Are you funding a traditional or Roth IRA as well? If not, I'd fund and IRA (and spouse IRA if applicable) before exceeding 401k match. Your post refers to both 401k and IRA but reads as if you may be mixing up the terms.

An IRA will give you more flexible investment options and often lower fees than a 401k.

You may also benefit from zero long term capital gains rate if your retirement income falls in lower brackets. If so, having some investments in taxable brokerage might be good. Another advantage to taxable is it can be used as assets to qualify for mortgage and you can even borrow against brokerage at very favorable rates if you have a large enough balance.

This post was edited on 6/21/22 at 3:44 pm

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Posted by Im4datigers

Northern Virginia

Member since Oct 2003

4470 posts

Posted on 6/21/22 at 4:07 pm to TorchtheFlyingTiger

quote:
Are you sure you're getting full match even after hitting employee contribution limit early? Some employers offer "true up" at end of year. Others only match during pay periods you contribute so maxing early in year could mean losing out on full year's match.

Yes, even after I hit my max contribution, they still do the 4% every check.

On the IRA, I do have a separate IRA and a regular brokerage account that I dabble with. Probably under $100k combined. I've never put much effort into the IRA for either myself or wife as our AGI is over the max limit to get any kind of deduction on taxes. So it's been an afterthought really.

I'd rather put the money into the brokerage account as I can access it in extreme emergencies with only paying taxes on the gains vs the IRA withdrawal of 10% plus the gains. Unless I'm missing something there.

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