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New job, contribute to 401k?

Started by mhlavac, December 03, 2018, 07:21:29 PM

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A little bit about my situation:  I am changing jobs (current company is downsizing and staying isn't worth the risk) and am most of the way towards FI already.  I'm between 2 and 4 years away from FI, depending on market performance.  Once there, I plan to purchase a RV, spend a couple of years traveling the country and see where I want to end up and then work part time on projects that I am interested in.  I am currently in the 24% tax bracket and the new job will pay about the same.   The new job is in government rather than the private sector, and includes a pension (~6% required employee contribution), a 457 plan which I plan to fully fund and a 401k (no match).  I don't plan to stay long enough to fully vest in the pension, but I'm OK with that.

I have the financial flexibility to fully fund the 401k in addition to the pension and the 457 plan, but withdrawing the money over the first couple of years of retirement out of a 401k would be difficult.  The advantage here is that by fully funding the 401k in addition to 457 and pension, I could drop into a lower tax bracket.   Assuming I stay at the new gig for 3 years, I'd have ~$54,000 in the 401k.  I'd like to access that money to fund my time traveling or to purchase the RV, but I'm not sure how to get at it.  I know I could do a SEPP on the 401k or a Roth conversion, but neither of those would get me access to the 401k $ in time for travel.

Any tips or tricks that you all are aware of where I could defer the taxes (at the higher tax) for the 401k, but still use the money in either year 1 or year 2 of traveling?


How old are you? You can access your 401K a few years early if you separate from your employer at a certain age (I think it's 55).

Otherwise, just remember that money is fungible. If you're close to FI and at a young age, you probably already have other savings and a taxable account. Just draw from those to travel, because your additional 401K funds replace it.