We Maxed Out All Our Retirement Accounts for the First Time!

It’s Tax Day for 2021 and our final transfer to Vanguard has gone through, so I can officially announce that Kyle and I maxed out ALL of the tax-advantaged retirement accounts available to us for the first time EVER!

We filled up:

  • Kyle’s traditional 401(k)
  • The employee side of my traditional 401(k)
  • The employer side of my traditional 401(k)
  • My Roth IRA
  • Kyle’s Roth IRA

In recent years, we capped our retirement contributions at 20% of our gross income because we were simultaneously saving for our house down payment. With our house purchase complete, we had no reason to limit our retirement contributions (except, you know, cash flow).

We set our goal of maxing out all the traditional accounts available to us in part to keep our AGI low enough to qualify, as best we were able to, for the expanded tax benefits in 2021, such as the Child Tax Credit and the Child and Dependent Care Tax Credit.

2021 was the first year that we contributed to Kyle’s expensive 401(k), and in fact we maxed it out over just the last five months of the year!

It was also the first year that I contributed to my 401(k) as my own employer. When I say I maxed the employee and employer sides out, I mean that I contributed $19,500 as an employee plus as much as was allowed as my employer based on an estimate of my income for the year—not that I got up to $57,000 total. It was a bit of a process to estimate my business profit before the year officially ended to calculate the contribution room, but having been through it once I think it will be quite a bit easier next year.

I expect we’ll aim to max out again in 2022 as our household income will be higher than in 2021. Kyle has already set up his 401(k) contributions to max out throughout the calendar year. We’ll save the 2022 Roth IRAs for spring 2023. That leaves me to contribute to both sides of my 401(k) between now and the end of December (for the employer side) and Tax Day next year (for the employee side).

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