We’d love to do a megabackdoor Roth, as we started to save very late but have been all in. We live frugally. Unfortunately, we have been unable to get my husband’s TIAA 403b to agree.
We max out IRAs, my husband’s 403b and my 457 + a small side business allows us to set aside money via a i401k. Now I’m trying to decide if we should add a 529 to the mix this year–any thoughts?
This year counts for the FAFSA, as our younger daughter is a junior. We will be 61 when she graduates.
The real plan administrator is the employer, not Fidelity or Vanguard or ADP. They may process contributions and sponsor a plan document, but decisions as to what plans actually allow are actually made by the plan administrator/ trustees (i.e., the owner of the company or specific designees). If you are a small employer and adopt a plan document by Vanguard or Fidelity, there are various plan options you can adopt. Those may or may not allow after-tax contributions that the plan administrator/trustee can elect. Ditto if an attorney drafts a customized plan doc for you.
I worked for a third party plan administration company (we did 401(k) and DBs for small employers) and we were NEVER the plan administrator for IRS or legal purposes. It was always the owner of the company. We acted on the employer’s and participant’s instructions.
Most of our clients used our prototype plan document which was approved by the IRS, which allowed plans with certain standardized/safe harbor options to qualify for an automatic determination letter (which is the IRS’s blessing on the plan). More customized plans had to be submitted to the IRS for an individual determination letter, which cost more $$ and took some time.
Yes, @shawbridge – I kept D’s 529 alive and funded with the idea that when she (eventually) has a kiddo we will have a head start on funding college. It also will work if she wants to go back for a masters.
@arabrab, I am thinking of funding to the max over time. ShawD’s 529 Plan has enough that she could go back for a DNP, but I don’t see any compelling reason for her to do that. ShawSon’s is likely to run out before the end of his schooling unless the business school lets the engineering department pay for his tuition in return for his assistantship.
It is interesting. We just closed the books this year for my companies. I have been pretty fortunate in that the world seems to be OK paying me for my ideas and efforts, including those carried out by our employees. Nonetheless, I have set up various vehicles – Defined Benefit Plan, an ILIT, and a trust that owns my interest in one of my companies – that I don’t have tons of spare cash besides what we need to live on (not that we live badly, as ShawWife said, “If we had a slush fund, what would we do that we don’t already do? and couldn’t think of anything.”).
On another note, we are trying very hard to pay off our debt, well before retirement. Minus the house, we think we can pay it off in about a year and a half. My husband came up with a graph of our debt, so we could follow it visually and be inspired to pay it off quicker—and plastered them on a wall in our study. I thought it was going to be a couple of pieces of paper, but no, the graph goes from the floor all the way up to the ceiling! He decided not to add our mortgage to the graph, because he thought then the graph would extend the length of the ceiling, down the wall on the other side, and onto the carpet!
Thought I’d post that for entertainment value. Though looking at the debt graph is actually kind of depressing!! Needless to say, when guests come over, I’m going to shut the door to the study. 
I have kept debt – smallish mortgages on two properties and somewhat larger on another – because they are at 3.25% 30 year fixed (maybe one is a little higher rate) and I thought when interest rates go up, it will be great to have these loans. Well, I’ve been waiting a while and interest rates are still incredibly low.
Our debt also is at a low rate-0%, 1.29%, 1.99%, 4% and 4.75% (reduced by tax writeoff of 39.6%), and our mortgage is at 2.875%, which is partially tax deductible.
However, it is still a big a$$ debt, and I am weary of having so much debt. Maybe I’m just getting old, but I’m ready to have it be gone. It is starting to feel like a burden, even though it’s fairly low interest.
Between my house and rentals, we had over seven figures in mortgage debt at one point.
Even with low interest rates, it becomes a cash flow issue. So we are trying to pay most of it off by the time we retire. I keep a spreadsheet that tracks a running total of what we owe.
Didn’t think of posting a chart on the wall though. 
It’s our only debt, though. And who knows when interest rates will climb high enough that you can safely make 3 or 4% in interest on your money.
Total debt - mid-low 5 figures at 2.25%.
Owing nothing feels even better.
We hate debt to a possibly unreasonable level. I once bought a car and they had some subsidized loan rate. I took out the loan, but even though it didn’t make financial sense to do so, paid it off early.
We might have a mortgage when we buy our retirement home before we sell our current home, but I won’t borrow more than 50%, and we’ll pay it off when the current home sells.
It’s a bit irrational, but it works for us.
I’d bet that no debt feels absolutely great.
As sensible as it is financially to have debt when mortgage rates are very low, it sure does feel good NOT to owe and be paying interest and principal back, especially when one is retired or retiring.
I would think that would be a wonderful feeling, with the security that the rates and payment will never go up, if it’s zero. Plus having the income you used to pay off debt for, now free.
Yes, and if you pay off real estate you aren’t living in, you can earn some nice rental income as well.
I don’t really need current income, though both rental properties make money. But, @busdriver11 and @HImom as you are both pointing out, by borrowing against the property, I am making the investment more of a bet on future appreciation than current income.
Both have probably had significant appreciation since I got the mortgages. The first property was bought in the late 80s or maybe early 90s for $50K with 10% downpayment. I took a new mortgage when rates were 3.25% when the property was valued at probably $250K. It is probably now $350K and a subway stop is supposed to be coming a block away (which would probably add $100K to the value), but that subway project is now way over budget and might be cancelled. The other we bought four years ago when the market was low, but not that much as it is a highly sought after area. It is a little small for ShawWife and me, but we have played with the thought of trading it for a larger place in the same neighborhood and moving there at some point.
The ultimate luxury of being financially secure! You don’t have to be financially sensible all the time.
“The ultimate luxury of being financially secure! You don’t have to be financially sensible all the time.”
Yes! If you have everything paid off, maybe you just don’t have to think about it as much and worry about it. Especially as people get older and start losing some of their thinking power (though that will never happen to us here on cc).
My parents have had a large amount of money in cash, for a very long time, losing out on all of the gains in the market. However, I have told them that they weren’t so foolish this year, as the market has kind of stunk anyways. But finally, today, they are talking to a Vanguard advisor about having Vanguard manage it for 0.3%. Better to have them do it for a low fee, than to just have it sitting in a money market. And I trust Vanguard not to churn it. They are so worried about doing the wrong thing, that they just aren’t doing anything (which obviously is the wrong thing).
@busdriver11 How old are your parents? Do they have income? I am going in the other direction. I have not worked for almost 9 years now, and I was commenting to my wife this morning how nice it is that we haven’t spent all our money during that time! I am using market uptics to reduce my equity exposure right now. My goal is to get rid of 40 positions and keep 2 or 3 (or 4 or 5) ETFs to keep things simple. .3% is not an exorbitant fee, especially when the investments will most likely be very low cost Vanguard funds, but I just prefer to screw things up myself. 
Other than our house, our real estate investments are probably no more than 10% of our assets and net of debt, much smaller. I don’t really worry about paying the debt as they are both in highly desirable neighborhoods. The pain of real estate are tenants who can be difficult and managing repairs at locations half an hour away. And, we are now moving to California for the winter as an experiment, which means we have to rely on a few folks if something goes wrong with the properties while we are away.