Hi all,

Manlobbi informed me of this board after I posted this as an OT post on the mechanical board. I hope it is not OT here!!

My son is 24 and an industrial operations engineer finishing his second year at a job where he makes close to $100K/year but can expect substantial pay increases in the next 5 years which could more than double his income.

His federal tax rate is 22% this year and possibly 24% in 2025, and his state tax rate is 5%
His employer matches the first $2150 in 401k contributions. The overall max my son can contribute to a 401K plan will be $23,500 in 2025.
I do not yet know the investment choices he has available in his company's 401K plan, but i assume it will be a few index funds, broad-type mutual funds and target retirement funds.

He has a taxable brokerage account(that I still manage with him). It was once an UTMA that became his at age 21. After using some of these funds for college, he still has over $500K in that account with a lot of unrealized long-term capital gains. My son's long-term capital gains tax rate is 15%.

He currently doesn't want to contribute more than the matching amount to his 401K because of cost of living expenses while making right about $100K per year. Note - He does max his annual Roth IRA contributions each year.

SOOooo - would it be wiser to max his 401K plan now, and pay himself that amount from his taxable account for the next 4-5 years, or just wait and plan to increase his annual 401K contributions as his salary increases? The former plan would represent about $6,670 not paid annually in state/federal taxes (until he retires), but he would be paying something less than $1000 in long-term capital gains each year.

I appreciate your thoughts - Smufty