Can you do a blog covering the mechanics of getting laid off? A lot of tech companies have a notice period when you're let go (don't have access to internal systems) but still on payroll and a severance period when you're off payroll but still getting severance. What documents will you need to get while you're still technically employed? At which point is it appropriate to file for unemployment?
Unfortunately this is an area where I have just add many questions as you do now. Each state is different and there is the confusing payroll period, severance payments, unemployment, insurance…
If you find a good resource on this please let me know.
Does Meta match after-tax 401k contributions? That is, if I forgo pre-tax contributions and only do after-tax, will they make matching contributions into my pre-tax account?
I ask because I was laid off earlier this year after having already maxed out my pre-tax 401k and my former employer's match. My former employer matched any contributions: pre-tax, Roth, or after-tax. I'll be starting at Meta before the end of the year and would like to take advantage of their matching as well.
Alternatively, I may be able to over-contribute, get the match, and then withdraw the over-contribution, but I'd rather avoid the hassle if possible.
Great post! How do you determine maxing out your 401k via mega backdoor vs. investing that amount into a taxable brokerage account if the goal is to retire early and access funds before age 59 1/2? For example, long term capital gains is 0% up to ~$80k for married couples filing jointly, so in a state with no income tax the liability of withdrawing against a brokerage account could be $0 (assuming ~$100k/yr withdrawal in retirement minus standard deductions). Of course this assumption changes based on many different variables but would value your thoughts!
If you are investing aggressively for FIRE you will end up with a significant portion of your investments beyond those in tax sheltered accounts. I currently have >60% of my overall investments in taxable.
In addition there are multiple ways to access that money early in FIRE if needed without penalty. Two examples: 1. Contributions to Roths can be withdrawn penalty free 2. There is something called 72t which will allow you to begin making withdrawals early in equal amounts. Good topic for a future post!
Just curious why you choose to manage your 401k to individual funds instead of a target date fund. The Vanguard 2055 Target Date fund for example does:
Domestic Stock 51.92%
Foreign Bond 3.17%
Domestic Bond 6.11%
Foreign Stock 36.43%
This seems roughly inline with what you are targeting as well?
That is a great option. It matches my target allocation for my overall portfolio while keeping fees low.
In this case I am optimizing more granularity around “asset location”. Wanting to hold more bonds in my 401k, more international in my Roth, and balanced (minus bonds) in my taxable.
Interesting thought. I'm curious: Is it your gut feeling that the Intl equity will outperform vs. US equity going fwd? Or, did you study to arrive at that conclusion? Because looking back 50+ yrs of data, US eq generally outperformed Intl eq most of the years:
I’ll pull more details when I do my full post on the topic. More often international gets bundled into “Growth”. It likely doesn’t matter that much (asset location overall does but over tuning within Roth vs traditional). One of the white papers I like on the topic is actually from betterment. They also include good reference links https://www.betterment.com/resources/asset-location-methodology
Just got the time to read that Betterment paper. Thanks. Very valuable info there but the paper is just too long and boring and IMHO could've been condensed to 20% to make it readable and yet keep all the important content. It did help me appreciate why it made sense to allocate bonds in 401k, Intl in Roth, and US eq in taxable accounts. I'll need to significantly rebalance my positions to do that. Will wait a bit until I read your Step 9 just in case there's a better way to do it!
Can you do a blog covering the mechanics of getting laid off? A lot of tech companies have a notice period when you're let go (don't have access to internal systems) but still on payroll and a severance period when you're off payroll but still getting severance. What documents will you need to get while you're still technically employed? At which point is it appropriate to file for unemployment?
Unfortunately this is an area where I have just add many questions as you do now. Each state is different and there is the confusing payroll period, severance payments, unemployment, insurance…
If you find a good resource on this please let me know.
Does Meta match after-tax 401k contributions? That is, if I forgo pre-tax contributions and only do after-tax, will they make matching contributions into my pre-tax account?
I ask because I was laid off earlier this year after having already maxed out my pre-tax 401k and my former employer's match. My former employer matched any contributions: pre-tax, Roth, or after-tax. I'll be starting at Meta before the end of the year and would like to take advantage of their matching as well.
Alternatively, I may be able to over-contribute, get the match, and then withdraw the over-contribution, but I'd rather avoid the hassle if possible.
They do not. You can try to call your last employer’s 401k provider and ask about withdrawing an excess contribution.
How do you make sure you dont over contribute? When do you change the 401k election settings back to 0%?
With fidelity it automatically stops contributing after you hit the max.
Great post! How do you determine maxing out your 401k via mega backdoor vs. investing that amount into a taxable brokerage account if the goal is to retire early and access funds before age 59 1/2? For example, long term capital gains is 0% up to ~$80k for married couples filing jointly, so in a state with no income tax the liability of withdrawing against a brokerage account could be $0 (assuming ~$100k/yr withdrawal in retirement minus standard deductions). Of course this assumption changes based on many different variables but would value your thoughts!
If you are investing aggressively for FIRE you will end up with a significant portion of your investments beyond those in tax sheltered accounts. I currently have >60% of my overall investments in taxable.
In addition there are multiple ways to access that money early in FIRE if needed without penalty. Two examples: 1. Contributions to Roths can be withdrawn penalty free 2. There is something called 72t which will allow you to begin making withdrawals early in equal amounts. Good topic for a future post!
Just curious why you choose to manage your 401k to individual funds instead of a target date fund. The Vanguard 2055 Target Date fund for example does:
Domestic Stock 51.92%
Foreign Bond 3.17%
Domestic Bond 6.11%
Foreign Stock 36.43%
This seems roughly inline with what you are targeting as well?
That is a great option. It matches my target allocation for my overall portfolio while keeping fees low.
In this case I am optimizing more granularity around “asset location”. Wanting to hold more bonds in my 401k, more international in my Roth, and balanced (minus bonds) in my taxable.
Could you consider writing a post on the different asset locations across the 3 buckets?
Just curious, why 55+% bonds in the 401k? Thanks!
Andre, I understand why you want to have more bonds in your 401K but why do you keep more Intl in your Roth?
The thought is that international will out perform US equities. So having the higher growth asset in the account that grows tax free makes sense.
Interesting thought. I'm curious: Is it your gut feeling that the Intl equity will outperform vs. US equity going fwd? Or, did you study to arrive at that conclusion? Because looking back 50+ yrs of data, US eq generally outperformed Intl eq most of the years:
https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=TotalStockMarket&allocation1_1=100&asset2=IntlStockMarket&allocation2_2=100
I’ll pull more details when I do my full post on the topic. More often international gets bundled into “Growth”. It likely doesn’t matter that much (asset location overall does but over tuning within Roth vs traditional). One of the white papers I like on the topic is actually from betterment. They also include good reference links https://www.betterment.com/resources/asset-location-methodology
Just got the time to read that Betterment paper. Thanks. Very valuable info there but the paper is just too long and boring and IMHO could've been condensed to 20% to make it readable and yet keep all the important content. It did help me appreciate why it made sense to allocate bonds in 401k, Intl in Roth, and US eq in taxable accounts. I'll need to significantly rebalance my positions to do that. Will wait a bit until I read your Step 9 just in case there's a better way to do it!
Thanks. Eager to see your full post on asset allocation & rebalancing. Is it still Step 9 of 10 or did you decide to move it up? :)