If you plan to retire early, have you considered switching to tax deferred contributions and contributing the savings to Roth IRA? Seems like you might even be eligible for saver's credit if you can defer enough to get AGI below ~$36 (I realize that may be unrealistic). This plan would allow you to save more each year. And if you can save that much now, it shouldn't be an issue to Roth convert in an even lower bracket in early retirement.Would it make sense to only use my Roth 401k up to my employers match and contribute the rest of my money to a Roth IRA?
I currently make $51,500 annually and am currently contributing 8% to my company’s Roth 401k.
My employer matches 100% for the first 3% I contribute and 50% for 2% after. I can only see myself getting up to 12-15% contributions with my current and projected salary, so I do not see myself ever maxing out my Roth 401k.
I am considering opening a Roth IRA and putting 3% towards it while I take advantage of the 5% employer match, so still maintaining my 8% in contributions.
I would love to retire early (a girl can dream) and want to get a head start on the 5 year rule regarding Roth IRAs.
If you don't want to go with tax deferred now, be aware that you are less than the standard deduction away from the next tax bracket. You should keep an eye on that and defer enough to stay in the 12% bracket.
Statistics: Posted by sailaway — Fri Apr 05, 2024 1:51 pm — Replies 3 — Views 96