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View Poll Results: Given your own circumstances if you could save $45k/year tax defered what %age would you save tax de
100% tax defered (all $45k) 21 70.00%
75% defered, 25% after tax 4 13.33%
50%/50% 2 6.67%
25% defered, 75% after tax 1 3.33%
100% after tax 2 6.67%
Voters: 30. You may not vote on this poll

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How much would you save tax defered?
Old 10-26-2006, 10:19 PM   #1
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How much would you save tax defered?

Please explian you circumstances and reasons for picking your ratios. Assume the usual 59 1/2 age rules for the tax defered account.
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Re: How much would you save tax defered?
Old 10-26-2006, 10:40 PM   #2
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Re: How much would you save tax defered?

We save $40K tax deferred nowadays and about $50K after-tax. I would do more tax deferred to reduce our current income taxes if we could. Our assets are pretty evenly divided between tax-deferrred qualified accounts and after-tax accounts, so we have lots of flexibility when we ge to the withdrawal phase.
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Re: How much would you save tax defered?
Old 10-26-2006, 10:57 PM   #3
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Re: How much would you save tax defered?

We defer as much as we can (30K/year) to avoid AMT and to try to knock our bracket down. We put less aggresive investments (bonds/fixed income + some stocks) in the deferred account and the aggressive (stocks) in the after tax account. Still... I suspect our deferred account will be overfunded come 70 1/2. Its going to be painful paying the tax.
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Re: How much would you save tax defered?
Old 10-27-2006, 04:59 AM   #4
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Re: How much would you save tax defered?

I know I'm at the 25% marginal braket now even with my current tax deferred savings. AMT is also looming. I have hopes when FIREd at being able to manage my tax to 15% even with IRA withdrawls/Roth conversions. Saving tax deferred now maximizes what I save in taxes.
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Re: How much would you save tax defered?
Old 10-27-2006, 05:33 AM   #5
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Re: How much would you save tax defered?

I did not vote. Didn't seem to fit the poll.

I think I included this in my "Letterman 10 biggest ER surprises" list.
If not I should have. Taxes for me turned out the reverse of what
I expected (just like health insurance availability, except in the opposite
direction). Because I live on so little personal income, I was able to
manage and minimize federal income tax quite easily. In the long run,
this may offset the health insurance problem.
Time will tell.

JG
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Re: How much would you save tax defered?
Old 10-27-2006, 07:41 AM   #6
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Re: How much would you save tax defered?

I would put as much as possible tax deferred until your tax deferred account will provide all your retirement funding after 70. Then you might want to consider funding your home purchase, then taxable accounts.

I have a question here: Self employed can use Keogh and SEP. Is there a way for an employee to tax defer income beyond 401k/IRA and reach th deferral level we are talking about??
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Re: How much would you save tax defered?
Old 10-27-2006, 07:47 AM   #7
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Re: How much would you save tax defered?

I chose 100% because at my income level there are very few tax deferred places for me to put money other than my 401k.
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Re: How much would you save tax defered?
Old 10-27-2006, 07:58 AM   #8
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Re: How much would you save tax defered?

100% in tax deferred. Why pay taxes now when I can pay them later? I'll probably be in the same 15% bracket later as I am now. State taxes are 7% marginal, so this could potentially be reduced in retirement if I relocate (since most state income taxes seem to be lower or nonexistant).

I plan on retiring in my 30's, but I can always 72(t) my money out of an IRA at ~4% a year.

Tax deferred status would allow a lot of flexibility in choosing assets regardless of taxation of their current interest/dividends/capital gains distribution.
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Re: How much would you save tax defered?
Old 10-27-2006, 08:05 AM   #9
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Re: How much would you save tax defered?

It would depend on several factors:

-- If my only tax-deferred option is a 401k (or even 2 of them for a couple), we can't put away $45k/yr tax-deferred.

-- If my company has no match and/or poor, expensive choices in its 401k plan, I might not want to use it.

-- How soon and how early I was expecting to retire. I might save more tax-deferred at age 20 than at age 50, for example.

-- Whether I am coming into an inheritance in the near future, and if so, whether it's in the form of an IRA or taxable.

-- My tax situation (worry about AMT? empty nester with no mortgage and very few deductions?).
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Re: How much would you save tax defered?
Old 10-27-2006, 08:55 AM   #10
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Re: How much would you save tax defered?

We are high wage earners. the more we can defer the better!
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Re: How much would you save tax defered?
Old 10-27-2006, 09:12 AM   #11
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Re: How much would you save tax defered?

100% tax-deferred.

I'd spend down the taxable accounts now (at very low cap gains rates) and convert the tax-deferred accounts to Roth IRAs. When spouse's pension kicks in (age 60) we won't have to worry about the impacts of IRA RMDs or SS taxation.
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Re: How much would you save tax defered?
Old 10-27-2006, 01:03 PM   #12
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Re: How much would you save tax defered?

I choose 100% deferred. At a combined federal/state marginal tax rate of 40%, the young wife and I need all the tax benefits we can get. Currently, we max out a 401k, a 403b and a 457 plan and I would do much more if the law allowed.
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