Stop 401k deductions to pay debt is this smart?

[Lee Prete]

My partner and I are considering stopping all 401k deductions (MAXED YEARLY) to fund debt payoff. I am not sure if this is the correct approach and looking for advice?

We currently have a 2 rental properties and produce around 7k annually in combined profits after all expenses. With combined income that will exceed

135k without deductions we rely on the 39k 401k deduction to lower are tax bracket yearly.

We see the value of getting debt free to accumulate cash to purchase property. On the other hand we do not want to have to give that cash to the irs in additional taxes owed yearly.

Any advice from the BP community would be appreciated. Also if there are any Connecticut investors out there that can share their tax professional contacts that would be great.

[Lee Prete]

Greeting Dmitriy,

I am going to continue to contribute the required amount to make sure the the employer match is still coming into the account.

The interest on the debt is at 13.99 percent.

What I was worried about was making to much money and not having enough deductions to take me down a tax bracket.

Accelerating debt pay off is a great thing but if I am going to have to give the irs an extra 12 percent I might be better of finding a different way to accomplish this payoff.

Respectfully,

Lee