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I'm starting to plan now; in the next 2 years I'm going to be able to do the max $53k to my employee sponsored retirement accounts. My options are

-401k (all company contributions must go into this account; my contributions are optional
-Roth 401k my contributions to this are optional
-401a

Making the decisions as to which account to direct funds to is one based mainly on what my current marginal tax rate is for that tax year and what I expect my tax rate to be in retirement. I'll make some numbers up to try and lay out the best way to evaluate where to direct funds to;

Assume in tax year 2017 I have the following;

-$20,000 Company contribution
-$20,000 profit sharing
-$20,000 personal contributions

This, obviously, takes me over the $53,000 annual limit. Assuming all $20,000 of company contributions go to the 401k I'm left with deciding where to send my profit sharing check and my personal contributions.

I could put $18,000 of my contributions (or profit sharing) into the 401k or Roth 401k. After that the remaining $15,000 will need to be sent to the 401a which can then be rolled into a Roth IRA in an outside brokerage. This would give me the ability to withdraw funds at retirement tax free, where as a 401a does not give you this option.

Say I'm in the position to contribute $20,000 of my contributions in the first 2 months of the year and my profit sharing comes in February, I could have $40,000 towards the $53,000 max in the first 2 months of the year, but then I'm left with only $13,000 of the $20,000 eligible to go towards the tax sheltered 401k. The remaining $7,000 will be paid as ordinary income and raise my marginal tax rate. Amplify that with say a $35,000 profit sharing check and $30,000 personal contributions, I could have my $53,000 reached in the first 2 months of the year. ALL company contributions, we'll say $30,000 in this case, will be paid as ordinary income increasing my tax burden.

The dilemma, if you're following me, is this

1-Deciding the best location for my money, either pretax in the 401k or post tax in the Roth 401k and/or 401a
2-Deciding if I should spread my contributions out over the year versus all up front so as to allow company contributions to go towards the 401k as pre tax contributions.

Clear as mud? Alternatively, maybe you all could tell me specifically the right type of accountant to look for to help me wade through all of this. My goal is simple, keep uncle sams hands off of as much money as I can.

Thanks!
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Clear as mud? Alternatively, maybe you all could tell me specifically the right type of accountant to look for to help me wade through all of this. My goal is simple, keep uncle sams hands off of as much money as I can.

You don't need an accountant, you need a financial advisor with extensive tax training or an EA (Enrolled Agent, the only federally licensed tax professional) who is also a financial advisor. Accountants know accounting, not necessarily investments nor taxation. (Most accountants don't prepare taxes.)

Your goal of keeping Uncle Sam's hands off as much of your money as you can is misguided. Your goal should be to keep as much of your money in your pockets after you pay Uncle Sam. Often you can make more money after taxes by choosing an investment strategy that pays more taxes.

Ira
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