Originally Posted by higney85

I saw your response this morning and thought about it later. I hate to be a broken record but the "why" keeps screaming. From an estate planning view, once you and your spouse (if applicable) are gone... you don't want to see probate from the grave. All love is lost to attorneys. At the same time, things can take some simple structure while alive to not only avoid probate, but pass on assets to those you love, in many cases spanning generations. How it's structured can pass more on to those who will either see an end return, or have a bigger tax bill only by your actions. That's part of estate planning and creating a team of a CPA, estate attorney, and CFP/CFA to make sure it all works to your desires and wishes. The IRS is like a pilot in the sense of "but did they"; stay within the laws (not saying anyone is skirting them) to create an EFFICIENT transfer of wealth. If over age 50-55, you should have a team, imho.

back to the original topic, that was pages ago- anything invested outside of a tax deferred account max (401k, IRA- if under income limits-, HSA, MBCBP) is after tax, including a brokerage. Yes, a brokerage is more tax advantaged, yes- personally I/we (spouse) use the brokerage acct investment for overall growth... but it's still taxable income that (likely in the realms we are discussing) will be subject to future tax. The question becomes WHY are you wanting to do the Mega back door with 401A? It's taxed now (like anything you would do outside a taxable acct, sourced from after tax dollars) but grows tax free....vs NOT loading up the 401K with an extra few tens of thousands to use for what? If saving for retirement, it's the best, but what if your savings plan has other ideas before 59.5? Needs before retirement? Stability before retirement? Income before retirement? Health issues that lean on being "done" before 65 (you or spouse)? Desire to just call in and say "I'm done" early?

The Mega is absolutely amazing in the terms of paying tax now and growth is free. It's still after tax money to start. Sure, you can load up the traditional 401k and take the 23k deduction, but that becomes future tax/RMD. You can max out everything possible for retirement but want to walk away at 55 and see a tax and penalty wall. The balance of "how" each dollar is used joins into you and your spouse's (if applicable goals) tied into income needs and desires, based on what will be available (pensions/SS/annuities/nheritance). Personally, the retirement of my wife and I will be on my savings, she's a stay at home mom with our young kids. I believe SS will means test out and it's our dollars, that may be a political stance, but that's my play, in addition to taxes going back up and rising further.

Things are currently structured with that mindset. If SS exists, I'll still buy the beer on the 19th if you beat me at this point without regard for getting SS dollars. Why? Because we made a plan. I'm not better than anyone, but a plan was made, and is being executed, with the "why " for dollars in place. Options aren't a problem, but lack of plan to a "why" can sink anyone's future. Uncle Sam will be there to get the pieces missed.