Investing in 401k/SEP IRA vs buying another rental annually

[Jason Coleman]

So my wife and I are torn on this question. We're both 33 years old and we have been maxing out her 401k at her w-2 job for a couple of years. That's great of course and I'm not complaining. However, if we just contributed the 401k employer match we would basically be able to buy another rental property annually with those savings. Or at least use it for rehab. I am a self employed investor/agent out of Triad NC and I contribute a significant portion to my SEP IRA annually. Again, the problem is I won't have access to those funds for another 25+ years (which is ridiculous but don't get me started). Even though both the 401k and the SEP IRA reduce my taxable income, I would still get an overall better return if I continued buying cash flowing rental properties with it. I think I know what the answer is but I just wanted to ask the BP community to see who else is struggling with this same problem. We are on the fast track to retire before I'm 40 (if we want). So I don't exactly see the benefit of having that money tied up in a government regulated account for the next 19 years after we retire early. Is that not a waste? We will most likely put the minimum match in her 401k for 2021 and I'll consult with my CPA towards the end of the year to see if contributing a small amount to the SEP IRA would greatly reduce my tax hit. As always, I am thrilled to be a part of this BP community and I thank Josh, Brandon, David, and everyone else who has been involved with providing this basically FREE platform and podcast. It's truly incredible what has happened to me and my family since we started listening 4 years ago.

[Jason E. Smith]

Jason, lots of great responses already.  I still have a W2 and I contribute 7% only because my employer will match 50% up to 7%.  So I contribute 7% just to get the "free" money.  But my choices inside that retirement account are about twenty different options, none of which I would invest in if it was outside a controlled account.  Therefore I don't contribute anything above the 7%.  A great resource for talking about retirement fund options would be @Josh Plave and I also would recommend speaking to @Tamiel Kenney or @Brent Kawakami about how cost segregation in large multifamily could have great impact on reducing your taxes.  Hope that helps!  Happy New Year!