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Re: Pension Lump Sum vs Immediate Annuity

The rules for calculation of lump sum amounts for pension plans are contained in the Pension Protection Act of 2006; they start with the monthly benefit available by the pension plan rules, and use mortality tables and interest rates published by the IRS. Whether the current low interest rates matte...
by Bill M
Mon Jul 28, 2014 8:00 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension Lump Sum vs Immediate Annuity
Replies: 4
Views: 537

Re: So how long will I live? How long do I plan for?

I'm planning for 105-110. It would be terrible to plan for just <x>, and live longer. It doesn't matter what family history suggests, or what liveto100.com tells us. When the sample size is one, statistics are irrelevant. But I think there is a bigger long-term social issue here. There used to be pe...
by Bill M
Wed Jul 23, 2014 8:19 am
 
Forum: Personal Finance (Not Investing)
Topic: So how long will I live? How long do I plan for?
Replies: 55
Views: 4333

Re: New 10-Year TIPS Auction July 24 2014

I am in the process of building a portfolio of 20 issues of 10-year TIPS, with roughly equal par amounts in each. So I buy some in every auction. Some rates are good, some rates are negative. Its just like dollar cost averaging. I find it interesting that bogleheads who (as a group) consistently adv...
by Bill M
Tue Jul 22, 2014 5:33 pm
 
Forum: Investing - Theory, News & General
Topic: New 10-Year TIPS Auction July 24 2014
Replies: 17
Views: 1601

Re: Beneficiaries

I think the most important thing you are missing is the appointment of a guardian for your twins. This will probably be 75% of the text of your will, naming the guardian and setting up the trust accounts until they turn 18 (or 30, or, until the youngest child turns 18) and appointing the trustee for...
by Bill M
Tue Jul 22, 2014 8:03 am
 
Forum: Personal Finance (Not Investing)
Topic: Beneficiaries
Replies: 23
Views: 1370

Re: Hw many credit cards to own?

We own and regularly use three; all offer rewards of some kind and none charge annual fees. (1) Universal Card, because of its $0 liability policy, for all internet transactions (it gets replaced about once every year or so, due to fraudulent transactions), (2) Discover Card, for almost all day-to-d...
by Bill M
Mon Jul 21, 2014 11:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Hw many credit cards to own?
Replies: 69
Views: 4119

Re: TIPs Inflation Calculation

At the end of 2015 you would get two tax forms, 1099-INT showing $980, and 1099-OID showing -$2,000 interest. Put both on Schedule B, and you get to shelter $1020 of other ordinary income from the IRS. I think this how most of us would do it. I just wish the rules covered the case where the negativ...
by Bill M
Thu Jul 17, 2014 1:07 am
 
Forum: Investing - Theory, News & General
Topic: TIPs Inflation Calculation
Replies: 7
Views: 1129

Re: TIPs Inflation Calculation

to expand on sscritic's response, Suppose you bought $100K of TIPS in 2014, and their coupon rate was 1%. Assume the 2% deflation happened early in the year. During 2015 you would receive payments of 1% of the reduced principle ($98K), so $980. At the end of 2015 you would get two tax forms, 1099-IN...
by Bill M
Wed Jul 16, 2014 8:49 am
 
Forum: Investing - Theory, News & General
Topic: TIPs Inflation Calculation
Replies: 7
Views: 1129

Re: Inherited a promissory note--what to do?

.....you'd have to keep up to date with his situation as he could die, then his estate could be settled quickly. The concern here would be that the debtor's estate may not need to go through probate, either because it is too small (or negative), or that all the assets have payable-on-death clauses ...
by Bill M
Wed Jul 16, 2014 8:05 am
 
Forum: Personal Finance (Not Investing)
Topic: Inherited a promissory note--what to do?
Replies: 22
Views: 2420

Re: Assisted Living Residence and Care Agreement - Questions

My Mom was in a similar facility, in PA, and I got to know the terms of the Residency Agreement rather well. Yours sounds similar in lots of ways. The "Living Unit" can be either (1) a self-contained independent-living apartment or (2) a room in a special assisted-living section, or (3) a ...
by Bill M
Sun Jul 13, 2014 3:00 pm
 
Forum: Personal Finance (Not Investing)
Topic: Assisted Living Residence and Care Agreement - Questions
Replies: 30
Views: 2909

Re: When you retire you plan to?

Moving is hard work. Staying put is easy. So while there are many nice places to move to, there needs to be a reason to move. We've not identified any such reason, so are staying.
by Bill M
Mon Jul 07, 2014 11:53 am
 
Forum: Personal Finance (Not Investing)
Topic: When you retire you plan to?
Replies: 44
Views: 3377

Re: Anyone switch to non-branch banking?

It is hard to have a safe deposit box at an internet bank, so a minimal account at a brick&mortar(&vault) nearby is useful. It also makes it easier to deposit paper checks that come in the mail. It also makes it easier to get free notary service and Medallion Signature Guarantees. But for tr...
by Bill M
Wed Jun 25, 2014 8:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Anyone switch to non-branch banking?
Replies: 54
Views: 4328

Re: How common are after-tax in service rollovers?

Vanguard has a report on the defined contribution plans they administer, available at https://pressroom.vanguard.com/nonindexed/2013.06.03_How_America_Saves_2013.pdf From that report--plans offering after-tax contributions has been flat at 19% of all plans. Participants using after-tax contributions...
by Bill M
Tue Jun 24, 2014 12:57 am
 
Forum: Investing - Theory, News & General
Topic: How common are after-tax in service rollovers?
Replies: 17
Views: 1258

Re: Why does Vanguard sit on your money for a week ?

I've certainly noticed the 7-day hold period, but there is only one case where it sort-of matters -- back-door Roths. The web interface forces me to wait before doing the Roth conversion. The phone reps always seem to be able to do things beyond what I can do myself via the web (and especially since...
by Bill M
Fri Jun 20, 2014 5:48 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard sit on your money for a week ?
Replies: 14
Views: 1521

Re: [Poll] Have you taken any Investments course?

With MOOCs free and widely available, I've taken several: Finance, Financial Engineering (I and II), Mathematical Methods of Finance, Monte Carlo Methods of Finance, Computational Finance, Behavioral Economics, and probably several more. They all came long after the classes that mattered, from that ...
by Bill M
Fri Jun 20, 2014 5:28 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] Have you taken any Investments course?
Replies: 60
Views: 2840

Re: How much do you contribute to your HSA?

Can you explain what you mean by tracking your medical expenses and reimbursing yourself later? Is this just for mental accounting? I'm somewhat AR about records. I keep all the EOB forms from UnitedHealthCare and the Dental plans (downloaded as pdf files), and also scan the insurance premium state...
by Bill M
Wed Jun 18, 2014 7:43 am
 
Forum: Personal Finance (Not Investing)
Topic: How much do you contribute to your HSA?
Replies: 17
Views: 937

Re: How much do you contribute to your HSA?

Once you incur some out-of-pocket medical expenses, you can reimburse yourself for them from your HSA -- years after the fact. In the meantime, the account grows tax-free. Not tax-deferred -- tax-free. So I contribute the maximum to the HSA every year, and pay the medical bills from the regular chec...
by Bill M
Tue Jun 17, 2014 10:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: How much do you contribute to your HSA?
Replies: 17
Views: 937

IRS tax refund for deceased Mom

Mom passed away in February this year; I filed her 2013 fed 1040 before that date. In April, while still waiting for the refund check, I received a "CP05" notice stating "We've received your 2013 tax return, and are reviewing it to verify (list of six income/withholding bullet items)....
by Bill M
Tue Jun 17, 2014 4:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: IRS tax refund for deceased Mom
Replies: 2
Views: 333

Re: Curious SS "when do I take it" spreadsheet

Major problem is that formula for cell L9 (and later in col L) assume 12% annual return on the 66-70 SocSec benefit. You're adding 1% of the account balance to the reduced SocSec payment, not 1%/12. And a couple other minor quibbles: The increase factor in cell C2 assumes a 7% increase each year of ...
by Bill M
Fri Jun 13, 2014 8:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Curious SS "when do I take it" spreadsheet
Replies: 5
Views: 891

Re: Estate planning questions

I also know from experience that probate can take a long time. Whether it necessarily HAS to or not, I don't know, but the ones I have been involved with as an heir took as long as a year to be settled. One of the first jobs of an executor is to publish a notice in the local legal newspapers that l...
by Bill M
Thu Jun 12, 2014 11:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: Estate planning questions
Replies: 8
Views: 1426

Re: FYI: 2nd Q Es Tax [2nd Quarter Estimated taxes due June

Since I no longer have paycheck from which to have withholding withheld, I signed up for EFTPS (start at same URL as above). It took about a week for the snail-mail form in getting the account set up. Now that it is, it's much easier and simpler. Too late for 2Q14, but plan ahead for 3Q14.
by Bill M
Thu Jun 12, 2014 11:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: FYI: 2nd Q Es Tax
Replies: 4
Views: 461

Re: TOD/POD and estate planning

* We didn't push the issue since by default, the estate is divided among the children, ... Before going this route, you should investigate the extra costs and "hassle factor". Unless there are lots of $$$ involved, you may walk away from the inheritance. * primary beneficiary, per stirpes...
by Bill M
Wed Jun 11, 2014 7:50 am
 
Forum: Personal Finance (Not Investing)
Topic: TOD/POD and estate planning
Replies: 15
Views: 1171

Re: TOD/POD and estate planning

TOD/POD bypass anything stated in a will, so the concern about a mismatch isn't. Instead you need to be concerned about keeping the TOD/POD up to date. A will is something written once, and includes all of the contingencies (e.g. what happens if one of the kids dies first, does it go 100% to remaini...
by Bill M
Tue Jun 10, 2014 8:11 am
 
Forum: Personal Finance (Not Investing)
Topic: TOD/POD and estate planning
Replies: 15
Views: 1171

Re: What is this (possible) pension worth?

One way to answer the question is to ask what would an insurance company charge you for an equivalent single-premium annuity? Going to Vanguard's Annuity Access (Hueler Investment Services) and entering the numbers I get a premium of $15601.95 (with your age bumped to 35, since they only give annuit...
by Bill M
Wed Jun 04, 2014 10:06 am
 
Forum: Personal Finance (Not Investing)
Topic: What is this (possible) pension worth?
Replies: 12
Views: 854

Re: POD (Pay on Death)

Person B may not even know that he/she is the POD beneficiary. I've run into that case as well. My FIL had an account POD to DW, and we only found out about it when the executor of his estate told us. As executor of my Mom's estate, I believe it was my responsibility to track down all beneficiaries...
by Bill M
Mon Jun 02, 2014 2:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: POD (Pay on Death)
Replies: 16
Views: 2153

Re: POD (Pay on Death)

I was wondering, and it may vary by company, but what is the actual procedure for claiming it. So let's say Person A has Person B designed as a POD beneficiary. I am assuming Person B would need Person A's account number and contact the bank with a copy of the death certificate? My experience is th...
by Bill M
Sat May 31, 2014 11:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: POD (Pay on Death)
Replies: 16
Views: 2153

Re: Who is doing In Plan Roth conversions?

What are the gap years? The gap years are the low-income years after you retire, before you start pension/SocialSecurity. In my case, I retired at 61, will start pension at 65 and Social Security at 70. So I have several years with little or no taxable income. I can take advantage of the standard d...
by Bill M
Thu May 29, 2014 10:33 am
 
Forum: Personal Finance (Not Investing)
Topic: Who is doing In Plan Roth conversions?
Replies: 35
Views: 2545

Re: Who is doing In Plan Roth conversions?

I would be doing it now if allowed, but my 401k won't let me until I'm 59 (or it might be 59 1/2), so for now I'm just marking time. Prior to 2013 you could only do in-plan roth conversions on funds that were "withdrawable" from the 401k plan, so typically could only be done at age 59 1/2...
by Bill M
Thu May 29, 2014 7:52 am
 
Forum: Personal Finance (Not Investing)
Topic: Who is doing In Plan Roth conversions?
Replies: 35
Views: 2545

Re: Who is doing In Plan Roth conversions?

What are the gap years? The gap years are the low-income years after you retire, before you start pension/SocialSecurity. In my case, I retired at 61, will start pension at 65 and Social Security at 70. So I have several years with little or no taxable income. I can take advantage of the standard d...
by Bill M
Thu May 29, 2014 12:26 am
 
Forum: Personal Finance (Not Investing)
Topic: Who is doing In Plan Roth conversions?
Replies: 35
Views: 2545

Re: Lump Sum Distribution or Annuity?

Its all about risk. With a pension, they are taking the risk and guaranteeing you the monthly payments. With the lump sum you are taking the risks. If the market tanks...if you live exceptionally long...other black swans.... Or, if you die early...if the market soars...if your kids need cash... Ther...
by Bill M
Wed May 28, 2014 9:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Lump Sum Distribution or Annuity?
Replies: 20
Views: 1375

Re: POD (Pay on Death)

Its still part of the estate. So if the estate is subject to Federal Estate taxes, it is taxable. If subject to state estate taxes, it is taxable. If subject to inheritance taxes (like in Pennsylvania), it is taxable. The one big advantage of POD is that it avoids probate, so you don't need to file ...
by Bill M
Wed May 28, 2014 9:31 am
 
Forum: Personal Finance (Not Investing)
Topic: POD (Pay on Death)
Replies: 16
Views: 2153

Re: Spending in first year of retirement

I'm curious... why did you figure your expenses would go up by 66% after retirement? A CFP several years ago looked at our income, looked at our spending (very LBYM), and couldn't believe it. We took his figure for planning. A second calculation was to add a 2-week vacation every month to our exist...
by Bill M
Wed May 28, 2014 7:46 am
 
Forum: Personal Finance (Not Investing)
Topic: Spending in first year of retirement
Replies: 8
Views: 1025

Spending in first year of retirement

Having never been retired, it has always seemed ludicrous to ask us how much we are going to spend while retired. Yet that is one of the necessary inputs to any financial plan. So we had (what I thought) a good method to determine retirement spending -- with good records of spending for the past 10-...
by Bill M
Wed May 28, 2014 12:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Spending in first year of retirement
Replies: 8
Views: 1025

Re: Fidelity vs. Vanguard

I have accounts at both. Fidelity really screwed up an in-plan Roth 401k conversion a few years ago, and refused to fix it. No problems with goofs at Vanguard. My Mom had accounts at both. As executor, I've had to deal with both to get the accounts distributed. Vanguard was a snap. Fidelity was coun...
by Bill M
Thu May 22, 2014 11:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity vs. Vanguard
Replies: 75
Views: 7941

Re: Who is doing In Plan Roth conversions?

Doing a conversion while still working??? I'm not surprised it is nearly nobody. I had one of the exceptional cases a few years ago, when I had some headroom in the 28% AMT bracket and took advantage of it. But after retiring, I certainly plan to do significant in-plan Roth conversions in the so-cal...
by Bill M
Thu May 22, 2014 10:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Who is doing In Plan Roth conversions?
Replies: 35
Views: 2545

Re: AMT Planning Strategies

I'm usually in what Kitces calls the AMT "Bump zone". With most income from employment, it hasn't been possible to adjust this to do the "alternate year" tricks, of being below the bump zone one year and above the bump zone the next. So with those restrictions, it isn't until nea...
by Bill M
Thu May 22, 2014 9:30 am
 
Forum: Personal Finance (Not Investing)
Topic: AMT Planning Strategies
Replies: 13
Views: 1342

Re: Process for surviving spouse.

One thing I've found that I don't understand is that some banks insist of seeing the "short certificate" issued by the registrar of wills that indicates letters testamentary were issued to me. Even when there were named beneficiaries on the account. Makes no sense to me. Anyone else seen ...
by Bill M
Mon May 12, 2014 9:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Process for surviving spouse.
Replies: 50
Views: 5186

Re: Process for surviving spouse.

So far everything has a beneficiary named and on the Wiki Probate page falls under "Non Probate" There is a will. As everything is Non-Probate, does the will need to be filed somewhere? Does Probate or a lawyer need to be involved? state is Ohio. I'm dealing with a very similar situation ...
by Bill M
Sun May 11, 2014 10:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: Process for surviving spouse.
Replies: 50
Views: 5186

Re: Efficiently collecting CPI-adjusted SPIA quotes

Bill, for Lincoln Financial, I had tried calling them but did not get very far (not being a financial advisor). Document that you linked is for specific age (65). So if you wanted to get a quote from them for your particular case, do you end up calling some number or getting it in some other way? A...
by Bill M
Wed Apr 30, 2014 8:55 am
 
Forum: Investing - Theory, News & General
Topic: Efficiently collecting CPI-adjusted SPIA quotes
Replies: 14
Views: 2163

Re: (Over)pay taxes make money get I-bond

You don't have to over-pay in December to get the I-bonds. I file a 4868 in April with payment of taxes due plus $5K, and then file the return a few days later.

When you pay with a credit card, don't they call it a cash advance, and charge finance charges?
by Bill M
Wed Apr 30, 2014 8:28 am
 
Forum: Personal Finance (Not Investing)
Topic: (Over)pay taxes make money get I-bond
Replies: 5
Views: 645

Re: SS - DW insists on starting at 62; what are my options?

If you make a graph of net worth over time for each of the various SS claiming strategies, you'll see a noticeable "dip" between age 62 and 70; the strategies with the largest dip will have the largest upward slope after 70. Reasonable people can look at this collection of graphs and pick ...
by Bill M
Wed Apr 30, 2014 8:23 am
 
Forum: Personal Finance (Not Investing)
Topic: SS - DW insists on starting at 62; what are my options?
Replies: 27
Views: 2023

Re: Efficiently collecting CPI-adjusted SPIA quotes

I'm also interested in any other experience collecting these quotes. I know of only three companies that offer competitive quotes, American General, Lincoln Financial, and Principal. Here is the procedure I use to track the SPIA market, monthly: (1) American General Insurance Co -- quotes are availa...
by Bill M
Mon Apr 28, 2014 7:54 pm
 
Forum: Investing - Theory, News & General
Topic: Efficiently collecting CPI-adjusted SPIA quotes
Replies: 14
Views: 2163

Re: Anyone have over 200 individual positions in their accou

Only 160*. And "royal PITA" isn't strong enough to describe it. I wouldn't even attempt an "in-kind" transfer, rather I'd liquidate and transfer cash. Plan is to reduce the number down below 40 in the next 5-8 years (doing it the cheap way is slow, waiting for bonds and CDs to ma...
by Bill M
Sat Apr 26, 2014 12:14 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone have over 200 individual positions in their accounts?
Replies: 31
Views: 6720

Re: After Tax 401k to Roth 401k: is this bad?

Couldn't you avoid even that just by rolling it over into a Roth IRA shortly after you turn 70? The calendar year in which I turn 70 1/2 is the first for which the 401k custodian will do the RMD calculation. It will be based on the account value on 12/31 of previous year. This first RMD doesn't hav...
by Bill M
Fri Apr 18, 2014 8:25 am
 
Forum: Personal Finance (Not Investing)
Topic: After Tax 401k to Roth 401k: is this bad?
Replies: 4
Views: 528

Re: After Tax 401k to Roth 401k: is this bad?

I also have nice institutional funds available in my 401k, and use them, particularly the Stable Value fund. Much higher return and lower risk than anything I can get myself. And I do annual in-plan Roth conversions, amount calculated each year to fill the low tax brackets. The in-plan Roth conversi...
by Bill M
Thu Apr 17, 2014 8:20 am
 
Forum: Personal Finance (Not Investing)
Topic: After Tax 401k to Roth 401k: is this bad?
Replies: 4
Views: 528

Re: SS Strategy Metric

The metric I use is final net worth. Maximizing SS benefits is useless if you go broke waiting to start receiving them. To evaluate a SS claiming strategy, I first project total worth as a function of age. I expect it to decrease between now and the age I start collecting SS benefits. I look first a...
by Bill M
Wed Apr 16, 2014 11:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: SS Strategy Metric
Replies: 55
Views: 4174

Re: making your own will or trust

The real question that needs to be asked is not whether anyone has had experience in writing your own will, but whether anyone has had experience being the executor or heir of someone who wrote their own will . One can say whether one has written their own will, but not how well it worked in the en...
by Bill M
Wed Apr 16, 2014 6:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: making your own will or trust
Replies: 29
Views: 2120

Re: How should I build a TIPS income ladder?

4. Is it really that simple? If so, maybe I don't need a spreadsheet. Maybe? If you are buying the ladder over time, like at successive or annual auctions, a spreadsheet is definitely helpful. The reason is that the number of bonds to purchase increases over time. As a simple example, if I want $10...
by Bill M
Mon Mar 31, 2014 7:57 am
 
Forum: Investing - Theory, News & General
Topic: How should I build a TIPS income ladder?
Replies: 31
Views: 4643

Re: Help with Estimated Taxes

One of the key things is that all taxes withheld from paychecks are deemed to have been paid equally over the year. Even if you go to the extreme of withholding 100% of pay in December, you'd get credit for 25% of that in the long-past first quarter. So the way to deal with estimated tax is differen...
by Bill M
Mon Mar 31, 2014 7:30 am
 
Forum: Personal Finance (Not Investing)
Topic: Help with Estimated Taxes
Replies: 7
Views: 510

Re: Keeping track of expenses, early retirement?

I'd be wary about ignoring/discounting all of those "one-time expenses". They have a habit of recurring. Before retiring I did annual expense-tracking for several years and found those "one-time" things accounted for about 30% of the annual total. Things like insurance premiums (...
by Bill M
Mon Mar 31, 2014 7:25 am
 
Forum: Personal Finance (Not Investing)
Topic: Keeping track of expenses, early retirement?
Replies: 35
Views: 4658

Re: Self protecting a SPIA against inflation

Here is the 4+3=7 solution: Suppose you are 66 year-old man. From http://www.immediateannuities.com/ $450K would buy annuity that pays $2,726 per month ($32,712 per year), which is 7.27% of $450,000. Suppose you expect inflation of about 3%. How about spending only $18,000 per year, which is 4%, an...
by Bill M
Mon Feb 24, 2014 9:21 am
 
Forum: Investing - Theory, News & General
Topic: Self protecting a SPIA against inflation
Replies: 47
Views: 2385
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