Should I draw from a taxable account in order to fund living expenses to completely maximize some of my retirement accounts?

I am currently 30 years old. I am contributing $11K a year to my Roth 401(k), and am maxing out my ESPP. Would it make sense to withdraw about $12.5K a year from my taxable account (inheritance) in order to cover my expenses as I max out my Roth 401(k) and fully fund a Roth IRA.

Financial Planning, Retirement Savings
Answers
Sort By:
Most Helpful
June 2017
100% of people found this answer helpful

I would definitely fully fund the Roth IRA. With a Roth you can always liquidate your contributions without taxes or penalty. Only your growth would be taxed and subject to a penalty on early withdraw. This makes a Roth IRA fairly liquid and adquate for an emergency fund. And if not used you have the tax free use of all your money in retirement.

I would suggest a regular 401k contribution instead of the Roth 401k contribution. Without knowing your income and tax status I'll ball park that if you put your $11,000 in a deductible 401k instead of a Roth you could save about $2500 in taxes every year. This tax savings could fund a portion of your Roth IRA.

June 2017
June 2017
June 2017
June 2017