The Max Match, The Max Contribution and the Max After Tax
Prospective clients would regularly tell me they are “maxing” their 401(k)s. Upon closer inspection, I’d discover that they were not maxing their 401(k)s. What were they doing? They were maxing their employer match. This happens often enough that I think it bears explaining. When financial planners say you should “max your contribution to your 401(k),” I don’t think it means what you think it means. (See The Princess Bride.)
Losing The Conventional Wisdom Part 1:
Among the more pernicious myths of the 20th century is the notion that it’s good to defer taxes because, in retirement, we’ll all be in a lower tax bracket. This is treated as gospel by CPAs and mere mortals alike. We believe that, when the piper demands his due, we’ll be enjoying our financial freedom—retirement—at a discount.