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Re: Questions About 401k and AGI and Traditional vs Roth IRA

There's a strong possibility my income could increase to 80k give or take a few k within the next 5 years. That would put you still under the phaseout. If in five years the TIRA phaseout starts at $65,000 and the 401k limit is $19,000 and you have $2,000 of pre-tax insurance premiums then the gross...
by Bob's not my name
Fri Nov 21, 2014 11:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

I don't see any issues with deductible TIRA eligibility. $70,000 of gross income probably puts your MAGI below $50,000, so you have lots of headroom. In 2015 you're fully eligible if your MAGI is below $61,000. That probably equates to about $82,000 gross income. The 401k contribution limit and the...
by Bob's not my name
Fri Nov 21, 2014 6:24 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

I'll need to continue reading and researching to understand the other point you're trying to make regarding $2,961 not being sheltered. Maybe it's not important since you say it's really not relevant to my "saturated" situation. Right. Most people can't fill all their tax-advantaged space...
by Bob's not my name
Fri Nov 21, 2014 12:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

You're doing the math upside down. If your marginal rate is 35% then you need $8,461 of gross income to yield $5,500 of net income, because $2,961 is lost to taxes. As I also explained, that doesn't mean, in your saturated case (maxing the 401k), that you could alternatively shelter $8,461 in a tra...
by Bob's not my name
Fri Nov 21, 2014 10:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

ShimmyShuffle wrote:I'm going to need to read up on the pro rata rule and back door Roth, but would this also cause complications for a Roth conversion pipeline? Are the back door and the pipeline the same thing, similar or completely different?
I don't know what a Roth conversion pipeline is.
by Bob's not my name
Fri Nov 21, 2014 4:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

Yes. Assuming you're not in NYC, your state tax is, what, 6.85%? (I didn't bother to look it up.) If you don't itemize, then your marginal rate is about 32%. $5,500/0.68 = $8,088. That's how much gross income you consume to make a $5,500 Roth contribution; $2,588 is lost to income taxes. However, a...
by Bob's not my name
Fri Nov 21, 2014 4:12 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Limits on Brokered CD Death Put

Not disputing MooreBonds' experience, but I never encountered any of those issues. I have seen a "percentage of total outstanding issue" limit only on corporate bonds with death puts. Did you ever run into the percentage limit on corporate bonds, or did you only do CDs? Only bought one co...
by Bob's not my name
Wed Nov 12, 2014 8:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Limits on Brokered CD Death Put
Replies: 13
Views: 939

Re: Limits on Brokered CD Death Put

The real bonanza was in 2007/2008/2009 And you always want to get a quote before automatically redeeming them, as there is a chance the current bid could be higher than the par value. Yes, the CDs I bought in 2008 I sold at substantial profit. I was still selling at premium in 2011. CDs I bought at...
by Bob's not my name
Wed Nov 12, 2014 6:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Limits on Brokered CD Death Put
Replies: 13
Views: 939

Re: FSA gains $500 rollover feature

I guess you could pursue a couple of concrete facts: Does our chosen provider offer to support a grace period? If so, what is the incremental cost? If not, what's the cost of changing providers?
by Bob's not my name
Tue Nov 11, 2014 12:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: FSA gains $500 rollover feature
Replies: 42
Views: 3706

Re: Limits on Brokered CD Death Put

Not disputing MooreBonds' experience, but I never encountered any of those issues. I have seen a "percentage of total outstanding issue" limit only on corporate bonds with death puts.
by Bob's not my name
Tue Nov 11, 2014 11:14 am
 
Forum: Investing - Help with Personal Investments
Topic: Limits on Brokered CD Death Put
Replies: 13
Views: 939

Re: FSA gains $500 rollover feature

I'd guess the rationale is that it's a piddling benefit not worth the accounting cost. $500 pre-tax is worth $300 post-tax. Big deal. The 2.5-month grace period is way better; focus your lobbying on that.
by Bob's not my name
Tue Nov 11, 2014 11:10 am
 
Forum: Personal Finance (Not Investing)
Topic: FSA gains $500 rollover feature
Replies: 42
Views: 3706

Re: Limits on Brokered CD Death Put

It's been a little while since I held brokered CDs and exercised death puts, but I never encountered any such limits. Biggest CDs I held and liquidated by death put were $100,000. You do of course want to stay under the $250,000 FDIC limit. Yes, if you call VBS you should get some reassurance -- you...
by Bob's not my name
Tue Nov 11, 2014 10:37 am
 
Forum: Investing - Help with Personal Investments
Topic: Limits on Brokered CD Death Put
Replies: 13
Views: 939

Re: Questions About 401k and AGI and Traditional vs Roth IRA

To follow up on an earlier question, if I ended up with 50,000 MAGI and then contributed 5,500 to the TIRA I would still be at 50,000 MAGI because you add the TIRA contribution back in at the end right? Sorta. MAGI has different definitions depending on the particular phaseout or credit. For deduct...
by Bob's not my name
Sat Nov 08, 2014 5:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

Yes. Assuming you're not in NYC, your state tax is, what, 6.85%? (I didn't bother to look it up.) If you don't itemize, then your marginal rate is about 32%. $5,500/0.68 = $8,088. That's how much gross income you consume to make a $5,500 Roth contribution; $2,588 is lost to income taxes. However, as...
by Bob's not my name
Sat Nov 08, 2014 5:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

I don't see any issues with deductible TIRA eligibility. $70,000 of gross income probably puts your MAGI below $50,000, so you have lots of headroom. In 2015 you're fully eligible if your MAGI is below $61,000. That probably equates to about $82,000 gross income. The 401k contribution limit and the ...
by Bob's not my name
Sat Nov 08, 2014 2:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Questions About 401k and AGI and Traditional vs Roth IRA

Look at your W2 and page one of your 1040 to see what factors reduce your AGI. One big factor is pre-tax health, dental, and disability insurance premiums withheld from your pay. For many people this is a few thousand. Then there are health FSA contributions. And the 401k contribution limit will be ...
by Bob's not my name
Sat Nov 08, 2014 1:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2598

Re: Company stock

inbox788 wrote:the stock can fall more than 30% and you'll still be about break even.
Ignoring dividends and taxes, a 25% fall would be break-even.
by Bob's not my name
Wed Nov 05, 2014 7:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Company stock
Replies: 9
Views: 939

Re: Tax consequences of UGMA account transfer to former mino

Also look into saving on health insurance. Where I work, the health and dental insurance premiums are the same whether I insure one child or ten. Since I have one kid still in college, this effectively means that my older kids, who live far away and make more than me, got a few years of “free” healt...
by Bob's not my name
Fri Oct 31, 2014 6:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 459

Re: Tax consequences of UGMA account transfer to former mino

And if she is eligible for the LLC be sure not to claim her as a dependent.
by Bob's not my name
Fri Oct 31, 2014 6:43 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 459

Re: Tax consequences of UGMA account transfer to former mino

Also be aware that a student in her graduation year may have a marginal tax rate on LTCG as high as 41% if she happens to be in the Lifetime Learning Credit phaseout and NY, so the timing of a sale should be considered carefully. The account is for my daughter and she did graduate from college this...
by Bob's not my name
Fri Oct 31, 2014 6:39 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 459

Re: Tax consequences of UGMA account transfer to former mino

Also be aware that a student in her graduation year may have a marginal tax rate on LTCG as high as 41% if she happens to be in the Lifetime Learning Credit phaseout and NY, so the timing of a sale should be considered carefully.
by Bob's not my name
Fri Oct 31, 2014 4:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 459

Re: Tax consequences of UGMA account transfer to former mino

You should make sure they do not liquidate the holdings but instead transfer them in-kind to the new account. The OP needs to makes sure he doesn't liquidate the holdings, but I don't see any need to make sure "they" don't liquidate the holdings. The form is for a transfer of shares. The ...
by Bob's not my name
Fri Oct 31, 2014 4:18 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 459

Re: Tax consequences of UGMA account transfer to former mino

animule wrote:I called Vanguard and they sent me some forms
The form is easily had from the Vanguard website. Click on Forms on the homepage and then click on Remove yourself as custodian from a UGMA/UTMA.
animule wrote:the UGMA fund would apparently be liquidated
How is that apparent? I don't see the word "liquidate" on the form. Can you point it out?
animule wrote:When I hear "liquidate"
When did you hear "liquidate"? In what context and from whom? The form is quite clear on transferring assets. It uses vocabulary like "transfer of shares". Is it possible you have the wrong form?
by Bob's not my name
Fri Oct 31, 2014 4:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 459

Re: 39.6% Tax Bracket :(

Your marginal tax rate will be higher than 39.6% of course. You also have: State and local income tax 0.9% ACA tax on your wages 3.8% ACA tax on your investment income 1% ATRA tax due to the itemized deduction phaseout (you are already completely through the ATRA personal exemption phaseout) Note th...
by Bob's not my name
Wed Oct 29, 2014 4:30 am
 
Forum: Personal Finance (Not Investing)
Topic: 39.6% Tax Bracket :(
Replies: 28
Views: 6037

Re: Yet another Roth vs Traditional 401k question

I have not factored those in yet. Since it's 20 years or more away I've been keeping it pretty simple. I mean have you factored them into your current marginal rate? It's hard to be here: We are in the 28% bracket currently and most likely will bump into 33% at some point without having AMT, ACA, a...
by Bob's not my name
Mon Oct 20, 2014 9:38 am
 
Forum: Investing - Help with Personal Investments
Topic: Yet another Roth vs Traditional 401k question
Replies: 4
Views: 559

Re: Marginal Tax Rate Question/Confusion

Yup, although for families with four children the child tax credit phaseout may eliminate the 25% marginal rate altogether, and moreover it can overlap with the American Opportunity Tax Credit phaseout (not for the same child), the spousal TIRA phaseout, the Roth IRA phaseout, the Lifetime Learning ...
by Bob's not my name
Sun Oct 19, 2014 11:52 am
 
Forum: Investing - Help with Personal Investments
Topic: Marginal Tax Rate Question/Confusion
Replies: 16
Views: 1252

Re: Portfolio Help for 29YO - First Taxable Investment Cont.

SVT wrote:Tax Rate: 28% Federal, 7.75% State
State of Residence: MD

Company match? 10% automatic contribution of base salary

New annual Contributions
$17500 his 401k + 11000 employer contribution
Your maximum 401k contribution is sufficient to drop you into the 25% bracket.
by Bob's not my name
Sun Oct 19, 2014 10:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Help for 29YO - First Taxable Investment Cont.
Replies: 15
Views: 1561

Re: Capital Gains for 2014

The marginal rates across the gain will probably be within the 0% - 100% range. 0% would be for the tiny portion that fits in the 15% federal bracket if they live in a no tax state and the property is in a no tax state. 100% would be for a middle portion of the gain if they have several kids in coll...
by Bob's not my name
Sun Oct 19, 2014 7:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Capital Gains for 2014
Replies: 4
Views: 1160

Re: Marginal Tax Rate Question/Confusion

The 25% bracket has largely disappeared for families, because nominal brackets are inflation-adjusted while the child tax credit phaseout is not -- as a result, the 25% bracket threshold is very close to the phaseout threshold for families with several children. Therefore, families pretty much jump ...
by Bob's not my name
Sun Oct 19, 2014 4:22 am
 
Forum: Investing - Help with Personal Investments
Topic: Marginal Tax Rate Question/Confusion
Replies: 16
Views: 1252

Re: Yet another Roth vs Traditional 401k question

Don't you live in Georgia? In Georgia up to $70,000 of retirement income is exempt from taxation for a couple both 62 or over. How has that impacted your consideration?

Also, you don't mention AMT, ACA, or ATRA taxes. How have you factored them in?
by Bob's not my name
Fri Oct 17, 2014 7:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Yet another Roth vs Traditional 401k question
Replies: 4
Views: 559

Re: Does your ROTH hold risky or stable items?

Can anyone explain why their plan is to use Roth last? I'd think you'd use traditional last, because at end of life you're probably in the 0% bracket thanks to the deduction of massive assisted living costs. So at that point you can withdraw from TIRA as necessary, at 0% tax, to pay your huge assist...
by Bob's not my name
Thu Oct 16, 2014 8:33 am
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3481

Re: Buying Secondary Market CDs at Vanguard

I must have been out of my mind a few years ago because as trustee for terminally ill grantors I was buying brokered 20-40-year CDs through Vanguard at discounts. Thanks to the death put feature their estates made long term rates, plus the discount, on short term investments. That meant 6% returns o...
by Bob's not my name
Thu Oct 16, 2014 5:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Secondary Market CDs at Vanguard
Replies: 6
Views: 770

Re: Max out Roth IRA or pay student loans faster?

They offer 0.5 employee match up to 5% for 401K Hopefully you mean employer match, or this is not a very good deal :D Hopefully you paid your last tuition bill in this calendar year so you are eligible for the $2,000 Lifetime Learning Credit in 2014. For unclear motives, schools typically try to du...
by Bob's not my name
Thu Oct 16, 2014 4:36 am
 
Forum: Personal Finance (Not Investing)
Topic: Max out Roth IRA or pay student loans faster?
Replies: 8
Views: 738

Re: Roth or Traditional IRA

For families the 25% bracket has almost ceased to exist because the inflation-adjusted bracket overlaps to a great degree with the non-inflation-adjusted Child Tax Credit phaseout. Example: $110,000 gross income - $2,500 health FSA contributions - $3,500 pre-tax health, dental, and disability insura...
by Bob's not my name
Wed Oct 15, 2014 10:52 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth or Traditional IRA
Replies: 5
Views: 387

Re: Does your ROTH hold risky or stable items?

I'll agree that a Roth should hold the assets with the highest expected return. Unfortunately, those are often the assets with the highest expected losses as well. Since a Roth is precious tax-free space, I don't think you want to lose money in your Roth, so you probably should compromise or at lea...
by Bob's not my name
Wed Oct 15, 2014 2:53 am
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3481

Re: What if I make a mistake in choosing IRA

OP may not know his marginal rate. It's possible for a new graduate to have a 50% marginal rate.
by Bob's not my name
Tue Oct 14, 2014 7:46 am
 
Forum: Investing - Help with Personal Investments
Topic: What if I make a mistake in choosing IRA
Replies: 9
Views: 695

Re: What if I make a mistake in choosing IRA

I suggest you make your 62nd post a portfolio review. You've been asking a lot of disconnected questions. You'll get more useful advice based on a comprehensive understanding of your situation -- what state you're in, what your combined gross income will be in 2014 and 2015, what 401k choices your s...
by Bob's not my name
Tue Oct 14, 2014 5:27 am
 
Forum: Investing - Help with Personal Investments
Topic: What if I make a mistake in choosing IRA
Replies: 9
Views: 695

Re: Does your ROTH hold risky or stable items?

having a larger Roth will lower your effective tax rate. The size of your Roth (ROTH if you are yelling) has no effect on your tax rate, because a Roth is a post-tax vehicle. I believe you mean that having a large traditional IRA will increase your tax rate. This is similar to the RMD argument. The...
by Bob's not my name
Tue Oct 14, 2014 3:07 am
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3481

Re: Does your ROTH hold risky or stable items?

conjecture about tax rates It is argued that, since a Roth is post-tax, holding stocks in Roth will protect you from changes in the tax code. This is also false. As illustrated above, to avoid false conclusions about asset placement you have to assume some tax rate on your Traditional IRA withdrawa...
by Bob's not my name
Mon Oct 13, 2014 6:54 pm
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3481

Re: Does your ROTH hold risky or stable items?

Some people believe that if you hold stocks in your Roth you’ll pay less in taxes. Their argument goes like this: if I hold a $5,000 Roth (post-tax) IRA and a $5,000 traditional (pre-tax) IRA, and stocks triple in value by my withdrawal date while bonds only double, it will be better to have held th...
by Bob's not my name
Mon Oct 13, 2014 6:52 pm
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3481

Re: Does your ROTH hold risky or stable items?

You should place your assets according to where you can get the best funds at the lowest expense ratios to make up your portfolio. Most 401k’s have at least one low cost stock index fund, but many do not have a low cost bond option. Therefore, a low cost portfolio is often constructed by concentrati...
by Bob's not my name
Mon Oct 13, 2014 6:51 pm
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3481

Re: Portfolio Review

My understanding is that it's bad to have bonds in Roth accounts since stocks will grow faster and you don't have to pay any taxes upon withdrawal. Hence, I have all bond holdings in non-Roth 401k. Is that correct? No, that's incorrect. There's nothing wrong with having stocks in Roth, but there's ...
by Bob's not my name
Mon Oct 13, 2014 5:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review
Replies: 6
Views: 1004

Re: Portfolio Review Question

If you want to read more about phaseouts (who wouldn't? they're so fascinating :D ), see http://thefinancebuff.com/your-marginal-tax-rate.html
by Bob's not my name
Sun Oct 12, 2014 9:59 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1327

Re: Portfolio Review Question

Our gross salaries in 2015 will be $116K. 3. We have a 5 month old child and we plan to have 1 to 2 more children over the next 4 to 5 years. For the next 20 years you want to keep your AGI under $110,000. Assuming no state tax refunds anymore, $2,500 in pre-tax health insurance premiums (maybe for...
by Bob's not my name
Sun Oct 12, 2014 9:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1327

Re: Portfolio Review Question

1. In 2013 our gross salaries was $99K. Our AGI was also around $99K. Our taxable income was around $76K after all deductions/exemptions. 6. We have health insurance through my wife's employer and her paycheck is deducted around $220 a month for that. If I've understood you correctly, in 2013 you w...
by Bob's not my name
Sun Oct 12, 2014 9:46 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1327

Re: Portfolio Review Question

I had heard/read that the Roth made sense for someone who is younger and has many years to save. The youth argument is backwards and the "many years" argument is made only by people who can't do basic math. Young folks shouldn't bet on the next 50 years going as they expect, which means t...
by Bob's not my name
Sun Oct 12, 2014 9:38 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1327

Re: Portfolio Review Question

6% of my salary and a 6% match which comes out to be around $7500/yr. I just made the switch to the Roth 401K • Tax rate is 25% Federal, 5% State 2. I know I will open a Roth IRA for myself and my wife. Why so much Roth if your marginal tax rate is 30%? ... but is it? You appear to be making about ...
by Bob's not my name
Sun Oct 12, 2014 6:49 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1327

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 5:00 am
 
Forum: Investing - Help with Personal Investments
Topic: please analyze portfolio and suggest improvement
Replies: 14
Views: 902

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 8:02 pm
 
Forum: Investing - Theory, News & General
Topic: Trying to understand taxes in retirement, correct me
Replies: 11
Views: 1066

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 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: Trying to understand taxes in retirement, correct me
Replies: 11
Views: 1066
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