty much on their own.

Debt:
Primary house – worth $2.4MM, mortgage $1.2MM 30 year/2.75% (just refinanced)
Rental property 1 – worth $1.6MM, mortgage $300K 8 year left/2.875%.
Rental property 2 – worth $650K, mortgage $360K 30 year/3.375%.

Emergency fund: $100K

Current Retirement Asset - $2.2MM (combined 401K. Husband $1MM/Wife $1.2MM). 90% SPY/10% bond

Current Deferred Income - $1.5MM (Wife’s employer-based account). 90% SPY/10% bond
The payout for 10 years. If wife leaves the current Mega corp, the payout will start immediately with a 10 year payout period. Year 1 is $200K, and Y2-Y10 will be ~$130 to $150K (assuming moderate growth in the portfolio)

Taxable Account - $1MM (55% SPY, 5% QQQ and 40% individual stocks)

529 - $36K (one kid, 5 years away from going to college)

Roth IRA - $100K (SPY)

Our questions are:
1. Wife recently starts to think of quitting the current job. Either change to another job or just take an early retirement. Husband plans to continue to work until 59. Given that the deferred income $200K in year 1 will immediately kick in, is it really worth for wife taking another job?
2. Did we save too much for 401K? should we start to consider Roth 401K or continue to contribute pre-tax now?
3. We plan to super fund 529 to ~150K to leverage the 5-year rule, is this a good idea?
4. We want to grow Roth IRA account, however Roth IRA conversion seems not fitting our situation until after the 10-year deferred income payout is complete (After 10 years husband 59/wife 57)

Our lesson: didn’t expect the deferred income portfolio grew so much. If we could start it over, we would contribute less to deferred income and put more to taxable account.

Thanks in advance for your advice.
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