Our 2025 investment contribution plan looks like this:
| Account | Contribution Limit | Status |
| Mrs. 457B | $23,500 | ✅ |
| Mrs. Roth 403B | $23,500 | 7/12 |
| Mr. Roth IRA | $7,000 | ✅ |
| Mrs. Roth IRA | $7,000 | ✅ |
| Mrs. HSA | $8,550 | 7/12 |
| I-Bond | $10,000 | December |
| Total | $79,550 | On target |
The last few years Mrs. Dress Pockets has been front loading her 457B deferred compensation plan with a 25% contribution rate. The goal being to hit the contribution limit in the first half of the year. Tax withholding and net pay jump the second half of the year when 457B deferrals fall to $0.
Mrs. Dress Pockets’s 403B plan employer match used to require hitting the employee contribution maximum in the last paycheck of the year. In other words, if you front loaded or hit the 403B employee contribution maximum before the last paycheck of the year, the employer match also stopped short of the maximum. Many 401K/403B plans including hers have now gone to a true up where the employer match is maximized at the end of the year regardless of when the employee maximum is hit. Perhaps I’ll test this feature in future years. Out of habit we smooth out the 403B contribution rate at 12-13%
For 2025, I decided to convert from tax deferred 403B contributions to Roth 403B contributions. Without dual incomes, we are sitting in the 22% federal tax bracket and paying a bit more tax now to increase our Roth buckets seemed liked a decent hedge. In a brief moment of panic this month, I toggled the Roth 403B contributions back to tax deferred hoping to qualify for some portion of the federal American Opportunity Tax Credit. But then learned I can’t double dip 529 plan qualified withdrawals with the AOTC and toggled the 403B contributions right back to Roth.
For the first time since I “retired”, I turned on monthly $2,000 VTSAX purchases in our joint brokerage. The hope here is to gradually decrease our oversized cash position. I’m not sure this will make much of a dent with our monthly taxable dividends approaching $1,600. Market return wise we would be better off investing a large chunk of cash over dollar cost averaging. But some investing is better than no investing.
