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Hit one of my goals
Old 09-07-2020, 04:05 PM   #1
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Hit one of my goals

I have the 401(k) account that I started at my former employer that I religiously contributed to since 1997 (the date I was first able to contribute) until 2017 when I left to start my own business. In 1997, I contributed $9,500.00 and got my match, then each year I made sure to increase my 401(k) contribution with part of my annual raise so I was always able to contribute the max, which was $18,000 in 2017. Since that portion of my annual raise was never in my take home paycheck, I never missed it.

It took 23 years, but just last week the balance of that original 401(k) crossed that magic threshold.
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Old 09-07-2020, 04:11 PM   #2
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Congrats! That's nice growth.

If/when you retire early, I recommend taking a serious look at Roth conversions to chip away at that tax deferment. Many of us have/had a nice window of low income in the years between retirement and the start of SS (and maybe pension) benefits. Otherwise your MRDs will likely push the max (85%) of your SS benefits into being taxed, and your tax bracket might be surprisingly high. A nice problem to have, but it's even nicer to pay a lower tax and get some of that money tucked into a Roth where income will never be taxed again.
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Old 09-07-2020, 04:12 PM   #3
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Way to go.
Compounding is a great thing.
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Old 09-07-2020, 04:24 PM   #4
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Congrats! That's nice growth.

If/when you retire early, I recommend taking a serious look at Roth conversions to chip away at that tax deferment. Many of us have/had a nice window of low income in the years between retirement and the start of SS (and maybe pension) benefits. Otherwise your MRDs will likely push the max (85%) of your SS benefits into being taxed, and your tax bracket might be surprisingly high. A nice problem to have, but it's even nicer to pay a lower tax and get some of that money tucked into a Roth where income will never be taxed again.
$200,000 of that $1M is in a Roth 401(k).
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Old 09-07-2020, 04:37 PM   #5
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I started a SepIRA for my new business in 2019 and will be contributing the Max to that retirement account going forward. For 2020 that will be $57,000.

I put my 2019 contribution into an Index fund (Fidelity 500 Index Fund). Unfortunately, I made that contribution earlier this year when my CPA told me how much profit I had. That was about 2 weeks before the big crash, so I got to ride it down, then back up. Too bad I didn't wait a few more weeks. ��*♂️

I don't know whether an Index fund is the way to go long term or not, so guess I should research other investment options for my Sep IRA.
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Old 09-07-2020, 04:44 PM   #6
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My own strategy is to use index funds for just about everything. But if you are going to use some managed funds that may throw more cap gains, those are better off in an IRA.

I found https://www.bogleheads.org/wiki/Tax-...fund_placement extremely helpful to decide which investments to keep in which accounts.
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Old 09-08-2020, 06:12 AM   #7
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I really need to get glasses. I thought this was titled 'Hit one of my goats'.

Congratulations! Not sure if thus is your first time crossing over to the two comma club, or if you have other accounts that placed you there already, but it is a great feeling regardless.

Last night someone kept referring to my DH and I as being 'frugal' because we ER'd in our late 40's/early 50's, as if that explained everything and somehow got them off the hook for having to work to 65. May you enjoy the same backhanded compliments at some point, because it looks like you are well on your way to ER as well!
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Old 09-08-2020, 06:41 AM   #8
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Congrats! It takes a long time and a lot of discipline to build up a nest egg, but it’s incredibly rewarding - the 7 figures threshold is universally meaningful.
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Old 09-08-2020, 09:20 AM   #9
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I really need to get glasses. I thought this was titled 'Hit one of my goats'.

Congratulations! Not sure if thus is your first time crossing over to the two comma club, or if you have other accounts that placed you there already, but it is a great feeling regardless.

Last night someone kept referring to my DH and I as being 'frugal' because we ER'd in our late 40's/early 50's, as if that explained everything and somehow got them off the hook for having to work to 65. May you enjoy the same backhanded compliments at some point, because it looks like you are well on your way to ER as well!
GOATS. I should have typed that just to see who was paying attention.

I crossed the two comma club a while back with Real Estate, but I am proud of this one because this one was set it and forget it, and shows that ANYONE with a job and a long enough time table can become a millionaire with compounding interest.

I am 50 and my wife is 48. I officially "retired" in 2017 when I was 47, but started what I thought would be a limited business to fill my time and it is generating even more than I ever made at my real job. In fact, this year will be my most lucrative EVER. So much so that I have my CPA working to see how much I can shelter.

Amazing how when you don't need the $, you have more than enough, but when you really need it, you can't find it.
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Old 09-09-2020, 11:12 PM   #10
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Congrats ! .. im at year 17.5 w 600k .. 5.5 more years (to 23 years) at 7% with full contribution and i will be there.
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Old 09-10-2020, 05:56 AM   #11
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Great job to you! I've always maxed out my 401K weekly and contributed monthly to index mutual funds every month also. Whatever was left for me to live on, I managed. This allowed me to FIRE a few years ago.
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Old 09-10-2020, 06:06 AM   #12
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That is very exciting and happy for you.
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Old 09-10-2020, 05:19 PM   #13
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Back in the day, I too enjoyed hitting the various milestones of met goals. But I forced myself to adjust for what % I would owe in taxes in the future. SO, let's say, tIRA or 401K) balance is $1MM. I would have considered that I really only had $800K. I figured avg. tax rate of 20% which is about what it has worked out. I DID do a lot of Roth converting shortly after ER (mostly tIRAs and not my 401(k) - for simplification.)

The most important milestone (goal achieved) for me (mentioned recently elsewhere) was when my portfolio first generated more than my salary. That was a pretty good year! YMMV
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Old 09-10-2020, 05:53 PM   #14
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Congrats to our brand new millionaire!
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Old 09-10-2020, 09:03 PM   #15
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Thanks everyone. Looking forward to seeing this account and my other grow. Onward and upward.
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Old 09-11-2020, 09:56 AM   #16
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To OP: was there any reason you left 401k as is after leaving the company(ies)? I was told to roll them over to my own broker by converting them into (Roth)IRA to avoid admin fees. That was what I did the second month after I changed my job.
Hopefully my I vested accounts have 8% avg annual return like yours.
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Old 09-11-2020, 04:23 PM   #17
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To OP: was there any reason you left 401k as is after leaving the company(ies)? I was told to roll them over to my own broker by converting them into (Roth)IRA to avoid admin fees. That was what I did the second month after I changed my job.
Hopefully my I vested accounts have 8% avg annual return like yours.
Can't answer for OP but I also did not leave my 401(k). Do keep in mind that transferring them ANYPLACE into a Roth may be (probably will be) a taxable event. I did all my Roth conversions in existing tIRAs - a little bit at a time to avoid increasing top tax rate. My 401(k) company had the funds I wanted (including a GIF - Guaranteed Income Fund.) I couldn't find any better funds elsewhere. I've heard time and again that one should transfer from 401(k) upon retiring, but I found more advantage to staying in than getting out. IF I had no other outside accounts, I probably would have transferred some of my 401(k) funds to tIRAs. YMMV
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Old 10-10-2020, 03:04 PM   #18
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To OP: was there any reason you left 401k as is after leaving the company(ies)? I was told to roll them over to my own broker by converting them into (Roth)IRA to avoid admin fees. That was what I did the second month after I changed my job.
Hopefully my I vested accounts have 8% avg annual return like yours.
Just seeing this question. I wish I had a sophisticated reason, but honestly I never got around to it, and the investment options are meeting my needs just fine.

I looked at moving it right after I left, and even talked to professional financial investment planners I knew who wanted to manage the accounts. After looking at their plans (they want to move me to hundreds of individual stocks), I realized I like the fact that I know where my money is invested. I currently have the money spread over 8 mutual funds that tend to cover the 4 Dave Ramsey investment areas (Growth, Grown & Income, Aggressive Growth and International) and my picks have beat the market year after year. One of the financial teams who was pitching to me (a friend) told me confidentially after the fact that they probably wouldn't have beat what I was doing on my own.

My former employer requested that I move the money twice, but I haven't heard from them this year. Not sure why they care, other than they bump into new compliance levels as the number of participants grows.

Does anyone know if there is a time limit for when you can roll your former employer 401(k) over to an IRA? I left 3.5 years ago, so I suspect I am well outside of the time limit if there is.

As for Roth, about 1/4 of the amount is in a Roth 401(k) because that option was added to the plan at some point. I was told I was the only person who selected that option.
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Old 10-10-2020, 03:22 PM   #19
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Just seeing this question. I wish I had a sophisticated reason, but honestly I never got around to it, and the investment options are meeting my needs just fine.

I looked at moving it right after I left, and even talked to professional financial investment planners I knew who wanted to manage the accounts. After looking at their plans (they want to move me to hundreds of individual stocks), I realized I like the fact that I know where my money is invested. I currently have the money spread over 8 mutual funds that tend to cover the 4 Dave Ramsey investment areas (Growth, Grown & Income, Aggressive Growth and International) and my picks have beat the market year after year. One of the financial teams who was pitching to me (a friend) told me confidentially after the fact that they probably wouldn't have beat what I was doing on my own.

My former employer requested that I move the money twice, but I haven't heard from them this year. Not sure why they care, other than they bump into new compliance levels as the number of participants grows.

Does anyone know if there is a time limit for when you can roll your former employer 401(k) over to an IRA? I left 3.5 years ago, so I suspect I am well outside of the time limit if there is.

As for Roth, about 1/4 of the amount is in a Roth 401(k) because that option was added to the plan at some point. I was told I was the only person who selected that option.
I have not moved my 401K and it will be 5 year next May. I don't beleive you have to do anything with your 401K till RMD. Yu can leave it as a 401K and where you have had it.
That was my understanding I hope someone can confirm that but I don't think you have to move it at all.
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Old 10-10-2020, 04:43 PM   #20
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I have not moved my 401K and it will be 5 year next May. I don't beleive you have to do anything with your 401K till RMD. Yu can leave it as a 401K and where you have had it.
That was my understanding I hope someone can confirm that but I don't think you have to move it at all.
In general that is correct.
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