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Subject:  Re: How much is enough in my 403b? Date:  12/14/2000  4:14 PM
Author:  rkmacdonald Number:  26614 of 97964

Author: teton99 Date: 12/14/00 3:01 PM Number: 26611
I am putting about 14k a year into my 403b TIAA CREF. Which is a combination of my contribution and my employers. This account now totals about 132,000. When calculated out at 10% interest for 24 years when I turn 60 the sum should be 1,110,000. I also am contributing to my ROTH and have about 24k there form an IRA conversion. My concern is that I will end up in a higher tax bracket at 60 than I am in now, our AGI is about 85k. My husbond is also maxing out his contribution to his 401k and ROTH but has started more receintly. I'm considering paying more on our morgage and investing more in individual stocks.

I am closer to retirement than you are, but I have a similar problem. I plan to begin fairly large distributions immediately after retirement to avoid huge MRDs (Minimum Required Distributions) when I turn 70.5.

I have also stumbled across what seems to be a really good fund for investing outside of your sheltered accounts. It is the Vanguard Tax Managed S&P500 Index Fund, VTGIX. It has an expense ratio of 0.19% and taxes are minimal due to only 0.21% in yearly distributions each year. Total returns appear to match the S&P 500, which has historically been about 12%. Then, when you are retired, you can sell shares and only pay long term capital gains taxes. In addition, if there is any left when you die, the heirs get the step-up in cost basis.

I believe that if you use this fund, you may eventually end up with more money in your pocket than you will get from unmatched contributions to a 401(k) that are taxed at your marginal rate (which could be quite high) when you are retired.

(Note: I am not affiliated with Vanguard other than being a customer.)


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