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Re: Roth IRA vs Traditional

Confused questions yield confusing answers. I looked at your prior thread. Let's see if we know your actual situation: ⋅ You say you're in the 33% federal bracket and 10.3% California bracket, which means your combined gross income must be well over $250,000. Is that right?⋅ It a...
by Bob's not my name
Mon Apr 14, 2014 6:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA vs Traditional
Replies: 3
Views: 343

Re: 79% of bachelors degree in tax deductions/credits

Bob's not my name wrote:You can't deduct college expenses.
Ketawa wrote:You can only take one of the AOC, LLC, and the Tuition and Fees Deduction in a given year.
Angelus359 wrote:Okay, you can't have the deduction and AOC at same time.
The Tuition and Fees Deduction expired 2013.
by Bob's not my name
Mon Apr 14, 2014 1:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: delete this(edited)
Replies: 17
Views: 1537

Re: 79% of bachelors degree in tax deductions/credits

You can't deduct college expenses.
by Bob's not my name
Mon Apr 14, 2014 11:44 am
 
Forum: Personal Finance (Not Investing)
Topic: delete this(edited)
Replies: 17
Views: 1537

Re: 79% of bachelors degree in tax deductions/credits

A strategy to use is to not use the AOC in the fall semester of the first year. AOTC expires 2017 under current law, so as of 2014 the AOTC is limited to four specific years: 2014, 2015, 2016, and 2017. If you go to a top school, AOTC eligibility phases out right where financial aid eligibility pha...
by Bob's not my name
Mon Apr 14, 2014 4:36 am
 
Forum: Personal Finance (Not Investing)
Topic: delete this(edited)
Replies: 17
Views: 1537

Re: Unsubsidized Fixed Rate Stafford Loans - a good deal?

Anyone have any feel if the AOTC will be extended? On the one hand, tax breaks are often extended, because it's easy to give and hard to take away. On the other, this wouldn't be taking away, since it's set to expire. In addition, the AOTC was introduced by the current administration, which expires...
by Bob's not my name
Thu Apr 10, 2014 4:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Unsubsidized Fixed Rate Stafford Loans - a good deal?
Replies: 22
Views: 855

Re: Unsubsidized Fixed Rate Stafford Loans - a good deal?

If the borrower (student) earns less than $75k, they can deduct up to $2,500 of student loan interest payments. Not exactly. The deduction is limited for AGI, not gross or earned income, above and at $80,000, not $75,000. If the student marries the phaseout starts at $160,000 AGI. In addition the c...
by Bob's not my name
Wed Apr 09, 2014 6:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: Unsubsidized Fixed Rate Stafford Loans - a good deal?
Replies: 22
Views: 855

Re: Vanguard Roth IRA Complimentary IRA Question

A Roth contribution is taxed. Thereafter the account is is tax-free. A traditional IRA contribution is tax-exempt; it grows tax-free and is taxed on withdrawal. As I explained above, if you have a 33% combined federal/state marginal tax rate, your top $5,000 of gross income is threatened with $1,650...
by Bob's not my name
Tue Apr 08, 2014 1:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Roth IRA Complimentary IRA Question
Replies: 4
Views: 452

Re: Portfolio and game-plan checkup for 34 year old couple

joint annual income of ~$170k (variable commission component) I am aware that we are nearing the income limit for being eligible to contribute to a Roth IRA You are more than $30,000 under the phaseout. The phaseout is inflation adjusted. The phaseout is not based on gross income. The phaseout is t...
by Bob's not my name
Sun Apr 06, 2014 5:42 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio and game-plan checkup for 34 year old couple
Replies: 5
Views: 871

Re: Portfolio Advice needed for 67 year old mother

I think some respondents missed the fact that her annual gross income is about $60,000 and her annual expenses are about $50,000 and she has more than $2M net worth and she is expecting an inheritance.
by Bob's not my name
Sat Apr 05, 2014 6:27 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Advice needed for 67 year old mother
Replies: 9
Views: 632

Re: 401(k) loan for down payment

401k loans tend to cause nausea and a loss of reading comprehension on this site. haha. Agreed. Same with student loans. Obviously your student loans aren't deductible (for at least one reason and very probably for two) so you're feeling the full 6.5%. Pay them off. Consider using the 401k loan to ...
by Bob's not my name
Sat Apr 05, 2014 6:10 am
 
Forum: Investing - Help with Personal Investments
Topic: 401(k) loan for down payment
Replies: 15
Views: 925

Re: Vanguard Roth IRA Complimentary IRA Question

Your title is confusing. I'm wondering why you're investing in a Roth IRA if you're returning to school full time. A Roth IRA is a post-tax vehicle, so unless you're in the 0% tax bracket right now you paid tax on the Roth contribution. If you are eligible for and instead make deductible traditional...
by Bob's not my name
Sun Mar 30, 2014 6:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Roth IRA Complimentary IRA Question
Replies: 4
Views: 452

Re: Retired: When to move?

After doing Roth conversions, if that makes sense given your federal tax situation. Michigan (4.35%, 6.85% in Detroit) had a $90,000 exemption for taxpayers over 59.5, but in 2012 that was reduced to $40,000 and the age requirement raised to 67 for persons born after 1952. North Carolina (5.8%) unti...
by Bob's not my name
Sun Mar 30, 2014 6:13 am
 
Forum: Personal Consumer Issues
Topic: Retired: When to move?
Replies: 43
Views: 3986

Re: Backdoor Roth with duductible TIRA contributions?

BeaverFood wrote:Every explanation I see about backdoor Roths starts with nondeductible tIRAs.
Here's a thread on backdoor Roths starting with deductible IRAs, but I don't think it has any relevance to expat Wisconsinites: viewtopic.php?f=10&t=86262
by Bob's not my name
Mon Mar 24, 2014 5:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Backdoor Roth with duductible TIRA contributions?
Replies: 3
Views: 331

Re: How to help my son with law school loans?

2cents2 wrote:I'm assuming he is able to write off interest on the loans?
Bob's not my name wrote:
vachica wrote:I assume his income is over the student loan deduction threshold (75k AGI for singles).
Probably true but also irrelevant. The maximum deduction is $2,500, so the top $60,000 of his debt is not deductible regardless of his income.
by Bob's not my name
Sun Mar 23, 2014 3:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

The cash approach is of course superior to liquidating stock or borrowing, unless this would draw down cash so much as to risk forcing a later stock sale in a tax-inefficient way.
by Bob's not my name
Sun Mar 23, 2014 3:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

I'm finding it a bit mind-numbing to figure out whether financially he's better off taking out a home equity loan versus just closing some of his positions in his taxable account to retire his son's debt. It's not mind-numbing at all. It's impossible. We have none of the information needed to do th...
by Bob's not my name
Sun Mar 23, 2014 2:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

I'm finding it a bit mind-numbing to figure out whether financially he's better off taking out a home equity loan versus just closing some of his positions in his taxable account to retire his son's debt. It's not mind-numbing at all. It's impossible. We have none of the information needed to do th...
by Bob's not my name
Sun Mar 23, 2014 2:19 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

I'm finding it a bit mind-numbing to figure out whether financially he's better off taking out a home equity loan versus just closing some of his positions in his taxable account to retire his son's debt. It's not mind-numbing at all. It's impossible. We have none of the information needed to do th...
by Bob's not my name
Sun Mar 23, 2014 12:54 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

You've never stated how much would be realized in capital gains if you liquidated the least appreciated assets in your taxable account, so we can't answer. Nor have you said what your LTCG tax rate will be this year with your wife working only part of the year and next year when she's not working at...
by Bob's not my name
Sun Mar 23, 2014 11:19 am
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

Gift the stock to your son if he will pay capital gains tax at a lower rate.
by Bob's not my name
Sat Mar 22, 2014 3:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: How to help my son with law school loans?

vachica wrote:I assume his income is over the student loan deduction threshold (75k AGI for singles).
Probably true but also irrelevant. The maximum deduction is $2,500, so the top $60,000 of his debt is not deductible regardless of his income.
by Bob's not my name
Sat Mar 22, 2014 2:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to help my son with law school loans?
Replies: 58
Views: 2707

Re: 401k and ESPP

No advantage worth waiting for. See tfb's article (thefinancebuff.com).
by Bob's not my name
Sat Mar 22, 2014 11:36 am
 
Forum: Investing - Help with Personal Investments
Topic: 401k and ESPP
Replies: 33
Views: 1303

Re: Roth 401k or 401k? - lots of calculations done. sanity c

Many states have lower state income tax rates and a handful have no state income tax. Your personal situation could change a lot in 40 years and you may well retire somewhere other than CA, NY or NJ. New York tax is lower than California unless you live in NYC. Furthermore, taxpayers over 59.5 get ...
by Bob's not my name
Fri Mar 21, 2014 5:36 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth 401k or 401k? - lots of calculations done. sanity check
Replies: 11
Views: 873

Re: Roth 401k or 401k? - lots of calculations done. sanity c

You're making a "saturated case" argument, meaning that you're assuming you'll always be able to completely fill your available tax-advantaged space. Is that realistic? You say you're under the deductible TIRA phaseout, which starts at $60,000 MAGI. If you're sheltering none of your income...
by Bob's not my name
Thu Mar 20, 2014 6:56 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth 401k or 401k? - lots of calculations done. sanity check
Replies: 11
Views: 873

Re: Please clarify Investment Priority 401K v. Roth

Send us a huge check every year so you can learn to trust us.
by Bob's not my name
Thu Mar 20, 2014 4:07 am
 
Forum: Investing - Help with Personal Investments
Topic: Please clarify Investment Priority 401K v. Roth
Replies: 17
Views: 1101

Re: Single Income Family with 4 Children (so far)

Today I am working on looking into Roth IRA accounts Why? You should first develop a plan for contributing enough to your 401k and possibly a deductible spousal TIRA so that your federal marginal rate drops from 30% to 15%. Then you need to consider you state tax situation. Some states favor tradit...
by Bob's not my name
Wed Mar 19, 2014 12:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Single Income Family with 4 Children (so far)
Replies: 69
Views: 4679

Re: Should I continue to do Roth 401k and Roth IRA?

an_asker wrote:Roth 401(k) is definitely not pre-tax.
Agreed. But it is definitely pre-taxed.
by Bob's not my name
Wed Mar 19, 2014 12:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: Should I continue to do Roth 401k and Roth IRA?
Replies: 25
Views: 1426

Re: Should I continue to do Roth 401k and Roth IRA?

after tax = pre-taxed after = post before = pre taxed = past participle of tax = post-tax I pre-wrote this post before posting it. Then I previewed it post writing it and pre posting it. Roth and "pre-taxed" are the same thing, since Roth contributions are taxed. Using quote #1 above, wou...
by Bob's not my name
Wed Mar 19, 2014 4:38 am
 
Forum: Personal Finance (Not Investing)
Topic: Should I continue to do Roth 401k and Roth IRA?
Replies: 25
Views: 1426

Re: Should I continue to do Roth 401k and Roth IRA?

I am in NJ. There are no deductions for contributions to retirement accounts, whether Roth or tax deferred. Earnings on tax deferred accounts, but not the original investment, are taxed by the state when withdrawn with a possible pension exclusion (see below). No part of qualified withdrawals from ...
by Bob's not my name
Wed Mar 19, 2014 4:33 am
 
Forum: Personal Finance (Not Investing)
Topic: Should I continue to do Roth 401k and Roth IRA?
Replies: 25
Views: 1426

Re: Single Income Family with 4 Children (so far)

Missed the line in the OP that asked for family planning advice.
by Bob's not my name
Tue Mar 18, 2014 7:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: Single Income Family with 4 Children (so far)
Replies: 69
Views: 4679

Re: Should I continue to do Roth 401k and Roth IRA?

after tax = pre-taxed

after = post

before = pre

taxed = past participle of tax = post-tax

I pre-wrote this post before posting it. Then I previewed it post writing it and pre posting it.
by Bob's not my name
Tue Mar 18, 2014 2:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: Should I continue to do Roth 401k and Roth IRA?
Replies: 25
Views: 1426

Re: Single Income Family with 4 Children (so far)

I am in the 25% bracket for 2014. Your federal marginal rate is 30% because you're not maxing your 401k. What state are you in? The child tax credit starts phasing out at AGI $110,000. The phaseout adds 5% to your marginal rate. If you max your 401k ($17,500) and a medical FSA ($2,500), you will be...
by Bob's not my name
Tue Mar 18, 2014 12:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Single Income Family with 4 Children (so far)
Replies: 69
Views: 4679

Re: Should I continue to do Roth 401k and Roth IRA?

For the 401k, I can contribute my "bonus" money to a Roth bucket. The rest of the contributions are regular pre-taxed contribution. Roth and "pre-taxed" are the same thing, since Roth contributions are taxed. Traditional and "pre-tax" are the same thing, since traditio...
by Bob's not my name
Tue Mar 18, 2014 12:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Should I continue to do Roth 401k and Roth IRA?
Replies: 25
Views: 1426

Re: Don’t Bother With That High Cost 401(k)

grabiner wrote:My rule of thumb is that if the product of the expenses and the years you will be in the plan exceeds 30%, then a taxable stock investment may be better.
In other posts grabiner has clarified that "expenses" means the differential vs. what you can get at Vanguard.
by Bob's not my name
Tue Mar 18, 2014 10:59 am
 
Forum: Investing - Theory, News & General
Topic: Don’t Bother With That High Cost 401(k)
Replies: 28
Views: 2979

Re: 401k and ESPP

Laura wrote:Stick with the Target Retirement fund. No need to break out into individual holdings until you have an account of about $100k.
I disagree because you can build your own asset allocation and save about 0.1% on expenses:
ERZ80 wrote:BlackRock US Debt Index NL Fund Class W .08%
Vanguard Institutional Index Institutional Plus Shares .02%
Vanguard Total International Stock Index Fund Institutional Class .13%

Vanguard Target Retirement 2055-.19%
by Bob's not my name
Mon Mar 17, 2014 6:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k and ESPP
Replies: 33
Views: 1303

Re: 401k and ESPP

Again, Illinois favors pre-tax savings over post-tax (Roth). Your 401k contributions and withdrawals are exempt from Illinois tax, whereas your Roth contributions are taxed. Your 401k is outstanding, too. Here's why your ESPP is less attractive due to the six month holding period (herbie explained i...
by Bob's not my name
Mon Mar 17, 2014 6:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k and ESPP
Replies: 33
Views: 1303

Re: 401k and ESPP

I suggest you put as much as you can into your 401k and leave everything else alone.
by Bob's not my name
Mon Mar 17, 2014 5:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k and ESPP
Replies: 33
Views: 1303

Re: 401k and ESPP

Yes, it is a 6 Month minimum You have a parallel thread in which you explain the plan's terms more clearly. Your plan has a 3-month period and a 6-month holding period. The 6-month holding period substantially changes the attractiveness of the ESPP. In the future, include clear and complete informa...
by Bob's not my name
Mon Mar 17, 2014 4:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k and ESPP
Replies: 33
Views: 1303

Re: 401k and ESPP

Illinois tax law favors your 401k over a Roth IRA, since Illinois exempts retirement plan withdrawals and conversions.
by Bob's not my name
Mon Mar 17, 2014 4:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k and ESPP
Replies: 33
Views: 1303

Re: Don’t Bother With That High Cost 401(k)

tfb wrote:Rule of thumb is 30 divided by the number of years. The expense has to be 5% if you are out in 6 years.
by Bob's not my name
Mon Mar 17, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: Don’t Bother With That High Cost 401(k)
Replies: 28
Views: 2979

Re: Don’t Bother With That High Cost 401(k)

Employee bad choices were also part of the problem studied. We like to talk about employees making bad 401k choices, but not so much about people making bad choices with credit cards, home purchases, car purchases, tickets for sporting events, lottery tickets, legal alcohol consumption, brokers, rea...
by Bob's not my name
Mon Mar 17, 2014 12:13 pm
 
Forum: Investing - Theory, News & General
Topic: Don’t Bother With That High Cost 401(k)
Replies: 28
Views: 2979

Re: 2013 tax filing issues

We make 164K combined ( 98 his + 66 hers) Our calculated MAGI is 155K 1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction? 1. You are correct that th...
by Bob's not my name
Mon Mar 17, 2014 11:13 am
 
Forum: Personal Finance (Not Investing)
Topic: 2013 tax filing issues
Replies: 33
Views: 1007

Re: 2013 tax filing issues

We make 164K combined ( 98 his + 66 hers) Our calculated MAGI is 155K 1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction? 1. You are correct that th...
by Bob's not my name
Mon Mar 17, 2014 10:45 am
 
Forum: Personal Finance (Not Investing)
Topic: 2013 tax filing issues
Replies: 33
Views: 1007

Re: Don’t Bother With That High Cost 401(k)

Young workers change jobs and roll over.
by Bob's not my name
Mon Mar 17, 2014 10:06 am
 
Forum: Investing - Theory, News & General
Topic: Don’t Bother With That High Cost 401(k)
Replies: 28
Views: 2979

Re: 2013 tax filing issues

We make 164K combined ( 98 his + 66 hers) Our calculated MAGI is 155K 1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction? 1. You are correct that th...
by Bob's not my name
Mon Mar 17, 2014 9:57 am
 
Forum: Personal Finance (Not Investing)
Topic: 2013 tax filing issues
Replies: 33
Views: 1007

Re: 401K loan or PenFed HEL for high % rate mortgage payoff?

OP covered those points:
Tecktser wrote:Currently in my tax situation my deductions are less than the standard deduction I get on my federal taxes.

The loan does not affect my ability to contribute to my 401K plan.
by Bob's not my name
Mon Mar 17, 2014 4:31 am
 
Forum: Personal Finance (Not Investing)
Topic: 401K loan or PenFed HEL for high % rate mortgage payoff?
Replies: 8
Views: 683

Re: Retirement vehicle for 2014 AGI over $160,000

In another thread you posted the same question but in that thread you said your gross income would be about $210,000. Not sure why you cited $160,000 AGI in this thread -- maybe you were thinking of the American Opportunity Tax Credit, which starts phasing out at that AGI. If your gross income is re...
by Bob's not my name
Sun Mar 16, 2014 2:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retirement vehicle for 2014 AGI over $160,000
Replies: 9
Views: 848

Re: Questions on 401k and IRA portfolio

crg11 wrote:Her TransAmerica 401k:
3% contribution, 1.5% match

Vanguard SmCap Idx VSISX 0.10%

her 401k with the lousy employer match and the high expense ratios
Wow, her 401k is outstanding. A 50% immediate return and a 0.10% ER! She is very lucky.
by Bob's not my name
Sat Mar 15, 2014 8:28 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions on 401k and IRA portfolio
Replies: 13
Views: 969

Re: Questions on 401k and IRA portfolio

Illustrative example: $107,000 gross income - $3,000 pre-tax health, dental, and disability insurance premiums withheld from your pay (guess) - $0 FSA contributions (guess) - $8,000 pre-tax 401k contributions (this is equivalent to $6,000 of Roth contributions, because you save $2,000 in taxes) - $1...
by Bob's not my name
Sat Mar 15, 2014 8:21 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions on 401k and IRA portfolio
Replies: 13
Views: 969
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