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Reply to "Not maxing out 401k, even though high income"
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[quote=Anonymous][quote=Anonymous]My wife and I know what we contribute. We both max it out. We file jointly. And we both became millionaires. We both have pensions so when we both turn 73, our income is going to sky rocket. We will have RMDs.[/quote] This is why high income people shouldn't "max out" 401k contributions. If you do the math on RMD's it may make more sense to put in enough to get the employer match and then invest in brokerage accounts. This is especially true if you have enough saved that you will be leaving money to your heirs. Brokerage accounts are inherited with a stepped up basis; in contrast, qualified accounts like 401ks are not -- they must be withdrawn on a short schedule and are taxed as income to your heirs. [/quote]
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