@notrichenough, AMT is so annoying. We are in AMT for years when I make less and out when I make more. Is that not perverse? Our retirement funding had to go down because I have to roll my defined benefit plan into a 401K. So now I can contribute a Max of $52k? I have to investigate. Is there a reason to stop funding if I’m still earning? Won’t I benefit from tax deferral on the contribution and growth? Or is there an age at which it becomes better not to fund?
I think the max for 2018 is $55K, not sure if that includes the $6k catch-up or not.
I think it’s more a question of, do I have enough saved and is there something else I want to use the money for? I would think at some point the tax-deferred growth part gets outweighed by LTCG rates if you save outside of retirement accounts.
A downside of tax-deferred accounts is that once you hit your mid-80s, the required minimum distributions start to get really large. If you have a really big pile saved up you could wind up in a higher tax bracket than you expect, which might wipe out some or all the tax-deferred benefits.
Given the new tax law, it might make sense to put that $55k into a Roth 401k. Or depending on what bracket you are in, start doing Roth conversions, because this tax bill will get undone the second the other party is back in control.
@shawbridge - Snow removal in Sausalito? Who’d’ve thunk it?
@sherpa, climate change? Snow removal is in Massachusetts. We’re bicoastal.
@shawbridge - If you buy or rent the Florida island place, would that make you tri-coastal? Technically speaking, probably only if you’re on the gulf side.
I agree. I did a rough calculation once and concluded that there’s no real benefit to put money in a tax deferred account. About Roth 401k, one still has to take a RMD if required. I don’t understand why it’s the case when Roth IRA is not included in calculating RMD. It is still good since the accumulation won’t be taxed.
@shawbridge, “tax deferral on contribution and growth:” that’s a perennial question for us. I decided since new employer will be matching, it’s now a clearly good idea, but without the match, IMO it’s less clear. We don’t want to pay for capital gains at earned income tax rates. Otoh, contribution tax deferral is good 
@notrichenough , I believe that the catch up $6k is off the table for the $55k Total. Have to settle for $55k
@shawbridge — one issue to consider is that if you invest in stocks in a retirement account, you will pay income tax instead of capital gains tax when you pull the money out. It would involve some complicated math to figure out what’s worse — buying stocks with after tax $ or paying full freight down the road. I stopped contributing because I was putting away so much of my income that I was looking at liquidating stocks in order to go on vacation, buy cars, make home improvements, etc. I realized effectively, I would be selling stock with a 15% tax rate to fund a retirement account with at least a 25% tax rate, and since we had nearly met our retirement goals at the time (more than met them now), it made no sense to do it.
Eta: missed some of the prior posts before responding.
They probably forgot to dot an i when drafting the Roth 401k rules. Or maybe they did it on purpose and the original mistake was not requiring RMDs for Roth IRAs.
If you are retired and no longer working for the company, you can roll it into a Roth IRA at any time.
If it is your company you can terminate the Roth 401k and roll it into a Roth IRA.
If you can’t terminate the plan (because you have other employees or don’t own the company or whatever) and are still employed, you are out of luck to do a rollover out of the 401k, AFAIK.
Also @notrichenough if over 59.5, can roll money out of company 401k etc even with still working for company. Before 59.5, may have allowable amount that can be rolled out. That is what H did; got some money out, then more out later. We were able to lower our risk with other investments and keep using the 401k with stock funds.
@SOSConcern yes, the IRS allows it, however most employers do not IME. You’d have to check whether your plan allows it while still employed.
H’s company plan is thru Prudential…Many, many companies farm out so much stuff that these companies like Fidelity, Dreyfus, etc, and I imagine they often follow what the IRS does allow IMHO…
My employer has 401k enrollment farmed out to Fidelity - corporate even farms out initial company benefits enrollment (health insurance, etc). I had to call corporate to find out exactly when I was eligible for 401k matching…to verify what Fidelity told me (the quarter AFTER my one year anniversary after working at least 1000 hours the year before) - all their other stuff said one year. Eager to get that matching during my sunset career…
Thanks. Very helpful discussion. It sounds like I should really evaluate setting up a Roth 401k and then rolling proceeds into a Roth IRA.
Among our 10+ employers, I have yet to see an employer with self-managed (as compared to Fidelity etc) 401(k). These companies will follow precisely whatever the employer says.
Aside from DW’s 401(k), all our retirement funds are held differently than anything I’ve seen mentioned on this thread. Between us we have 4 self directed IRA’s (2 Roth, 2 regular) and these IRA’s are the only members of an LLC, of which DW and I are managers. This allows us great flexibility, with the LLC currently holding stocks, real estate, and high yielding real estate mortgages.
" track with precision your current cash flow " - I think it is important to track cash flow, but for us I feltt that precision on specific categories was not necessary until closer to retirement, when we want to decide what to cut back on.
Per a prior thread, I log monthly outflow (cash+checks+withdrawals). We also review the Visa annual statement - that’s a good way to see general categories. DH is considering retirement in next year or two, so he wants to start a spreadsheet of the all required expenses. That will be helpful too, But it’s the broad brush tracking that has been helpful til now to show that although fairly frugal… we spend more than ya’d think. That helps us realizing that the 401K balances that look good are not yet quite enough, especially when you add on medical expenses.
I think I had a self-directed IRA that held a hedge fund. You have to be very careful about self-dealing rules. I can’t invest in my son’s startup, for example. But I think @BunsenBurner is likely to be correct that employers will not have self-directed 401(k)s. Trouble and potential liability.
This is one reason why we never put RE into an IRA - we manage our own properties and do a lot of our own maintenance. My understanding is that you are not allowed to do any of that if the property is in an IRA.
Plus, our rentals generated tax losses in the beginning. If they are in an IRA you don’t get any benefit from that. Getting a mortgage on a property held in an IRA is problematic/nearly impossible AFAIK. So you have to have enough in the IRA to buy it outright.
While you “could” use debt financing to purchase real estate within a self directed IRA (there are a few institutions that’ll do this), doing so would trigger the Unrelated Business Income Tax (UBIT).
Owning rental property within an IRA is fine but, as @notrichenough notes, you can’t self manage.
We’ve had our IRA’s purchase building lots in bulk at a discount for resale to individual builders, sometimes in combination with making construction loans to the builder.
One drawback to putting real estate into a self directed IRA is that if you can’t sell it to a related party and it’s very difficult to convert it to personal use. For example, my SIL would like to build a house on one of our lots but we can’t sell it to her.