401k contribution

Amazon
im-L10

Go to company page Amazon

im-L10
Sep 29, 2017 55 Comments

Do you max out 401k contribution?

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  • Twitter
    howbig

    Go to company page Twitter

    howbig
    Yes. And as early as possible in the year. Almost get 0 salary per paycheck till 401k is maxed out.
    Sep 29, 2017 8
    • It does ensure you take full advantage of match, if you decide to leave the company mid-year
      Sep 30, 2017
    • ^ that's a good point. Maximize company match quickly so you can leave if you have to, and still keep that money.

      Also, investing at the beginning of the year is advantageous if the market is going up over the year on average. Then, on most years, you'll come out ahead.
      Oct 1, 2017
  • Google / Other
    Gav$((!

    Go to company page Google Other

     Gav$((!
    Yes. Free money. Next question.
    Sep 29, 2017 0
  • Oracle / Eng
    ivar

    Go to company page Oracle Eng

     ivar
    No, tax rate might be higher by the time I can withdraw.
    Sep 30, 2017 11
    • New / Eng
      MDOy74

      New Eng

       MDOy74
      You really just want to minimize the tax paid, whether now or later. Most developers are likely at the 28% marginal rate ($91-191k single or $153-233k married). So the question is simply whether you'll be withdrawing more than the higher end of that rate in retirement. Keep in mind, the range will be adjusted upward for inflation.

      But another option is to take a year off work -- perhaps for grad school, starting a business, or just for vacation, reducing your income (and marginal tax rate) for the year to 0. Then if you convert up to $38k (single) or 75k (married) from IRA/401k to Roth IRA, you'll pay only 15% on that (actually less, on the first $10-20k).

      That's about $7,500 in tax savings compared to withdrawing it later at the 25% bracket. Not enough to justify taking a year off work. But a nice perk if you were already planning to take a year off for various professional or personal reasons.

      Keep in mind $75k today may be worth $150k or $300k in 10-20 years, so you're actually saving more than just the $7.5k.
      Oct 2, 2017
    • Gen!x / Eng
      XPbr65

      Gen!x Eng

      PRE
      Bank of America Merrill Lynch, HPE, Northrop Grumman
      BIO
      mehy
       XPbr65
      Here’s my math

      At 70, my only source of income will be 401k and whatever social security I will get. If I draw down under $50k that is 15-25% tax bracket.

      I’m 33% tax bracket today.

      Let’s say I have $20k
      I can defer $6.6k tax on that in my bracket using 401k.
      Let that compound for 30years. I’m 40 now. Draw at a lower bracket.

      All my other incomes (at that point) will intentionally be cap gains.
      Oct 2, 2017
  • Square
    MrLasagna

    Go to company page Square

    MrLasagna
    Short answer: yes

    Long answer: yyyyyyyyeeeeessssssssssss
    Sep 29, 2017 1
  • Why wouldn’t you? Give yourself 2 dollars tax deferred and I’ll give you 1 dollar?
    Sep 29, 2017 1
    • Amazon / Eng
      techslut

      Go to company page Amazon Eng

       techslut
      There’s a difference between the max of the company’s 401k match and the max set by the IRS. Assuming OP is already maxing out the company contribution.
      Sep 29, 2017