A disclosure before I start... I have maxed out my 401k plan whenever given the opportunity to do so.Â Recently, I put 75% of my paycheck towards it because I knew I was going to a new job that might not have a 401k plan.
The other day I realized that if I continued this for the next 35 years, I might have a huge nest egg in there.Â What would happen if I had so much that withdrawing it would put me in a higher tax bracket that I'm in now?Â I know it sounds like an extraordinary good "problem" to have - and I won't be complaining.Â Getting the tax-deferred gains would definitely be a benefit as well.Â However, that's just a small amount of leverage, I'd still have to pay tax on the growth when it comes out.
I think it gets confusing because now it feels like I'm escaping taxes forever.Â However, down the line there will be a piper to pay.Â I wish there were a way to know if that piper would be charging more or less then.
(As a post script, I max out my Roth IRA as well.Â Since I "pay that piper" now, I'm hedging my bets, that if he wants more in the future, I'm still doing okay.)
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