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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 7:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 434

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 7:43 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 434

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 7:39 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 434

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 5:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 434

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 5:18 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 434

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 5:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax consequences of UGMA account transfer to former minor
Replies: 13
Views: 434

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 5:30 am
 
Forum: Personal Finance (Not Investing)
Topic: 39.6% Tax Bracket :(
Replies: 26
Views: 4781

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 10:38 am
 
Forum: Investing - Help with Personal Investments
Topic: Yet another Roth vs Traditional 401k question
Replies: 4
Views: 555

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 12:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Marginal Tax Rate Question/Confusion
Replies: 16
Views: 1215

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 11:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Help for 29YO - First Taxable Investment Cont.
Replies: 15
Views: 1443

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 8:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Capital Gains for 2014
Replies: 4
Views: 1141

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 5:22 am
 
Forum: Investing - Help with Personal Investments
Topic: Marginal Tax Rate Question/Confusion
Replies: 16
Views: 1215

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 8:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Yet another Roth vs Traditional 401k question
Replies: 4
Views: 555

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 9:33 am
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3393

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 6:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Secondary Market CDs at Vanguard
Replies: 6
Views: 749

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 5:36 am
 
Forum: Personal Finance (Not Investing)
Topic: Max out Roth IRA or pay student loans faster?
Replies: 8
Views: 719

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 11:52 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth or Traditional IRA
Replies: 5
Views: 375

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 3:53 am
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3393

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 8:46 am
 
Forum: Investing - Help with Personal Investments
Topic: What if I make a mistake in choosing IRA
Replies: 9
Views: 677

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 6:27 am
 
Forum: Investing - Help with Personal Investments
Topic: What if I make a mistake in choosing IRA
Replies: 9
Views: 677

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 4:07 am
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3393

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 7:54 pm
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3393

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 7:52 pm
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3393

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 7:51 pm
 
Forum: Investing - Theory, News & General
Topic: Does your ROTH hold risky or stable items?
Replies: 56
Views: 3393

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 6:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review
Replies: 6
Views: 898

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 10:59 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1214

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 10:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1214

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 10:46 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1214

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 10:38 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1214

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 7:49 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Review Question
Replies: 18
Views: 1214

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: 518

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: 1055

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: 1055

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: 689

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: 1136

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: 470

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: 677

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: 677

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: 3669

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: 677

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: 677

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: 1136

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: 1136

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: 901

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: 901

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: 1079

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: 1079

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: 1079

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: 1079

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: 1136
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