I think those are good things to keep in mind. I too share what I’ve learned to help educate others on achieving FIRE. Even though the fees are bad for your 401(k), I’d say it is still worth maxing it out but only if you switch from a Roth to a Traditional (check out my addendum on this JLCollinsNH post for my reasoning behind this). Hey Mr. Fientist. My $.02 would be if you still have money to save after maxing out your 401K (at 18K or whatever), as long as you have an emergency fund, maxing out either a Roth or traditional IRA as well is great. If you live overseas or live in a state w/o income tax then that should be all you need to pay. That all makes sense. I had both traditional 401k and a Roth 401k at my previous company as well. So in total, last year we both put 51k into our 401k accounts. If my cost of living after retirement is 125k a year, then I’ll be paying a 25-30% marginal tax bracket on what I’m taking out of my traditional IRA vs if I had used a Roth for all my retirement, I would not pay any taxes on the Roth nor any of the growth on the Roth…. Thank you for making this information available and easily digestible. Not specifically asking about Traditional or Roth IRAs. Each state is different though so you’ll need to check how your particular state handles it. Any amount converted while working would increase the amount of tax they have to pay at their marginal tax rate and wouldn’t be worthwhile. One of these cases is for people who are high savers. Incomes over $200K are still be eligible for non-deductible traditional IRA thanks to a recent change in rules. Can you just rent a place for say 6 months, change your drivers license, utilities, etc.? Today’s main event: Roth vs. If you have an income of just $18,000 in ER, as described above, then you’ll only pay $205 in state income taxes, which is only about 1.1%. Quick question: Is it a good idea to recharacterize a previously converted Roth back to a traditional if you’re new to pursuing ER/FI? Thank you for sharing the knowledge. MF, can you comment on Traditional 401K and Roth 401K?. Success! You would only need to pay the 10% penalty. Glad you’ve been enjoying it around here! Mad Fientist – thanks for this, you have probably pulled my FI date a couple years closer! My question is this: I have a portion of income that is not taxed at all, enough that I can max out contributions to a Roth or Traditional IRA, along with the 401(k) in either flavor also. I think that these are minor factors and for most people hard to predict. Check out this post that my buddy Jeremy at Go Curry Cracker wrote. He also saved over $100,000! I already changed my strategy based on this but its nice to hear it from you. A) continue maxing out our 401k accounts AND make non-deductible contributions to a Traditional IRA? Roth IRAs don’t have RMDs and allow you to strategically make withdrawals based on your specific tax situation. Fidelity may comp the fee if there is one. Thanks! Early retirees are going to most likely have a lower income levels and thus a lot of us will rely on the ACA to help subsidize our health care costs. Here’s what a taxable account looks like: Not only is your money taxed before it enters the taxable account, your investment growth is also taxed along the way. For example, New Jersey treats traditional IRAs the same way as roths: taxed on the way in, not on the way out. The US progressive tax system has standard deductions and brackets. I did the same detailed research about mortgage pay-off. There is a second threshold, but that shouldn’t come into play for most people. We also cannot directly contribute to a ROTH IRA due to our high income. The details: Roth vs. I was thinking you would want to have conversions end the year before you take social security, not at age 59.5. As a non-US citizen not working in the US, I’m not sure having a US account would be beneficial or wise. I had no one working for me, and if you do, then this won’t work since the retirement offerings for a company must be the same for everyone. Let me know if it’s still not clear and I’ll point you to some documentation that may help clear things up. However, since the maximum yearly contribution amount into a traditional 401(k) is $19,500, Sam is out of luck. On the graph in the article, you’ll notice that the IRA balances only increase by $5,500 (plus investment earnings) per year for the first 10 years, at which point the two individuals stop contributing and leave the investments to grow until standard retirement age. I have a post about the seminar, Taxes in Retirement, on my blog for those interested (BossManJax.com). For instance, if you were able to generate $4k/month in rental income ($48/yr) that would more than eliminate the 0% roth conversion opportunity by my thinking. I’ve always joked about wanting to retire today, and I say joked because I didn’t see how it could be possible. Hi Will, email me your spreadsheet and I’ll take a look. More and more companies are now offering a Roth 401 (k) in addition to a traditional 401 (k). But if I fund a Roth 401(k) instead, I won’t hit the contribution limit as quickly because I’ll have to pay tax on my investments now. The idea is that those taxable accounts would be able to hold you over for the duration of the five-year waiting period, after which you will not pay a penalty on distributions from the Roth. 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