Are health savings accounts better?

[JSH]

Originally Posted by redpoint5

So 401k is more tax advantaged than IRA?

Same Same but different

401K:

• No taxes on contributions / regular income tax paid on withdrawals
• Max contribution is $19,500 per year per person
• Can withdraw without penalty @55 from your last employer
• Can withdraw without penalty @59 1/2 from earlier employers
• Sheltered from lawsuits

IRA (Roth):

• Pay taxes on contributions / withdraw tax free
• Max contribution is $6,000 per year per person
• Can withdraw contributions penalty free after 5 years
• Can withdraw any amount penalty free at 59 1/2
• Can penalty free at any time using a SEPP.
• Not sheltered from lawsuits.

SEPP is Substantially Equal Partial Payments. You agree to draw down the IRA with equal month payment for a period of 5 years or until you are 59 1/2. You pay regular income tax but no penalty. However you are screwed and pay a penalty on the whole thing if you stop taking the payments.

I prefer to max the 401K first because I would rather have a tax break today than the promise of a tax break in the future. If you remain the the same tax bracket there is no difference between taxed paid on a traditional account vs a Roth.


Our early retirement plans are as follows:

1. Retire!
2. Move out of country and live on savings outside of retirement accounts
3. Convert $50K a year from our Traditional IRAs to Roth IRAs. At current rates we would pay 5% taxes on that transfer.
4. Year 6 we can withdraw the year 1 Roth conversion tax free.
5. Repeat until year 10.
6. That gets us to 55 where we can start drawing down 401Ks penalty free

Moving back to the states depends on the USA doing something to fix our healthcare system. We refuse to pay $20K a year out-of-pocket just for insurance premiums when we can get the same level of care for a small fraction of the price in other countries. There are a lot of nice places to live in the world.

[redpoint5]

I might substantially borrow from that plan.

Where else might you live?

[JSH]

Originally Posted by redpoint5

I might substantially borrow from that plan.

Where else might you live?

To date we have visited: Mexico, Costa Rica, Columbia, Peru, Chile, Ecuador, Thailand, Vietnam, Cambodia, Slovenia, Croatia, Bosnia, Macedonia, Serbia, Montenegro, Kosovo, Bulgaria, Greece and Romania. We've been to most of Western Europe as well but immigration is hard. Canada is also difficult but you can buy your way in by loaning Quebec $2 million. (Costa Rica requires depositing $60,000 in a bank or having a $1000 a month pension)

This year we will visit: Hungary, Poland, Slovakia. We are also visiting another part of Costa Rica to do a two-week Spanish immersion class and check things out.

Belize, Panama, Spain and Portugal are popular and will need to be checked out in the near future.

Right now we have narrowed it down to countries that use a Latin alphabet. A Spanish speaking country gives lots of options if the first country doesn't work out. It wouldn't be much fun to take the effort to learn Romanian to then move a few years later and have to learn a new language.

Costa Rica and Ecuador are in the lead but so is slow travelling. Most Central and South American countries allow visitors with a US Passport a 90-180 day stay. That is enough time to rent an apartment and see the area before moving on.

EDIT. You have the advantage of rental income although I guess I do as well. We could live very comfortable what our house in Portland would rent for. Of course we could also sell it and buy 2-3 duplexes in another part of the country.

[redpoint5]

I can't speak for the logistics of Nicaragua or a substantial part of the country, but Big/little Corn Islands were superb. Probably avoid any city with significant size, but then again that's my opinion of any city in any country.

From what limited traveling I've done, Costa Rica would be on my list.

[oil pan 4]

I got all $1,700 of mine back at the end of the year.