Can you OVERFUND your 401k?
Believe it or not, it’s possible to save TOO much in your 401k.
But you if you do things right, you won’t need to worry about it.
There’s something called Required Minimum Distributions.
Uncle Sam FORCES you to take money out of your 401k even if you don’t need the money.
Then you’ll pay taxes on anything you take out of your 401k.
So you can OVERFUND your 401k if you’re FORCED to take more money out than you actually need because you’re paying taxes on money you don’t need.
But you probably don’t need to worry about it because if you #fatFIRE, you’ll likely do some smart financial engineering.
There’s a secret in the tax code called Rule 72(t).
It basically allows you to tap into your 401k BEFORE age 59.5 WITHOUT paying the 10% tax penalty.
(You’ll want to talk to a professional to dig deeper.)
So yes, you can overfund your 401k, but only if you didn’t engineer your finances correctly along the way.
