Search found 274 matches

Return to advanced search

Re: Roth conversion tax question

Since this thread has gotten into the devilish details, let me add my strange case--- My Mom opened a Roth IRA in 2013, and did a conversion of a traditional IRA into it. No previous Roth IRA. I inherited that Roth IRA in 2014. My personal Roth IRA was opened back in 1999, so that 5-yr period has pa...
by Bill M
Mon Dec 15, 2014 3:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: Roth conversion tax question
Replies: 23
Views: 1263

Re: How much is reasonable to spend on vacation?

I'm finding it tough as a Boglehead to spend the money because I keep thinking this 1k or 2k invested in a tax deferred vehicle over 40 yrs would be worth x amount. Vacations are something you save for in advance, just like college tuition and for your retirement. Saving has to have a purpose, and ...
by Bill M
Sun Dec 14, 2014 11:40 pm
 
Forum: Personal Finance (Not Investing)
Topic: How much is reasonable to spend on vacation?
Replies: 30
Views: 2862

Re: Roth 401K to Roth IRA

I've done this every year since my employer's plan allowed Roth 401k contributions. They were all "trustee-to-trustee" rollovers, and I was over 59 1/2. Not sure if any other type of rollover would have been allowed. I think the change this year was Notice 2014-54 that permits basis isolat...
by Bill M
Sun Dec 14, 2014 11:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Roth 401K to Roth IRA
Replies: 3
Views: 426

Re: Roth conversion tax question

IRS Pub 590 gives a flowchart telling whether a distribution is taxable or not. Has it been five years since you set up and first contributed to the Roth IRA? If not, then partially taxable. Were you 59 1/2 at time of distribution? If yes, then tax-free Distribution used to buy or build first home? ...
by Bill M
Sun Dec 14, 2014 10:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Roth conversion tax question
Replies: 23
Views: 1263

Re: Retirees: Withdrawals by time and amount

We start with our estimate of annual spending and divide it in half. First half is withdrawn in January, second half in July. This goes into an online savings account which also stores our "emergency fund". This gets moved as needed into the near-zero-interest checking account. The investm...
by Bill M
Fri Dec 12, 2014 3:21 pm
 
Forum: Investing - Theory, News & General
Topic: Retirees: Withdrawals by time and amount
Replies: 36
Views: 3425

Re: (Poll) Did you tap into emergency fund in the past 10 ye

The purpose of an emergency fund is to have a supply of liquid cash to cover the expenses if/when the paychecks don't come. We're retired now, and so the role of the emergency fund has changed -- there are no more paychecks - they never come. So we use the "emergency fund" as a (what I cal...
by Bill M
Thu Dec 11, 2014 10:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: (Poll) Did you tap into emergency fund in the past 10 years?
Replies: 56
Views: 3773

Re: A puzzle about Social Security

Thanks for both posts. Very interesting and helpful. Social Security is actuarially neutral among the various single-person claiming strategies. Excluding the spousal benefits, is it also actuarially neutral among two-person (married couple) strategies? Of course not, but you set up the problem suc...
by Bill M
Thu Dec 11, 2014 8:17 am
 
Forum: Personal Finance (Not Investing)
Topic: A puzzle about Social Security
Replies: 46
Views: 3521

Re: Poll: Your Portfolio Tax Diversification

The trouble is this isn't under our control, like asset allocation is. I'd love to move all my taxable accounts to Roth, but rules get in the way. Likewise there is a high cost to move traditional IRA to Roth. So its hard to take the results of the poll as being a measure of desired allocation. BTW,...
by Bill M
Thu Dec 11, 2014 1:13 am
 
Forum: Investing - Theory, News & General
Topic: Poll: Your Portfolio Tax Diversification
Replies: 45
Views: 2450

Re: A puzzle about Social Security

It was just pointed out to me in a private message that my understanding of life expectancy is incorrect. Life expectancy does not represent the median projected age, but the average. (For some reason, I assumed the distribution of remaining years was normal. Alas.) Without some research, I don't k...
by Bill M
Thu Dec 11, 2014 12:55 am
 
Forum: Personal Finance (Not Investing)
Topic: A puzzle about Social Security
Replies: 46
Views: 3521

Re: A puzzle about Social Security

Social Security is actuarially neutral among the various single-person claiming strategies. This assumes, of course, that the lifetime of the person follows the standard mortality tables. That is given in the puzzle statement; there is no known information that their expected lifetime of the aunt or...
by Bill M
Thu Dec 11, 2014 12:33 am
 
Forum: Personal Finance (Not Investing)
Topic: A puzzle about Social Security
Replies: 46
Views: 3521

Re: Pension Help

For questions like this one, I always go to Vanguard's Annuity Access (https://investor.vanguard.com/annuity/fixed), run by Hueler, and get some quotes. For a 57-year-old male, $38,000 premium paid now will get $296.36 or $287.65 per month starting 8 years from now (two numbers because two different...
by Bill M
Wed Dec 10, 2014 11:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pension Help
Replies: 22
Views: 1287

Re: POLL: Timing of Jan 1st payments

We're in the "reason other than bunching" category. Bunching doesn't do much for us, because (1) the "light" years for bunching are still above the standard deduction, and (2) we get hit with AMT every year, which takes away almost all the deductions anyway. So we just pay things...
by Bill M
Wed Dec 10, 2014 10:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Timing of Jan 1st payments
Replies: 9
Views: 1464

Re: How long do grilles last?

I have a propane grill, and cook year round. I replace the burner about every two or three years. Also I have to replace the grill cooking surface about every five years, and usually the vaporizers at the same time. At some point getting replacement parts becomes difficult, and that determines the l...
by Bill M
Tue Dec 09, 2014 12:14 am
 
Forum: Personal Consumer Issues
Topic: How long do grilles last?
Replies: 26
Views: 2465

Re: How do you rebalance?

We rebalance once per year, and I answered that way in the poll. But the more interesting aspect, not covered by the poll, is how. We have both taxable and IRA accounts, and want to maintain the asset allocation across the total, not for each individual account. It would be ideal if every rebalance ...
by Bill M
Thu Dec 04, 2014 5:11 pm
 
Forum: Investing - Theory, News & General
Topic: How do you rebalance?
Replies: 40
Views: 3150

Re: What % of your fixed-income is TIPs?

Ijim wrote:When breaking down your portfolio, what portion (or %) of your fixed-income/bonds are TIPs?

We do a floor-upside strategy. The floor is 100% TIPS. The upside is three-fund, so 0% TIPS. So the overall percentage is meaningless.
by Bill M
Thu Dec 04, 2014 9:21 am
 
Forum: Investing - Theory, News & General
Topic: What % of your fixed-income is TIPs?
Replies: 71
Views: 3503

Re: Roth Conversion make sense in our situation?

If you are waiting until 70 to start Social Security, then you will then have a significant bump in taxable income. The key thing to determine is the marginal rate you will face in your 70's, with both the RMDs and Social Security. The 25% bracket is wide. If the marginal rate is still 25%, then the...
by Bill M
Thu Dec 04, 2014 9:10 am
 
Forum: Personal Finance (Not Investing)
Topic: Roth Conversion make sense in our situation?
Replies: 8
Views: 818

Re: [Poll] What's Your Tax Prep Strategy?

I'm surprised that for a very-DIY-type group, there is no DIY option to the poll. I think it is important to realize how actions through the year affect taxes, and the only way to know that is to understand, in depth, how taxes are calculated. The various computer programs, like TurboTax, TaxAct, et...
by Bill M
Tue Dec 02, 2014 3:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: [Poll] What's Your Tax Prep Strategy?
Replies: 64
Views: 3632

Re: Tax deductions for donating a lot

Also, check on that $5000 number, maybe it is really $500? Between $500 and $5000 form 8283 is required. I've always tried hard to avoid filing this, rather breaking up donations into $500 portions and spreading them out one each year. Donating more than $500 in a single year seems to require knowi...
by Bill M
Mon Dec 01, 2014 2:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax deductions for donating a lot
Replies: 20
Views: 1423

Re: 401k limits

There's going to be earnings on the excess contribution, and that portion will be taxable whenever you receive it. So there will be a 1099-R in either case. But it's not much of a "tax mess" -- I regularly overcontributed to my MegaCo 401k (since the ERs in that plan were lower than I get ...
by Bill M
Tue Nov 25, 2014 11:02 am
 
Forum: Personal Finance (Not Investing)
Topic: 401k limits
Replies: 1
Views: 513

Re: Is investing more risky today today than before the inte

Actual value is still driven by earnings; the internet didn't change anything beyond creating new markets and earning potential. The noise (fluctuations around actual value) is still driven by fear and greed. I don't think the internet has had any impact on the greed side, but I think it is likely t...
by Bill M
Tue Nov 18, 2014 4:12 pm
 
Forum: Investing - Theory, News & General
Topic: Is investing more risky today today than before the internet
Replies: 30
Views: 3484

Re: Tax Planning for 2015 Roth conversion

I have to wonder how sure you are about the 2015 income figures. I do a similar sort of projection of income, and plan for a Roth conversion, but delay the conversion until December when I am more sure of the income figures. The full year's amount of interest and dividends and capital gains is hard ...
by Bill M
Tue Nov 18, 2014 3:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax Planning for 2015 Roth conversion
Replies: 11
Views: 1427

Re: What to calculate withdrawals on?

A regular withdrawal percentage, such as 4%, would only start when you are both retired, and both are collecting pensions (if any) and Social Security. Prior to that time, withdrawals are likely to be significantly different than the long term rate. I think it is best to think of two phases: (1) pre...
by Bill M
Tue Nov 18, 2014 3:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: What to calculate withdrawals on?
Replies: 11
Views: 933

Re: Contribution to ROTH in 401K

So I am looking for advice on whether I should do the company's option of contribution to a ROTH or just continue on with the max pre tax for 2015 ? There are certainly calculators that evaluate the tradeoffs between pre-tax 401k and Roth-401k contributions, and I ran them and ignored the results. ...
by Bill M
Thu Nov 13, 2014 8:08 am
 
Forum: Personal Finance (Not Investing)
Topic: Contribution to ROTH in 401K
Replies: 13
Views: 1136

Re: Transition from Saving to Spending

I'd call it auto-withdrawal. It then makes you contemplate how to spend it, it is just sitting there in your checking account. Actually, it just gives you an assurance that spending is OK. I constantly have to tell my wife, we've earned it, do what you want. Somehow, if it's a balance in our checki...
by Bill M
Thu Nov 13, 2014 6:34 am
 
Forum: Personal Finance (Not Investing)
Topic: Transition from Saving to Spending
Replies: 37
Views: 4881

Re: How do you track the value of your illiquid assets ?

S&P calculates an index of real estate prices, the Case-Shiller Index, and publishes it monthly. Latest values available at http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us---- Take your purchase price, divide by the index value for ...
by Bill M
Thu Nov 13, 2014 6:28 am
 
Forum: Personal Finance (Not Investing)
Topic: How do you track the value of your illiquid assets ?
Replies: 50
Views: 3256

Re: Pay for Release from Escrow

When I did this years ago there was no fee. But I had enough equity in the house that the mortgage company wasn't worried about recovering the outstanding balance even if I never paid any of the taxes. It sounds like your mortgage company is worried, rightly or wrongly. I suspect if you wait a few y...
by Bill M
Sun Nov 09, 2014 11:14 am
 
Forum: Personal Finance (Not Investing)
Topic: Pay for Release from Escrow
Replies: 5
Views: 662

Re: Home ownership/refinance paperwork - keep or shred?

I'm generally in favor of scanning everything and discarding the paper. But, ... There are two categories here - (1) stuff that might be interesting to you sometime later, and (2) stuff that might be essential in future real estate transactions. (1) interesting later - this is stuff that I'd scan an...
by Bill M
Sun Nov 09, 2014 11:12 am
 
Forum: Personal Finance (Not Investing)
Topic: Home ownership/refinance paperwork - keep or shred?
Replies: 7
Views: 1342

Re: After Tax 401k question

Its certainly reasonable; my 401k with MegaCo allowed this, and I did it several times. You need to check the plan documents carefully for withdrawal types: does the plan allow a withdrawal of just the after-tax subaccount? Or is it a withdrawal of all employee contributions? Either way, part of the...
by Bill M
Tue Nov 04, 2014 8:11 am
 
Forum: Personal Finance (Not Investing)
Topic: After Tax 401k question
Replies: 7
Views: 773

Re: Early SS or Higher IRA Withdrawal??

The higher withdrawal rate is not a problem by itself, especially since it would be significantly reduced once SS starts. You obviously have projected figures for spending and investment returns, since you gave calculations for withdrawal rates for each year. Spending goes up by some inflation facto...
by Bill M
Wed Oct 29, 2014 10:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Early SS or Higher IRA Withdrawal??
Replies: 19
Views: 1621

Re: Vanguard, TIPs, Accrued Interest & RMDs

I think I found the answer to my question in Pub 550 The following paragraph covers the treatment of TIPs in a taxable account, but I think it is reasonable to apply it to when interest is constructively received for valuing a retirement account. "Inflation-Indexed Debt Instruments If you hold...
by Bill M
Sat Oct 25, 2014 10:31 am
 
Forum: Personal Finance (Not Investing)
Topic: Vanguard, TIPs, Accrued Interest & RMDs
Replies: 22
Views: 1823

Re: Gross Yearly Income needed in Retirement (Speculation)

Then the "extras". Pure speculation. How many European/African/Asian vacations per year?? How much other stuff?? To get a handle on the amount, I assumed one big trip per month -- and since that is a gross overestimate of what we actually have done, we can feel good about saving the exces...
by Bill M
Thu Oct 23, 2014 7:47 am
 
Forum: Personal Finance (Not Investing)
Topic: Gross Yearly Income needed in Retirement (Speculation)
Replies: 159
Views: 13150

Re: Gross Yearly Income needed in Retirement (Speculation)

The "rules of thumb" all seem to be a percentage of pre-retirement income. I found that ridiculous, since (like most Bogleheads) we saved a LOT. So instead, I kept track of actual expenses for several years. Everything went through our joint checking account, so it was simple to get a CSV ...
by Bill M
Wed Oct 22, 2014 7:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Gross Yearly Income needed in Retirement (Speculation)
Replies: 159
Views: 13150

Re: PhD in Computer Engineering?

Its not the admission that you should care about. Just about any PhD program will grant admission if you are paying full price. Its the assistantship/fellowship application that matters, so that you are paid to go to school. If you apply for and get an outside fellowship, you can basically have your...
by Bill M
Wed Oct 15, 2014 7:11 am
 
Forum: Personal Finance (Not Investing)
Topic: PhD in Computer Engineering?
Replies: 33
Views: 3430

Re: Spiking HSA Contribution limits

I gave up years ago with funding my HSA from payroll deductions. I just do an online transfer in early January each year. The HSA provider, Optum Bank, is more than willing to take my deposits any time I want to send them in. There is no requirement that you have only a single HSA account, though yo...
by Bill M
Wed Oct 08, 2014 6:51 am
 
Forum: Personal Finance (Not Investing)
Topic: Spiking HSA Contribution limits
Replies: 10
Views: 1145

Re: 529 or not

Whether the parents or the students pay for college is an individual family matter. I think it's part of a parent's responsibility, but I recognize that others have different opinions. CEEB (same organization that does the SAT exams) used to put out an annual survey of college costs (and maybe they ...
by Bill M
Tue Oct 07, 2014 10:57 am
 
Forum: Personal Finance (Not Investing)
Topic: 529 or not
Replies: 38
Views: 4147

Re: Inflation Bonds - Staying the Course?

Inflation has certainly been low for the past few years. The target inflation rate is clearly a political decision, between those wanting low inflation (lenders) and those wanting high inflation (borrowers). And the target rate needs to be high enough to give the Taylor Rule some leeway to handle ex...
by Bill M
Wed Sep 17, 2014 9:36 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Bonds - Staying the Course?
Replies: 43
Views: 3244

Re: Personal Financial Inventory (From Vanguard's Site)

The idea is great, and the form is a good start at the data to record. The file on Vanguard's site is a fillable-forms PDF file. I tried filling this in a few years ago, but got really frustrated with it. It had space for six of each type of account, but no way to enter information for the seventh a...
by Bill M
Wed Sep 17, 2014 9:23 am
 
Forum: Personal Finance (Not Investing)
Topic: Personal Financial Inventory (From Vanguard's Site)
Replies: 2
Views: 485

Re: What evidence would prove the Boglehead mentality wrong?

Getting back to OP's question, Stay the course. This one, in the place of honor, is based on nothing more than empirical observation. This is the key piece of the "Boglehead mentality." And it is based purely on past performance predicting future results. We're constantly told that isn't s...
by Bill M
Wed Sep 17, 2014 9:08 am
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 16386

Re: What Happens To Mortgage When Borrower Dies?

I used to hear that if one person on a joint checking account died, the account would be frozen when the bank found out about the death. So I used to remind DH that the first thing to do after I die (if he wants to continue eating) is to remove as much money as he could from joint accounts and open...
by Bill M
Mon Sep 15, 2014 6:02 am
 
Forum: Personal Finance (Not Investing)
Topic: What Happens To Mortgage When Borrower Dies?
Replies: 12
Views: 1991

Re: What Happens To Mortgage When Borrower Dies?

The mortgage is still due. If there is a mortgage cancellation policy, part of the work as executor will be to get the insurance company and bank together on it. If there are a few months that the payments are not made, it will affect your grandmother's credit score. That should not be an issue. Onc...
by Bill M
Mon Sep 15, 2014 5:59 am
 
Forum: Personal Finance (Not Investing)
Topic: What Happens To Mortgage When Borrower Dies?
Replies: 12
Views: 1991

Re: Reminder: estimated taxes due Monday

I have an EFTPS account, and used it for this quarter's estimated tax payment. But I received a notice a few days ago about "Direct Pay," which sounds like an alternative method. Any users of this? Any reason to switch?
by Bill M
Sat Sep 13, 2014 7:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Reminder: estimated taxes due Monday
Replies: 17
Views: 1220

Re: chip credit cards

Chip cards (also known as EMV cards) contain a secret cryptographic key used in the data exchange with the terminal. The technology is the same as used in cellphone SIM cards. Where a simple magnetic strip card can be duplicated by simply reading and reproducing the magnetic stripe information, dupl...
by Bill M
Thu Sep 04, 2014 7:31 am
 
Forum: Personal Finance (Not Investing)
Topic: chip credit cards
Replies: 25
Views: 1685

Re: Online Savings Accounts

If you are interested in the behind-the-scenes action at banks, there is a MOOC offered by coursera, Economics of Money and Banking, taught by Perry Mehrling of Bernard College Columbia University. He goes into detail of how banks lend long-term and borrow short-term, manage the clearing operations,...
by Bill M
Wed Sep 03, 2014 6:29 am
 
Forum: Investing - Theory, News & General
Topic: Online Savings Accounts
Replies: 26
Views: 2950

Re: Do I need to see my credit report?

Yes, you need to see your credit report. The credit score you are seeing is only one part of the information in your credit report. There is a another whole section, Personal Information, that you need to also verify for accuracy. annualcreditreport.com gives you a free copy each year; take advantag...
by Bill M
Tue Sep 02, 2014 5:55 am
 
Forum: Personal Finance (Not Investing)
Topic: Do I need to see my credit report?
Replies: 37
Views: 2304

Re: Do my in-laws need a will?

Save yourself a lot of grief-- convince them to make wills. I was executor of my Mom's estate earlier this year, and it was an eye-opener. For two bank accounts the bank lost the POD beneficiary information. Fortunately there was a will (which we all initially thought was unneeded), so I was declare...
by Bill M
Mon Sep 01, 2014 11:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do my in-laws need a will?
Replies: 26
Views: 2001

Re: Taxes on Roth conversion at retirement

...if you convert a $3 million 401k to a Roth... If your 401k has $3M when you turn 70, the first RMD is going to be about $113K. That is going to likely put you in the 25% tax bracket. During the years with no/low income, it might be worthwhile converting more than what is tax-free - possibly fill...
by Bill M
Tue Aug 26, 2014 8:24 am
 
Forum: Personal Finance (Not Investing)
Topic: Taxes on Roth conversion at retirement
Replies: 15
Views: 715

Re: Choosing and paying an executor

sunnyday wrote:For the secondary, my child is just a toddler.

For the secondary...your bigger issue is picking the person to appoint as guardian of your toddler. Making that person the executor also would only be a minor addition to the work&responsibility.
by Bill M
Mon Aug 18, 2014 4:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Choosing and paying an executor
Replies: 10
Views: 905

Re: Choosing and paying an executor

Spouse is great first choice, and, for normal situations and where there is a surviving spouse, the work is likely minimal. Problem is the secondary one. I suggest naming one of the heirs as contingent executor. They will have the incentive to keep the fees low (and remind them that any fee they cha...
by Bill M
Mon Aug 18, 2014 11:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Choosing and paying an executor
Replies: 10
Views: 905

Re: Inflation-indexed SPIAs: A Good Deal?

There are three separate variables: mortality table, interest rates, and inflation rates. Not enough data points are available to determine all of them. A few years ago AIG gave online quotes, without the 10-second delay now imposed by Hueler. It made it much easier to probe their calculations. I fo...
by Bill M
Sun Aug 17, 2014 10:53 pm
 
Forum: Investing - Theory, News & General
Topic: Inflation-indexed SPIAs: A Good Deal?
Replies: 22
Views: 3154
Next

Return to advanced search