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Re: please analyze portfolio and suggest improvement

You're in the 28% bracket with those 403b/457 contributions. You might have AMT. You can probably stay under the ACA investment tax threshold, the ATRA itemized deduction phaseout threshold, and the ATRA personal exemption phaseout threshold, but of course not the ACA wages tax.
by Bob's not my name
Thu Sep 18, 2014 6:00 am
 
Forum: Investing - Help with Personal Investments
Topic: please analyze portfolio and suggest improvement
Replies: 5
Views: 508

Re: Trying to understand taxes in retirement, correct me

Depends on where you live and what your expectations are. I've paid for assisted living in three states and it was about $100,000/year/person. It's a lot cheaper in other parts of the country, but my three states were in low and high cost of living areas.
by Bob's not my name
Tue Sep 16, 2014 9:02 pm
 
Forum: Investing - Theory, News & General
Topic: Trying to understand taxes in retirement, correct me
Replies: 11
Views: 1032

Re: Trying to understand taxes in retirement, correct me

we'd owe $760 if we made 20k working and used 30k in LTCG. Is this accurate Clearly not. Your personal exemptions and standard deduction alone would wipe out all tax liability. Where does the $760 come from? People at that income level don't pay taxes. By the way, I recommend you keep $1M in reserv...
by Bob's not my name
Tue Sep 16, 2014 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: Trying to understand taxes in retirement, correct me
Replies: 11
Views: 1032

Re: Roth stock/bond allocation

So your strategy is to increase the risk in your portfolio as you get older? Most people do the opposite. However, if that is your plan it doesn't make any difference where you hold the stocks, along as you keep migrating toward an all stock portfolio. As for saving Roth until last, I suggest you sa...
by Bob's not my name
Tue Sep 16, 2014 6:50 am
 
Forum: Investing - Theory, News & General
Topic: Roth stock/bond allocation
Replies: 8
Views: 675

Re: Roth Question

Roth makes no sense when your marginal rate is 34% and you can't max two 401k's and two IRAs. When you're retired your tax rate on withdrawals is likely to be way under that. There are other arguments, too, but you don't need more than these.
by Bob's not my name
Tue Sep 16, 2014 4:11 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth Question
Replies: 10
Views: 1123

Re: Portfolio Advice Needed - Thanks!

Dailystreet wrote:Debt: Student Loans (16k, 5.3-6.5% Interest Rates)

What should I do with my 16k in cash?
by Bob's not my name
Mon Sep 15, 2014 5:19 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Advice Needed - Thanks!
Replies: 4
Views: 463

Re: Inherited 403b - lump sum?

You're homing in on my intent. Almost there. Hint: if a group of guys all agree to rob a bank, is the robbery legal?
by Bob's not my name
Sun Sep 14, 2014 7:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inherited 403b - lump sum?
Replies: 16
Views: 656

Re: Inherited 403b - lump sum?

More squabbles result from pursuit of consensus than from exercising the authority the elderly person gave you for a reason. It's not clear if the OP has that authority.
by Bob's not my name
Sun Sep 14, 2014 6:53 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inherited 403b - lump sum?
Replies: 16
Views: 656

Re: DINK 200K household income - ways to reduce taxable inco

You can make direct Roth IRA contributions. You're way below the phaseout.
by Bob's not my name
Sun Sep 14, 2014 5:57 pm
 
Forum: Personal Finance (Not Investing)
Topic: DINK 200K household income - ways to reduce taxable income?
Replies: 31
Views: 3598

Re: Inherited 403b - lump sum?

2stepsbehind wrote:(assuming everyone is on board)
Why? Whoever has the authority to make the decisions has the authority. Whoever doesn't doesn't.
by Bob's not my name
Sun Sep 14, 2014 5:08 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inherited 403b - lump sum?
Replies: 16
Views: 656

Re: Inherited 403b - lump sum?

Yes, Roth conversion is the obviously superior choice. Same tax now (0% federal, maybe 0% state), less tax in the future.

Why do you need sibling agreement? Who has the responsibility and authority to make the decisions?
by Bob's not my name
Sun Sep 14, 2014 4:57 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inherited 403b - lump sum?
Replies: 16
Views: 656

Re: Roth Question

That's for Roth IRA contributions. The OP appears to be asking about Roth 401k contributions, for which the phaseout is not relevant. Furthermore, the phaseout is MAGI, not gross income.
by Bob's not my name
Sun Sep 14, 2014 10:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth Question
Replies: 10
Views: 1123

Re: Roth Question

abstainer (that's autocorrect for bsteiner :D ) makes a valid point for those who can saturate their available tax-advantaged space. Since the OP has $35,000 (probably $36,000 next year) of pre-tax space and $11,000 of Roth space available every year, he can shelter about $42,000 of his $140,000 gro...
by Bob's not my name
Sun Sep 14, 2014 9:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth Question
Replies: 10
Views: 1123

Re: Inherited tIRA-benefits to liquidating?

The key oversight here is very common: people forget that tax-deferred savings are tax-deferred. Hence the mythology about "capital gains being taxed at regular income tax rates". You pay the regular income tax rate today or you defer it to the withdrawal age. Either way, you pay regular i...
by Bob's not my name
Sun Sep 14, 2014 4:53 am
 
Forum: Investing - Help with Personal Investments
Topic: Inherited tIRA-benefits to liquidating?
Replies: 14
Views: 891

Re: Inherited tIRA-benefits to liquidating?

You're ignoring your 5% state tax. Isn't it true that IL taxes capital gains but it doesn't tax IRA withdrawals, regardless of age? So if I'm following correctly, you're comparing: 1. Let money grow tax-deferred in inherited TIRA, pay 25% tax at withdrawal (which I don't understand since you say you...
by Bob's not my name
Sat Sep 13, 2014 8:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Inherited tIRA-benefits to liquidating?
Replies: 14
Views: 891

Re: Second Opinion on Portfolio

Regarding the Roth IRA, since that is hers - I believe if we are not eligible, we would do a backdoor Roth IRA and open in her name (since the IRA is in her name) and I would not have any good options . Is this correct? No, you have it backwards. You have no pre-tax TIRA, so you can do a clean back...
by Bob's not my name
Sat Sep 13, 2014 1:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Second Opinion on Portfolio
Replies: 12
Views: 1059

Re: Second Opinion on Portfolio

While I'm pouring on the good cheer: Something else you have to look forward to is gnashing your teeth over education tax credits. The American Opportunity Tax Credit expires in 2017, but if they renew it or have something similar in the future you can look forward to something like this: if you're ...
by Bob's not my name
Sat Sep 13, 2014 12:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Second Opinion on Portfolio
Replies: 12
Views: 1059

Re: Second Opinion on Portfolio

We do the max on FSA and the state witholdings. By start Roth IRA's .. do you mean the backdoor method? My understanding was that we were not eligible for a Roth IRA through "regular" channels. This is probably obvious, I want to make sure I'm not missing anything. Also, I have a separate...
by Bob's not my name
Sat Sep 13, 2014 12:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Second Opinion on Portfolio
Replies: 12
Views: 1059

Re: Second Opinion on Portfolio

Tax Rate: 28% Federal Age: late thirties, wife – homemaker, 3 children (all 3yrs or younger) $5500 her IRA when deductible (this is usually not available to us as an option) $30k taxable yearly To put you in the 28% bracket with three kids, your gross income (including all your taxable investment i...
by Bob's not my name
Sat Sep 13, 2014 7:27 am
 
Forum: Investing - Help with Personal Investments
Topic: Second Opinion on Portfolio
Replies: 12
Views: 1059

Re: Roth Question

You are correct that lower earners are often taxed at high marginal rates, and you are correct that a lot of Roth advice is bad advice. However, you have the Child Tax Credit phaseout incorrect: it's a serial phaseout rather than a parallel phaseout. Other credits like the American Opportunity Tax C...
by Bob's not my name
Fri Sep 12, 2014 5:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth Question
Replies: 10
Views: 1123

Re: Low Income Investor (Tax Concerns)

Once you invest in the ROTH, it's out of reach (with a few exceptions) until you're 59.5. And by "out of reach" we mean that you can withdraw your contributions at any time, at any age, and for any reason, penalty-free. Also, William Roth requests (from the grave) that everyone stop yelli...
by Bob's not my name
Thu Sep 11, 2014 7:44 am
 
Forum: Investing - Help with Personal Investments
Topic: Low Income Investor (Tax Concerns)
Replies: 31
Views: 1866

Re: Low Income Investor (Tax Concerns)

MD: Marginal rate on top $1,000 of $10,999 is 80% , which can be avoided with 401k, 403b, or 529 contributions made in the calendar year but not by TIRA contributions. VA: Marginal rate on top $1,000 of $12,949 is 47% , which can be avoided with 401k, 403b, or TIRA contributions but not by 529 cont...
by Bob's not my name
Thu Sep 11, 2014 7:11 am
 
Forum: Investing - Help with Personal Investments
Topic: Low Income Investor (Tax Concerns)
Replies: 31
Views: 1866

Re: ESPP at 5% discount ?

The holding period effectively triples the investment duration, thereby substantially reducing the annualized yield. It also of course eliminates the guaranteed nature of the return. Finally, it doubles the amount you have invested in your employer's stock. You still get a 24% annualized return if t...
by Bob's not my name
Wed Sep 10, 2014 1:38 pm
 
Forum: Personal Finance (Not Investing)
Topic: ESPP at 5% discount ?
Replies: 83
Views: 11457

Re: Portfolio Review

That's right, the phaseout is currently MAGI $181,000 - $191,000. It'll be a thousand or two higher next year, and the 401k limit will probably be $18,000 and your pre-tax health insurance premiums might go up.
by Bob's not my name
Sun Sep 07, 2014 6:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review - Moving to a Three-Fund Portfolio
Replies: 7
Views: 1001

Re: Need help with portfolio

OK, that makes more sense. If you taxable income was $114,000 then your AGI must have been about $142,000, since a family of four gets at least a $12,000 standard deduction and four $4,000 personal exemptions (round numbers). That means your CD interest was taxed at 30% (25% nominal + 5% due to chil...
by Bob's not my name
Sun Sep 07, 2014 6:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help with portfolio
Replies: 13
Views: 744

Re: Portfolio Review

3. We may be over the income limit for Roth IRA contributions in 1-2 years. Should we transfer one or both of our Rollover IRAs into our 401ks to allow backdoor Roth contributions, given the options in our 401ks? That means your gross income will exceed about $225,000. Is that correct? Your 401k's ...
by Bob's not my name
Sun Sep 07, 2014 3:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review - Moving to a Three-Fund Portfolio
Replies: 7
Views: 1001

Re: Proportion of Roth to Traditional contributions

Agreed, but the OP is a physician.
by Bob's not my name
Sun Sep 07, 2014 9:06 am
 
Forum: Personal Finance (Not Investing)
Topic: Proportion of Roth to Traditional contributions
Replies: 16
Views: 1121

Re: Need help with portfolio

Note that your taxable income will decline with your proposed plan, which is more tax-efficient. Your taxable income is much higher than I expected -- it suggests to me your $750,000 of taxable investments have been throwing off 8% income. Or is it possible you didn't max your 403b's last year? Some...
by Bob's not my name
Sun Sep 07, 2014 4:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Need help with portfolio
Replies: 13
Views: 744

Re: Need help with portfolio

Your taxable investments would have to be throwing off more than $90,000/year to put you in the 28% bracket. They may be throwing off enough to put you in the 25% bracket. Your standard deduction and four personal exemptions, combined with $35,000 of 403b contributions and maybe some pre-tax health ...
by Bob's not my name
Sat Sep 06, 2014 8:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help with portfolio
Replies: 13
Views: 744

Re: Proportion of Roth to Traditional contributions

kafshar1 wrote:As far as investing the tax break from a traditional, it seems that this is automatic because the contribution to the 401k is via a payroll deduction.
This sentence indicates you have misunderstood the advice. There's nothing automatic about investing the tax break.
by Bob's not my name
Sat Sep 06, 2014 2:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Proportion of Roth to Traditional contributions
Replies: 16
Views: 1121

Re: Proportion of Roth to Traditional contributions

You ask a good question, particularly for a physician who will have high income. You have some excellent responses: I think it is a good idea to go 100% traditional 401(k) and not use the Roth 401(k) at all. The OP will probably be able to do conversions at a lower tax rate in the future. That's wha...
by Bob's not my name
Sat Sep 06, 2014 7:24 am
 
Forum: Personal Finance (Not Investing)
Topic: Proportion of Roth to Traditional contributions
Replies: 16
Views: 1121

Re: Pay off Debt, by cashing in Retirement account?

$48,000 of gross income would have you in the 15% bracket, but right at the top, so a withdrawal -- which I also doubt is even allowed -- would be taxed in the 25% bracket. You also have AZ state tax and a penalty, so you'd lose 39% of the funds. Meanwhile, the 4.5% interest is deductible against yo...
by Bob's not my name
Thu Sep 04, 2014 12:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pay off Debt, by cashing in Retirement account?
Replies: 25
Views: 2078

Re: Graduating Debt-Free, or with Elite College Degree?

SuperSaver wrote:Unless we move towards 100% merit-based air
That sounds like particularly cruel eugenics, but I'm for it.
by Bob's not my name
Thu Sep 04, 2014 12:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Graduating Debt-Free, or with Elite College Degree?
Replies: 92
Views: 4873

Re: Advice for a recent college graduate

⋅ You're not eligible for the Saver's Credit because you were a student. Next year you might be eligible for a modest 10% credit. Here's a simple primer on the credit: http://thefinancebuff.com/savers-credit-plays-hard-to-get.html From there go to irs.gov for up-to-date info. It seems unl...
by Bob's not my name
Wed Sep 03, 2014 3:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Advice for a recent college graduate
Replies: 9
Views: 486

Re: Porfolio guidance please

Hefty enough for King George to see without his spectacles.
by Bob's not my name
Tue Sep 02, 2014 5:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Porfolio guidance please
Replies: 11
Views: 798

Re: Porfolio guidance please

Your AGI should be your gross income minus your 401k contributions, your student loan interest deduction, and any employer plan pre-tax insurance premiums and FSA contributions withheld from your pay. If your employer pays the entire cost of your health, dental, and disability insurance and you make...
by Bob's not my name
Tue Sep 02, 2014 11:48 am
 
Forum: Investing - Help with Personal Investments
Topic: Porfolio guidance please
Replies: 11
Views: 798

Re: Porfolio guidance please

I'm surprised it's that high, since your 401k contributions, student loan interest deduction, standard deduction (more if you itemize), personal exemptions, and any pre-tax health, dental, and disability insurance premiums and/or FSA contributions withheld from your pay would knock your gross income...
by Bob's not my name
Tue Sep 02, 2014 10:20 am
 
Forum: Investing - Help with Personal Investments
Topic: Porfolio guidance please
Replies: 11
Views: 798

Re: Porfolio guidance please

That's right, except brackets don't "phase out." There are abrupt thresholds. (The distinction is important because a huge range of tax factors do phase out.) I figured your taxable income must be in the mid-$80,000 range based on information you provided, but you don't have to guess, you ...
by Bob's not my name
Tue Sep 02, 2014 8:56 am
 
Forum: Investing - Help with Personal Investments
Topic: Porfolio guidance please
Replies: 11
Views: 798

Re: Porfolio guidance please

Salary: $103,000 combined plus another 10k or so from rental income and side jobs. 2. Since we are in the 25% tax bracket should I contribute to my pretax 401k instead of the Roth IRA? I started the Roth after finding this forum and now contribute to this instead of 401k due to John Hancocks high f...
by Bob's not my name
Tue Sep 02, 2014 5:20 am
 
Forum: Investing - Help with Personal Investments
Topic: Porfolio guidance please
Replies: 11
Views: 798

Re: Pay Off Student Loans or Invest?

The use-it-or-lose-it argument only applies in the saturated case, which we don't have here. The OP is not close to maxing his TSP. His high marginal tax rate makes TSP contributions compelling. 33.5% is compelling, but 37% is even more compelling. Looks like he's safely under the student loan inter...
by Bob's not my name
Mon Sep 01, 2014 5:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pay Off Student Loans or Invest?
Replies: 10
Views: 962

Re: Pay Off Student Loans or Invest?

Many people have debt of some kind (a mortgage, for example) and sleep fine. My high marginal rate bothers me more than my debt, because I hate giving up more than 40% of my marginal income to taxes. Borrowing at 2% (mortgage after tax, and car loan) allows me to max my tax-deferred accounts. The OP...
by Bob's not my name
Mon Sep 01, 2014 3:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pay Off Student Loans or Invest?
Replies: 10
Views: 962

Re: Pay Off Student Loans or Invest?

To be clear: I'm recommending TSP contributions over loan reduction. At a 37% marginal tax rate and with the loan rates at 2-3%, I think that makes sense.
by Bob's not my name
Mon Sep 01, 2014 12:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pay Off Student Loans or Invest?
Replies: 10
Views: 962

Re: Pay Off Student Loans or Invest?

Unless you marry someone with student loan debt (thus already saturating the deduction, which has the same limit whether you're married or single) or a large enough income to put you over the MFJ phaseout for the deduction, your interest is deductible at the margin, since your total annual interest ...
by Bob's not my name
Mon Sep 01, 2014 5:03 am
 
Forum: Personal Finance (Not Investing)
Topic: Pay Off Student Loans or Invest?
Replies: 10
Views: 962

Re: Next phase of minimizing taxes for high-income household

Nobility Let me explain my thinking on the back door Roths. And I may be wrong. Let's say you have $50k in cash, to either invest or pay the taxes on your Roth conversion. You have already paid the taxes on that. You also have $36k in a 401k. If you convert 36k in the 401k to a Roth you will have t...
by Bob's not my name
Sun Aug 31, 2014 8:23 pm
 
Forum: Personal Finance (Not Investing)
Topic: Next phase of minimizing taxes for high-income household
Replies: 33
Views: 3586

Re: Pay off student debt with family inheritance "loan"?

You still can't deduct $10,000 of student loan interest annually.
by Bob's not my name
Sun Aug 31, 2014 8:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: Pay off student debt with family inheritance "loan"?
Replies: 23
Views: 1464

Re: Pay off student debt with family inheritance "loan"?

Elhorsehead wrote:I would lose a tax break down the road.
What tax break? You cannot deduct $10,000 of annual student loan interest.
by Bob's not my name
Sun Aug 31, 2014 8:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Pay off student debt with family inheritance "loan"?
Replies: 23
Views: 1464

Re: Next phase of minimizing taxes for high-income household

My wife runs a simpliest business. I do the tax return.
by Bob's not my name
Sun Aug 31, 2014 3:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Next phase of minimizing taxes for high-income household
Replies: 33
Views: 3586

Re: Max Contribution 401K Traditional vs Roth

If you're looking backwards the parameters are different, since the dollar limits on all tax-advantaged vehicles used to be much lower, catch-up contributions didn't exist, Roth 401k's were rare, and the backdoor Roth IRA wasn't allowed. Today, upper middle-class taxpayers can typically save a third...
by Bob's not my name
Sun Aug 31, 2014 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: Max Contribution 401K Traditional vs Roth
Replies: 5
Views: 625

Re: Max Contribution 401K Traditional vs Roth

Sure. For example, a family in the 25% federal bracket and the child tax credit phaseout with an 8% state tax has a marginal tax rate of 36%. So a $17,500 Roth 401k contribution consumes $27,344 of gross income, of which $9,844 is thrown away to taxes. On the other hand, a $17,500 traditional 401k c...
by Bob's not my name
Sun Aug 31, 2014 3:03 pm
 
Forum: Investing - Theory, News & General
Topic: Max Contribution 401K Traditional vs Roth
Replies: 5
Views: 625

Re: Investments for Kids

That's another good example.
by Bob's not my name
Sun Aug 31, 2014 8:27 am
 
Forum: Investing - Help with Personal Investments
Topic: Investments for Kids
Replies: 15
Views: 1007
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