Working towards FI, with a goal of pulling the plug on my corporate America job within 6-10 years where I will be somewhere between 49-53 years old. I'm trying to decide which account I should start allocating my “extra retirement” funds above and beyond maxing out my tax advantaged. The choices I’m looking at are continuing to max out my mega-backdoor roth or changing to my companies DCP and/or taxable savings.
Current Situation
· Current FI goal of $3m. Hoping to not move the goal posts too much. Currently we have ~$1.55m in retirement accounts 80% pre-tax and 20% roth
o 401k - $1.2m ($165k of this in ROTH)
o ROTH IRA’s - $160k
o Pension - $105k (treating this as my “bond” allocation)
o HSA - $66k
· 2024 Contributions
o 401k – Maxed mega backdoor 401k at $69k
o Roth IRA – Maxed at $14k
o Pension - $15k per year lump sum by company
o HSA – Maxed at $8300
· 2025 and beyond
o I will continue to max out my $23k 401k, Roth IRA, HAS.
o Question – Looking for advice on the extra $46 that I put into the mega backdoor roth ira moving forward.
o Option 1 – Continue to put this money into the mega backdoor Roth IRA, which would leave me with less flexibility in retirement and likely having to use a 72t.
o Option 2 – Start using my companies DCP plan to move this money into an account that will pay out over the period of time between early retirement and 59.5. My company is a very stable company (food company that as been around for 125 years) so there aren’t a lot of concerns about the risk of this option.
o Option 3 – Put this money into taxable.
I’m also open to a combination of both (i.e. some into taxable and some into DCP).
My current thought is I max out the megabackdoor Roth IRA and then get aggressive with the DCP plan starting in 2026. I do also get RSU’s which aren’t accounted for in here but I’m assuming that these will be used for more “short term goals.
Does anyone have some thoughts on why I wouldn’t do the DCP in the future? Thanks!
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