I have agi of about 105,000;to date have about 130,000 in traditional IRA and 5,000 in roth;should all future contributions be made after tax since i already have this amount in the traditional ira; i'm eligible for a non-qualifying plan that shelters pre-tax dollars upto 14%(i put in 8%), plus regular 401k upto 8%(i put in 8% after tax)...rational is 8% reduction to agi via non-qualified plan(which may bite me on the back end should company change hands) and 8% in post-tax(roth) plan which could fund an early retirement....or would it be best to take it all as pre-tax contributions and pay tax at lower rate when agi is reduced? confused?me too!
For retirement, you should max all your plans: $2K/yr to Roth IRA if you qualify otherwise to conventional IRA and $10.5K to 401K pretax plus whatever you can up to the usual 15 to 25% of gross max aftertax.Aftertax 401K contributions are somewhat easier to remove from the account for purposes other than retirement. However, they cannot be rolled over to an IRA when you leave your employer.If you retire early, you will be able to remove funds from your IRA penalty free by setting up an SEPP payout program. So don't worry about that. It is usually to your benefit to max all these contributions and then develop additional taxable investments.If you anticipate significant preretirement expenses like downpayment on a house, educating your children, etc., these are less well handled from retirement accounts. There are some provisions now, but usually you are better up to set up other plans in addition to your retirement plan for these purposes.The best allocation of your investment $$ will become clearer if you workout an approximate lifetime financial plan, set some priorities, and then review them periodically. Your plan will never be exact, but having a plan as a basis for your decisions is better than not planning and shotgunning those decisions.Save, save, save whatever you can.
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