Adding more Fuel to the 401k FIRE in March | Transfer Tuesday | Retire Early

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Hey everyone!
Welcome to another Transfer Tuesday video, where I'll break down how much money I earned, how much I spent, and where the leftover money is going to accomplish my financial goals - whether that's a new vacation or financial independence!
This time, I increase my 401k contributions from 38 to 40% in preparation for a raise in March, as well as make an expensive discretionary purchase...
Recording equipment:
Deity Pocket Wireless Microphone: amzn.to/49krBmK
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About Me:
I'm Raymond - a gen Z worker that's on the path to financial independence and retiring early. I make videos about personal finance, from news all the way to talking about my own net worth and budget. If that interests you, feel free to stick around.

Опубликовано:

8 сен 2024

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Комментарии : 19

@aaronquadd3019 5 месяцев назад

You're doing very well. I'm 26 (just turned 26 in March) and my goal is 100k in total savings (investments, roth, 401k, and savings/checksing) by the end of the year.

@jonlien5845 6 месяцев назад

Way to go you are doing great! Can't wait to hear how this all turns out for you.

@raymondwzeng 6 месяцев назад

Thank you! Honestly, I think it'll be an interesting journey to live through (and hopefully to follow) whether things go well or not (but hopefully they do go well) 😅

@danielbinoy 6 месяцев назад

Yayy! Good stuff! I'm 22 and on the same track as you, working SWE! I've been contributing heavily to my 401k and roth!

@vigilantharbor9776 6 месяцев назад

Really impressive that you can contribute that much to retirement and still have a solid lifestyle. Great execution.

@leo1231201 6 месяцев назад

You said that you are will be contributing about $3K per month into your 401K, but isn't the employee contribution limit only $23K for 2024 and wouldn't this result in you going over?

@raymondwzeng 6 месяцев назад

Thanks for the question! I'm front-loading my 401k for 2 reasons: 1. Personal preference - I'd rather have the money invested sooner rather than later (although this might result in me losing out on some matching, I should check how it works on my plan) 2. My retirement account offers both parts (after tax + in-plan distribution) to make the mega backdoor Roth IRA possible, so I want to max out my pre-tax and start putting money towards my mega backdoor as soon as I can.

@CobaltLobster 6 месяцев назад

Need a side gig (1099) work if you really want to make it work faster. Solo 401k plans are amazing. If you get monetized on YT that counts as sole proprietor work. You can literally put 100% of income up to the IRS 415 limit ($69,000 for 2024) using them. There's a lot of rules but it's easy enough to sort out.

@raymondwzeng 6 месяцев назад

Oh you bet I'm going to be LLC S-Corp when it makes sense to do so (in terms of at least making back the yearly payments for registered agents and other fees)! Things are definitely moving a bit on the slower side at the moment, but there is a potential opportunity for me to increase my income by quite a bit assuming the promotions come through (which, luckily, don't involve too much of my soul going to the company...)

@CobaltLobster 6 месяцев назад

@@raymondwzeng You don't even need an S-Corp. Just do it as a sole proprietorship initially. Until you have a full time employee, S Corps are just a pain in the butt. Have to have meetings, board of directors, blah blah blah. You can do sole proprietorship , get the solo 401k without the headache.

@user-ct8dn2dv1q 6 месяцев назад

I know software engineers always switch jobs every few years for a massive pay increase. You ever think about what happens to your 401k for everytime you switch companies? Or can you keep rolling over the 401k to the next company

@HatedJared 6 месяцев назад

You can roll it, or just open an IRA and roll your 401ks into it each time you leave a job. Only issue is that you likely lose the employer match if they have a longer vesting schedule.

@raymondwzeng 6 месяцев назад

Want to continue the conversation about financial independence and retiring early? Join the community Discord server here: discord.gg/j6MK5FvQ8h

@jonathanfoster2263 6 месяцев назад

good info. I am a big fan of the 401K, its the reason I am able to retire this year. That said I am not retiring early, I will be 60 when i retire at the end of this year. I am able to use my 401K without the early withdrawal penalty. I am wondering what you plan on doing with a 401K in early retirement? You can't really use it in early retirement, or you can but the %10 penalty makes it not worth it. So for early retirement would it not make more sense to contribute to a taxable account and just contribute enough to meet the match in the 401K. that way you will be able to use that for income in early retirement without penalty with only taxes for long term capital gains which will be less than you will pay as income plus penalty from the 401K early withdrawal. Thoughts?

@raymondwzeng 6 месяцев назад

Good question! A common way of accessing funds in a 401k in early retirement is through something called a Roth Ladder. Basically, you move your 401k into a traditional IRA, and every year you move 1 year worth of expenses into your Roth IRA (paying income tax). After 5 years, the principal of that conversion should be withdrawable without any additional penalty. There are resources online that probably explain this better, but that's the gist of what I understand about that strategy.

@jonathanfoster2263 6 месяцев назад

@dwzeng I was wondering about that, I think you have to go through a roth 401K first if your company offers it, then to the IRA correct? OR move it to a standard IRA then to a roth?

@raymondwzeng 6 месяцев назад

In my case, it would be pre-tax 401k -> traditional IRA (pre-tax) -> Roth IRA (post tax)

@Noobnubnoob 6 месяцев назад

@raymondwzeng 6 месяцев назад

You can roll over the 401k, or keep it there. I think it depends on whether the new 401k plan is worth it (lower fees, better provider, etc.) for you personally. The other option is a traditional IRA, but because I have the megabackdoor Roth IRA available, it's better to keep that empty. Of course, certain 401k providers will liquidate your account if you have too little in there, but that's not something that I expect to have as a problem :P