Plan for Exit 2024

[MoneyChic]

MoneyChic, thanks for your input! May I ask how often do you pull money out? And while in the plan, do you invest or just keep in cash? Talking about only after-tax portion.

I have only done it twice so far- about quarterly. Some had been invested, but a good chunk was still in cash. I’m just going ahead and converting the earnings on it as I go also because it’s such a small taxable amount and then the earnings portion begins growing tax-free as well.

 

[Exit 2024]

NgineER, MoneyChic , thank you! That is very helpful!

 

[Exit 2024]

Funny story
Decided to get my feet in the water and try to contribute small amount to After-tax part of 401k , basically to see how conversion to Roth will work. Made election on Fidelity website and .... nothing happened... after 4 paychecks with no additional deductions my better half went to lady who is in charge of the benefits to ask what is wrong ... answer - they "do not know how that works and that option should not even be available on the website to use" obviously no one in the company ever used it before but she promised to investigate
We are in a waiting mode right now, really hope that they do not screw it up with payroll and tax forms later on, is there anything we should be looking for right now beside confirming that money deducted from paycheck on after tax basis? in case if they will allow contributions?

 

[brokrken]

Typical HR incompetence

 

[Markola]

Funny story
Decided to get my feet in the water and try to contribute small amount to After-tax part of 401k , basically to see how conversion to Roth will work. Made election on Fidelity website and .... nothing happened... after 4 paychecks with no additional deductions my better half went to lady who is in charge of the benefits to ask what is wrong ... answer - they "do not know how that works and that option should not even be available on the website to use" obviously no one in the company ever used it before but she promised to investigate
We are in a waiting mode right now, really hope that they do not screw it up with payroll and tax forms later on, is there anything we should be looking for right now beside confirming that money deducted from paycheck on after tax basis? in case if they will allow contributions?

I’m not surprised at all. I explored the Rule of 55 option with Fidelity, who said, “You can withdraw however you like, whether a lump sum or multiple payments.” A work friend got laid off and suddenly HAD to us the Rule of 55. HR made him take the whole thing as a lump sum, which caused him to pay who knows what in taxes.

 

[Exit 2024]

HR made him take the whole thing as a lump sum, which caused him to pay who knows what in taxes.

Markola, that is terrible! I am also counting on rule 55 but your story will make me look more close into both 401k plans documents now. Thanks for bringing it up.

 

[Exit 2024]

Followed up with HR today - they are still looking into it, "trying to understand how that suppose to work" In the meantime we pulled Plan Document and After-tax option is clearly listed there, along with Roth and Pre-tax. So they are supposedly offering it but have no idea how to set it up?

 

[NgineER]

My HR was also incompetent regarding this, but I had he clear advantage of our web interface where it clearly indicates the different options, traditional, Roth and after tax. If you don’t have those contribution options then you are at the mercy of HR.

 

[Exit 2024]

My HR was also incompetent regarding this, but I had he clear advantage of our web interface where it clearly indicates the different options, traditional, Roth and after tax. If you don’t have those contribution options then you are at the mercy of HR.

NgineER,
Fidelity website have clear option for After-Tax contributions and allows to choose % of the pay, what we did, but HR did not process it as they do not know how to set it up, so still no contributions are taken from paycheck.

Other issues that I noticed - Fidelity site does not allow to choose funds specifically for After-tax portion, it is just one set of investments that you can pick, not sure if that is common or not but kind of weird.

 

[Exit 2024]

Q3 2019 update

- We finished Q3 at all time high NW of $1,649k - that is above our end of year target of $1,625k and 55% of overall target
- Investable assets got boost of $37k, cash increased by $15k, total NW change +$52k, not that bad
- Increased cash position will go down as we plan to replace one of our vehicles and pay cash for it, that probably will happen in next couple months
- After-tax contributions to spouse's new 401k is still pending, not sure if that will be resolved or not
- My company got new management and we are going through major reorganization right now, so my employment is not that stable again will see how it all will play out
- we went on our trip in August and it was perfect, a lot of fun and great memories already booked our next trip - cruise during Christmas week, will be interesting to see if we like this type of vacation or not as that will be our first one
-overall good quarter, looking forward to what next 3 months will bring - first 3 days of it was wild

- We have 19 Qs to go...

 

[Standard Staples]

Excellent work, as always. I gotta tell you, I admire your attitude. You and your wife really know how to roll with the punches and keep moving towards the goal, and I'm glad you got to go on the trip!

Cruising is our absolute favorite way to vacation (just went for a week in September, going again for another week in February). What's your itinerary like?

 

[Exit 2024]

Thanks, Staples !
Our cruise is with Holland America, on their newest ship, will leave from and return to Ft.Lauderdale, with stops at Half Moon Cay Bahamas, Aruba and Curaçao. We are going with group of friends, hope it will be fun

 

[Standard Staples]

Awesome. You'll love it. Be sure to report back on it with your EOY numbers.

 

[Exit 2024]

Awesome. You'll love it. Be sure to report back on it with your EOY numbers.

Will do

 

[Exit 2024]

Q4 2019 update

- We finished Q4 and whole 2019 at all time high NW of $1,737k - that is above our original end of year target of $1,625k by $112k, thanks to the blockbuster market run
- Investable assets got boost of $97k, cash decreased by $9k, total NW change +$88k
- Decreased cash position was due to adding 10k to taxable, we are still looking to replace one of our cars - expect cash to go down even more.
- After-tax contributions to spouse's new 401k still not fixed, we pretty much gave up on the hope to get into Mega backdoor Roth, will continue with taxable account
- one more wrinkle that happend to our finances in Q4 and will continue through full Q1 - we took over our child's student loans as they went from deffered status to payable in December, she graduated in June but still in the process of getting her licence. We promised to help her till March as we hope by that time she will get full time job and will start paying all by herself. We will continue to make additional payments on those loans (we planned for it) but expect her to pay required minimums plus some extra first. Will decide on amount of help later, when we see how big her paycheck will be and how dedicated she is to get done with those loans quicker
- we went on our Christmas cruise and it was great, mostly due to having great company with us. Cruise itself was ok, we did not care much about full days in see, wish we had more stops in different ports. Due to waves we could not get on Half moon island, so out of full 6 days on the ship we had only 2 stops - Aruba and Curacao, both were very interesting and a lot of fun.
-overall good quarter, and excellent year, despite the setback with spouse's job loss and 3 months of unemployment.
- we earned $60k less this year, saved $35k less than in 2018, net worth went up by $325k for the full year - not bad considering all the headwinds in our earnings
- Looking forward to 2020, original year end target was $1,860k and we should hit it much earlier unless we will have major market meltdown.

- We have 18 Qs to go...

 

[dvalley]

Congrats! So glad to see that you not only had a great year financially but also enjoyed a nice family vacation and were able to help your daughter with her student loans!

Are you planning to shift you AA between now and 2024?
What's your expected annual expenses in retirement btw, sorry if you mentioned it somewhere already?

 

[Tiger8693]

That is some major HSA account! Wish I had started ours earlier.

Our investments looks similar (amount), but less RE and Cash. Keep it going, you'll be good to go for 2024!

 

[Standard Staples]

Congrats on another great year! This kind of planning and dedication puts you in the position where a short or long term job loss is barely a blip on the radar.

Imagine telling someone that your wife was laid off for 3 months this year, but you still increased your NW by over $300K? Killer.

 

[brokrken]

Exit, we are living parallel lives, as usual. My wife quit her job last year, too, and we saw a $400K increase in our investable assets! Here's to hoping we stay on track for the next few years.

 

[Katiek]

Congrats. I really enjoy reading along on your journey and love how you have a plan but are flexible enough to handle unseen issues. Best of luck for the coming year.


One nice thing about cruises with friends is that nobody is stuck being the one to make all the individual arrangements and reservations. You can have time together with your friends but also do your own thing easily for a meal or a day if you choose.

 

[Exit 2024]

Are you planning to shift you AA between now and 2024?
What's your expected annual expenses in retirement btw, sorry if you mentioned it somewhere already?

We are slowly moving from 70/30 to 60/40, below is our current AA.
Almost all new investment money are going into bonds right now just to keep up with soaring stocks. I keep evaluating AA about every 6 months to see if any adjustments needed.

About spending: our multi-year records show that we need about $60-$70k to live on, so we are projecting to withdraw $90k from investments, where $20k will be allocated to taxes and healthcare.

Also plan is to limit taxable income to 400% of Federal poverty level as it will allow for healthcare subsidy. We live in low cost state but our insurance market is outrageous
We need to boost our taxable to make sure that they can support us with income for 5 years before we could access Roth accounts. At that period I think we will produce taxable income by converting some 401k money to Roth. Of cause it is just a plan and subject to modifications as all will depend on 2024 laws.

 

[Exit 2024]

That is some major HSA account! Wish I had started ours earlier.

Our investments looks similar (amount), but less RE and Cash. Keep it going, you'll be good to go for 2024!

Thanks, Tiger8693 !
About HSAs, we started in 2006, maxed out them every year, never took any money out but I do have all documentation in case we decide to take out amount that were spend during those years. As you can see on the chart our out-of-pocket expenses are just fraction of overall balance, being relatively healthy helps a lot I guess
You can click on chart to see it better.

 

[Exit 2024]

Congrats on another great year! This kind of planning and dedication puts you in the position where a short or long term job loss is barely a blip on the radar.

Imagine telling someone that your wife was laid off for 3 months this year, but you still increased your NW by over $300K? Killer.

Thanks , Stapels!
It indeed just blew our minds that during such non-trivial financial year we exceeded target by $100k+ never thought that it is even possible

 

[Exit 2024]

Exit, we are living parallel lives, as usual. My wife quit her job last year, too, and we saw a $400K increase in our investable assets! Here's to hoping we stay on track for the next few years.

LOL on parallel lives but it really looks like it

 

[Exit 2024]

Congrats. I really enjoy reading along on your journey and love how you have a plan but are flexible enough to handle unseen issues. Best of luck for the coming year.


One nice thing about cruises with friends is that nobody is stuck being the one to make all the individual arrangements and reservations. You can have time together with your friends but also do your own thing easily for a meal or a day if you choose.

Thanks!
And I do agree that having good company gives a lot of flexibility on how to spend time, we loved that part of cruise, if we ever will go again - will do it with friends for sure.