bonesly wrote: Sun Sep 21, 2025 12:37 pm
You read that correctly (if you have no employer plan then you can deduct contributions to a Trad IRA up to AGI of $236K, and if you have a plan that limit is much lower (like $50K). If you establish a 401k (self-employed?) you can still put $23.5K max to the 401k and $7K to a Roth IRA (the Roth has a phase-out on contributions between $236K & $246K).
Excellent, thank you!
bonesly wrote: Sun Sep 21, 2025 12:37 pm
It’s pretty easy to draw your own contributions (not earnings) from a Roth IRA at any age, you just need to keep records of contributions every year. IRS Pub 590 says “You don’t include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s).”
Tracking contributions sounds very doable.
bonesly wrote: Sun Sep 21, 2025 12:37 pm
Having said that, the contribution limit on a Roth IRA is $7K/yr while the contribution limit to a 457b is $23.5K/yr (this is in addition to the $23.5K you could contribute to a 401k). So depending on how much you need to draw from age 55 to age 59.9, a 457b may be more viable (assuming you have the savings bandwidth to contribution more than $7K/yr to said 457b).
Unfortunately I’m separated from service so I can no longer contribute to my 457(b), so it is what it is.
bonesly wrote: Sun Sep 21, 2025 12:37 pm
While the 457b’s MissionSquare stock & bond indexes are expensive by Boglehead standards, the increased savings potential may better fit your need for an account that will: a) be accessible from age 55-59.5, and b) has enough $ at age 55 to support the entire bridge period. You could just leave the somewhat costly 457b as is, then contribute $7K/yr to a Roth IRA and the remaining savings for your “bridge” to a Taxable account as both Roth contributions and all of Taxable will be accessible at any age (not just 55 or later). At age 59.5, I would likely execute a direct rollover of the 457b to a Trad IRA to lower your costs for your remaining life expectancy.
I appreciate this long-term advice! I’ll put some thought into whether this tradeoff is worth it.
bonesly wrote: Sun Sep 21, 2025 12:37 pm
We typically try to suggest rolling any Trad IRAs into workplace 401ks if one is going to need to utilize Backdoor Roth to get the full $7K contribution in, despite having a high income. This may not be your situation, but wanted to identify a concern with Trad IRAs if needing Backdoor Roth.
Ohhhhkay I see why you recommend this, thank you. We aren’t at that income limit but if our careers go well over the next few years this might come into effect. It feels a lot of the financial system is (intentionally?) opaque and convoluted, but I need to push through so I can make better decisions.
bonesly wrote: Sun Sep 21, 2025 12:37 pm
Your plan is already more complicated than a 3-Fund portfolio because you have “tilts” to small-cap value (VBR) and an appreciable 10% portion to miscellaneous spread among cash, real estate, and green energy.
Thanks a ton for this explanation! I have not heard the concept of “tilting” so I really appreciate the in-depth breakdown. I’ve been realizing recently that I don’t understand exactly what it is we’ve been buying… it would have been good to realize that earlier, but better late than never!
The green energy fund was the first thing I bought before I learned anything about investing, and I’ve just been carrying it along for the ride, but seems like I should deal with it.
I bought a fair chunk of the VBR in my taxable account during the stock market dip in 2009, so will have significant capital gains on that. I read the wiki article “Timing of transactions to reduce taxes” but it doesn’t totally address that. I am already expecting a larger tax bill for this year, so I’m wary of selling a lot… should I not stress about this? Probably best to just do it and get it over with?
