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I am essentially allergic to risk and paperwork, wherever possible. Just putting that out there.

Because of the nature of DH's company, he got hit with the HCE (Highly Compensated Employee) concept this year. He is allowed to put 5% into his 401K and the rest has to go into his HCE EDC (Executive Deferred Compensation Plan) which is an absolute nightmare.

He got pushed into this bracket by the skin of his teeth due to a bonus he received this last year. While the bonus was nice to have, the opportunity to save only around $6,000 into his 401K instead of $17,500 is NOT.

Since there's NO chance of him getting a similar bonus this year, I figure that between the 5% 401K and the small bit of EDC we elected for, he should be safely under the cap this year and we can go back to the fully-funded 401K next year.

HOWEVER, the question becomes, what savings vehicle do we use this year?

I am maxing out my 401K, and we DO NOT qualify for using an tax-advantaged IRA nor can we contribute to a ROTH.

I DO have the opportunity to contribute to my 401K on a POST tax basis.

My question is: What happens to that money once I put it in, from a tax/trading perspective? It's post-tax money. When/if I rebalance my portfolio in the future, will that post-tax money be taxed on the gains I make in the trading (essentially, selling one and picking up the other, as would be in a regular account), or, does it all just sit in there and behave like the rest of my pre-tax 401K from that perspective?

What are the upsides/downsides to putting post-tax money into a 401K account, other than the "You're so limited, why aren't you investing aggressively, putting it into X, Y, or Z, you're LEAVING MONEY ON THE TABLE!!!"

I know I'm leaving money on the table. I'm okay with that. I am NOT aggressive, or even assertive. I am the ultimate risk-averse person, but I don't want to take it and put it in a bank account or CD or something "completely" safe because I'm not *that* stupid.

So, once money is in a 401K as a POST TAX contribution, what are the down-the-line implications of that choice?

I'm going after this because this is, indeed, retirement savings, and I want to streamline the investing as much as possible by keeping it primarily in the same place.

Other ideas are welcome.


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