age 49, status check

[jIMOh]

I just changed jobs and have some issues I have not dealt with before. Bear with long winded post

I have a large 401k rollover going to my existing Roth and Rollover at etrade, by time transaction closes, account should be $260k which is most of my retirement balance.

My old job had a 9% match on 401k (90% of first 5%, plus another 4.5% fixed contribution).
My new job matches 50% of first 6%, the base they are matching is considerably larger, but losing that 9% match is part of reason for the post.

My new salary is significantly higher, and I can invest enough to make up for the match I am missing, I am trying to determine how much that is (easy math), and should this go to a taxable account (I am 49, I am leaning this way) or a non deductible IRA (what are the pros of commingling the existing rollover with after tax money?)

My math to FI looks like this
I think I will have $375k in 2025, which would be $750k in 2032, which is $1.5M in 2039 and therefore FI in 2039 at age of 66. Catch up contributions could accelerate this, 2039 is how I see my worst case (17 years from now). $60k income is enough for me to retire on.

Over next 17 years, I am thinking taking a portion of my raise and investing it in a taxable S&P 500 index fund (at etrade). It would be my initial taxable investment account.

My asks
check (and question) my math
if you moved from a job with a high match to an average match, what did you do?
if you had to look at problem as 9% of x to 3% of y, how do you allocate (y-x) with respect to investing?

 

[SevenUp]

should this go to a taxable account (I am 49, I am leaning this way) or a non deductible IRA (what are the pros of commingling the existing rollover with after tax money?)

Non-deductible IRAs are usually good only as a conduit to a Roth IRA when using the Backdoor Roth process.

But if you need/want to use that process, it would be better not to have any pre-tax money in any non-Roth IRAs. In other words, either leave your traditional 401k money with the old employer, or roll over the ex-employer's traditional 401k to the new employer's, or roll any pre-tax traditional IRA balance into the new 401k. Use of the new 401k for this purpose assumes it has expense ratios similar to what you can get in an IRA.

Two "how to prioritize" lists often cited are Prioritizing investments and Investment Order.

 

[Montecfo]

Never commingle. Life is just easier that way.

 

[NYC1967]

I would roll over your old 401k to a vanguard tIRA.

Start a new 401k at your new job. Do you know what funds they offer? if not great I would contribute to get the match then contribute to your vanguard tIRA.

 

[street]

Never commingle. Life is just easier that way.

This is great advice.

 

[jIMOh]

I would roll over your old 401k to a vanguard tIRA.

Start a new 401k at your new job. Do you know what funds they offer? if not great I would contribute to get the match then contribute to your vanguard tIRA.

I've already signed up for the new 401k, same funds as old one ironically, Vanguard mutual funds and I'll take a snip of the funds next time I check (I haven't even gotten paid yet, so it might take a month to kick in)

 

[Surewhitey]

I would roll over your old 401k to a vanguard tIRA.

Start a new 401k at your new job. Do you know what funds they offer? if not great I would contribute to get the match then contribute to your vanguard tIRA.

I did this in my similar situation. My decision was based on our tax rate at the time, ~25%...this has driven many of our 401k decisions. Everything else is in taxable accounts and CD's after maxing out the 401ks.

 

[NgineER]

I have found great value in doing After-tax 401k contributions also. Look at that to see if they are allowed at your company, my company has a 9% of salary limitation, but this allows me to balance traditional IRA (taxed as ordinary income on withdrawal), Roth-IRA (tax free withdrawal) and taxable (cap gains and potential for 0% taxed dividends) which I'm just starting to build out.

It will be nice to be able to manage taxes with three separate buckets to draw from.

 

[jIMOh]

I have found great value in doing After-tax 401k contributions also. Look at that to see if they are allowed at your company, my company has a 9% of salary limitation, but this allows me to balance traditional IRA (taxed as ordinary income on withdrawal), Roth-IRA (tax free withdrawal) and taxable (cap gains and potential for 0% taxed dividends) which I'm just starting to build out.

It will be nice to be able to manage taxes with three separate buckets to draw from.

Is an after tax 401k like a non deductible IRA? Does this affect the amount I can contribute to the pre tax and Roth 401k? I am 49, will it affect catch up contributions to 401k?

 

[SevenUp]

Is an after tax 401k like a non deductible IRA?

Yes. Much like using a non-deductible traditional IRA as part of the backdoor Roth process, the best use of an After-tax 401(k) is as part of the Mega-backdoor Roth process.

Does this affect the amount I can contribute to the pre tax and Roth 401k? I am 49, will it affect catch up contributions to 401k?

Assuming you start by maximizing your elective contributions to your traditional and/or Roth 401k, "no and no."

 

[NgineER]

Is an after tax 401k like a non deductible IRA? Does this affect the amount I can contribute to the pre tax and Roth 401k? I am 49, will it affect catch up contributions to 401k?

Yes. Much like using a non-deductible traditional IRA as part of the backdoor Roth process, the best use of an After-tax 401(k) is as part of the Mega-backdoor Roth process.
Assuming you start by maximizing your elective contributions to your traditional and/or Roth 401k, "no and no."

SevenUp is right.

You can max out your Roth or traditional 401k - $20,500
Catch-up contributions $6,500
Company Match
After tax (non-deductible) - maximum set by your company

All combined has to be less than the limit set by the IRS, which is $61,000 or $67,500 (for catch-up contributions).