Jumping on dividend trains?

[Vanraw]

Jake, Not exactly. On the ROTH you can take out the principle you invested after 5 years, but you cant touch the profit until 59 without paying penalty and tax. The only exception is first time home buyers that can take out 10k one time from profit.

Breandon, It really depends on where your at and what your tax burden will be, come retirement. My take is that I have a mix. I have a lot in standard 401k, and I will have to pay taxes on that. The taxes will be based on how much I pull out of 401k, and how much I am making on taxed investments and benefits. My plan is to balance how much I take from 401k along with other income, and keep my tax bracket lower by augmenting my income with Roth withdrawals.

My hope is to hold down my tax bracket to a minimum. Take out 401k differed up to the bracket level and live the rest off 401k roth and cash investments. Note that I don't have a regular IRA. My company and many companies offer ROTH IRA, which is not subject tot he income restrictions of a IRA. The ROTH 401k follows the 401k rules / maxes, not the smaller IRA limits.

Rule of thumb.

1. Always do the 401k match. always. Anyone who doesn't is throwing money on the floor.
2. Try Increase 401k deferred as well as tax deductions to pull you down to the next tax bracket or prevent you from hitting the highest.
3. Invest ROTH if you can so you have tax free cash to draw from, and be in a emergency position to draw the principle before 59.