1. please protect yourself by referring to it as tax *avoidance* not tax *evasion*, that later of which is of course illegal — must concur that tax avoidance is fun and inspiring — I know you put a smiley there, but I cannot imagine that IRS has a good sense of humor about tax evasion ;-\ (!)
2. pre-retirement, I did exactly what you propose. The limit was 100% of salary until I abused that and the HR department lowered the limit to 75%.
3. you may be phased out of a Roth IRA due to your salary (and of course well out of the range for a deductible IRA contrib), but I recommend to continue to max out a non-deductible, non-Roth IRA every year — particularly since you are of the early retirement mindset, once you unload the W-2 you’ll most certainly have many opportunities down the line to conduct partial rollover conversions from your traditional IRA (the non-deductible contribs and any account growth) — you can never make retroactive contributions to any IRA for a prior year, so it’s best to get the contribution done and maxed each year, worry about conversions later, at your leisure

@steve – fixed! I’m so paranoid with regards to bureaucratic authorities that everything is done by the book (hence my going to an accountant(ish) to get my state taxes done when they got too complicated). I don’t see how 100% is abuse? Although it was kinda funny to see that the state taxes for the last pay period was exactly $3.00 . I’ll probably be phased out of the IRA for 2008. I don’t think I’ll be quite phased out of the ROTH. Remember, I’m a scientist, not an engineer ;P

@tim – I don’t know if they provide that option. I know it’s possible to continue on a post-tax basis and get the match. That would probably involve IRS form 8086 (might misremember the form number), which I would like to avoid.

ERE, my memory of my 100% contribution violation was that although it was all Federal tax-deductible (and by extension, state too), it was not FICA tax-deductible. So I legitimately had to reduce my contribution level enough below 100% so that I would still have pre-tax income to pay my 6.2% (or whatever it was) for FICA and Medicare. HR should have caught it before submitting it to payroll anyway, but it was my call so I took the heat for it.
.
[RIRA == Roth IRA; TIRA == Traditional IRA]
Re: IRAs, wanted to say that even if you and Distinguished Woman get into partial phaseout of the Roth IRA, e.g. you can only make a $3k (of $5k IRA total allowed) each to a RIRA, that still leaves $2k each that you can contribute to a TIRA (albeit non-deductible contribs requiring you to file Form 8606). I say this because if you are partial phased out of the RIRA, I believe by definition the salary ranges will have you entirely phased out of the deductible TIRA.
.
Non-deductible contribs to a TIRA are sort of like a proto-RIRA: pre-tax contribs, and contribs are tax-free upon withdrawal, but any non-contrib growth in the TIRA is taxed as income (that’s where the RIRA advantage is, as you know). Not as good as a RIRA, but better than keeping it in a taxable account where dividends and gains are taxable as you go.
.
Summary: always max out your IRA (whether RIRA, TIRA, or a combo) just like you max out your 401(k) — you can play TIRA-to-RIRA (partial) conversions down the line, and you’ll thank your past self for fully exploiting the IRA every year that you could (i.e. every year you had earned income). That’s one disadvantage of full retirement: no earned income to enable IRA contributions and employ the standard deduction and personal exemption shelters. (Though taxable interest does use those shelters.)

Jacob, what do you buy in your tax-deferred plans?

I’ve read that contributing to an 401K beyond the employer match is not a good idea since taxes are currently at an all time low and will only go up in the future. That it’s best to invest in a taxable account instead (paying taxes now at the lower rate) after investing as much as you can into a ROTH. Or am I totally wrong here?

Thanks Jacob. I’m just curious, are you currently taping your 401K? If so, are you using the 72t loophole?
I’m really enjoying your site.

[...] there are perks. Some people get discounts, some get profit-sharing, and some get a nice healthy 401(k) match. That’s amazing and I’m jealous of them, but I understand that they are sponsored by [...]

@Steve Austin – I’m waiting for that until earned income (for both of us) drop to zero. Currently, I’m using IRAs to maximize taxable income.

As mentioned above, there are all sorts of vehicles available to the self-employed–Keoghs, SEP-IRAs and so forth.

You and others are lucky to have incomes so high that you can’t contribute to your IRAs. I don’t have that problem.

It has been mentioned above, but we should be absolutely clear about the timing of matching contributions by some employers. If your match occurs at the time of each contribution (as opposed to some time later) there is a chance you may forfeit your match if you hit the pre-tax limit ($16,500 in 2010) prior to your last paycheck. In these plans, employer match stops when employee contributions stop….for any reason. Some plans allow for contributions to “spill over” to after-tax once the pre-tax limit is reached, thereby eliminating the problem with stopping contributions and the associate company match. If you plan to hit the $16,500 limit any time prior to year end, it is imperative that you check with your employer to ensure you will receive full company match. There is also a $49,500 limit on company and employee contributions, if you are so lucky to reach that mark, which may also stop your match prematurely.