A 401K question, when to stop contributing.

[ultrarunner]

I had thought retirement was upon me…

Company has other plans with all the projects sending tons of overtime my way… the last thing I need is to trigger more taxable income.

Consistent 11-12 hour days with a 16 last Wednesday… and more to come…

For some odd reason the construction crews which have been working overnight and 12 hour weekends refuse to work this Sunday… could it be Football?

Saturday starts 5am to 6pm… with me arriving at 4:30am to open up access and facilitate.

I wish I was well enough versed but didn’t the tax code change in regards to overtime last year?

 

[ponytug]

I had thought retirement was upon me…

Company has other plans with all the projects sending tons of overtime my way… the last thing I need is to trigger more taxable income.

Consistent 11-12 hour days with a 16 last Wednesday… and more to come…

For some odd reason the construction crews which have been working overnight and 12 hour weekends refuse to work this Sunday… could it be Football?

Saturday starts 5am to 6pm… with me arriving at 4:30am to open up access and facilitate.

I wish I was well enough versed but didn’t the tax code change in regards to overtime last year?

Yes, workers with overtime were (are) allowed to deduct the first $12,500 of overtime. ($25,000 if married with join filing)

I'm less clear on why overtime income is unwanted for you. Rather have the time off?

Unless a deadline was this Monday morning, I would not be asking a construction team to work a major holiday, e.g. Super Bowl Sunday, unless it was needed for the game itself. Around here lots of folks are needed. A LEO friend is looking at back to back 16 hour days (plus commute times of an hour each way) to backstop other offices.

We were treated to a low altitude flyby of a large (non-747) aircraft with F-16 wingmen come over at about 400' yesterday. I haven't seen close formation security flying in awhile. It's not clear to me who was on board, as the executive leadership is supposedly elsewhere (e.g. the Olympics), or not planning to attend.

All the best,

Peter

 

[Richard]

I had thought retirement was upon me…

Roughly eight years ago, I sat with a gal. Her employer had just adopted the 401K (which has a Roth provision). She was 62 and anticipated retiring "soon" with no specific date in mind. She works at the library so this isn't sweating on a road crew, swinging an axe.....

I'd told her that I had personally witnessed two (and only two) people go from zero monies to $100,000 in their 401K. (edited to clarify: I've only seen two people starting at zero, hit $100K in their 401K WITHIN THREE YEARS)

I think that inspired her a bit....so she joined up, hammered the contributions and was very aggressive. (after all, she had "nothing" in there so throw some dice)

I guided her through the investments with my thoughts. She made her choices.

Though I had sat with her other times, my last visit was last March, so about 1-year ago. She's now 70 and still working....again, at a library so she's not busting up rocks with a sledgehammer.

When we first sat, I think she hoped that when she retired, she might approach $100K. When I saw her last March, her401K was $240K, all tax free as she now met the requirements.

I don't think she anticipated working to 70. If someone is at or near retirement age, I don't think that alone should disqualify anything. Even if she had retired three years later, she had other assets to dip into that would have allowed her to wait the full five years to make her account tax free. That she kept working & building it is in my view, just more icing on her cake.

I advised last march that she might lower her aggressive investments and maybe view it as "I hoped this might happen.....it did.... so now my focus needs to evolve from trying to build it to maintain it and get a "decent" rate of return but not get obliterated in a market downturn" (she had been averaging mid 20's on her returns)

I then encouraged her to start talking to some investment advisors, talk to them about rolling her $200K+ to them and put it into income producing investments. Just take the income out tax free, if life's spending allows. Leave the golden goose to her spouse or child as the circle of life progresses.