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Re: Portfolio Help: Part 2

The taxable account is a small portion of the total portfolio today and you're contributing much more to tax advantaged accounts each year. If you wanted to use automatic transactions to purchase mutual funds, I suggest opening a taxable account at Vanguard and holding only Total Stock Market in tax...
by DSInvestor
Sat Apr 19, 2014 3:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Help: Part 2
Replies: 4
Views: 183

Re: Taxes owed in taxable account

Thanks for the replies. That helps me understand more. Let's say if I had $2 million built up in the Vanguard TSM Index Fund, what would the estimated taxes be? Again, assume a marginal tax bracket of 39.6%. Thanks again. 2013 Income return was 2.56%. If you had 2M in TSM on Dec 31, 2012, you would...
by DSInvestor
Thu Apr 17, 2014 7:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: Taxes owed in taxable account
Replies: 18
Views: 972

Re: Roth IRA/Traditional IRA

You may also see lots of posts talking about asset allocation (AA) which is where you hold a certain amount of stocks and bonds. The most basic asset allocation separates stocks and bonds. Within stocks, you can further divide into US stocks and Foreign stocks. Some folks like to go deeper still int...
by DSInvestor
Thu Apr 17, 2014 7:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA/Traditional IRA
Replies: 9
Views: 378

Re: Taxes owed in taxable account

I am not the OP but curious about the question and the answer. With some of you chiming in, I notice that all answers are different. Can the posters that posted the answer come back and inform which of these is closest to correct by considering 2013 as tax year and the OP bought 20k worth of fund o...
by DSInvestor
Thu Apr 17, 2014 9:54 am
 
Forum: Personal Finance (Not Investing)
Topic: Taxes owed in taxable account
Replies: 18
Views: 972

Re: Taxes owed in taxable account

Dividends received in your taxable account can be Qualified or Non-Qualified. Total Stock Market tends to distribute Qualified Dividend Income. If your $20,000 distributed 2% in dividends, that's roughly $400 in Qualified Dividend Income (QDI) taxable at 20% at your level of income. Starting in 2013...
by DSInvestor
Thu Apr 17, 2014 9:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Taxes owed in taxable account
Replies: 18
Views: 972

Re: Just maxed 2013 Roth IRA. Should I max 2014 now too?

Nobody knows what the market will do in the short term. You have more than adequate cash. I'd go ahead and contribute for 2014 and invest it in the same fund. The lifestrategy Growth fund maintains 80/20 AA and if that matches your desired asset allocation, you're good to go. What are the options in...
by DSInvestor
Wed Apr 16, 2014 9:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Just maxed 2013 Roth IRA. Should I max 2014 now too?
Replies: 6
Views: 927

Re: B-shares

Class A shares typically involve a front end load of say 5.75% and you get a lower expense ratio of say 0.75%. Class B shares do not have a front end load but you will pay a much higher expense ratio, perhaps 1% higher than Class A shares so 1.75%. The best bet may be to sell the class A and B share...
by DSInvestor
Wed Apr 16, 2014 7:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: B-shares
Replies: 6
Views: 421

Re: IRA deduction or contribution limits if you have solo 40

Solo 401k is an employer plan so you'd be covered by an employer plan for the purposes of taking the tax deduction for Traditional IRA contributions. Coverage by an employer plan affects the amount you can deduct not the amount you can contribute to Traditional IRA. If you find yourself unable to de...
by DSInvestor
Wed Apr 16, 2014 6:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: IRA deduction or contribution limits if you have solo 401k
Replies: 3
Views: 131

Re: Let's compare 2013 effective tax rates

I'm sorry everyone. I didn't realize I had opened yet another can of worms. From form 1040, how about line 61 divided by line 37. Then a second number which includes in the numerator any state income tax (and payments already made there). In California that's line 64. I get: 25% rate, 30% including...
by DSInvestor
Wed Apr 16, 2014 5:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: Let's compare 2013 effective tax rates
Replies: 46
Views: 2127

Re: I don't understand whether there are costs to rebalancin

Assuming portfolio is entirely in taxable accounts and no tax advantaged holdings and new contributions insufficient to restore target AA, the cost to rebalance will be associated to realizing capital gains. Short term capital gains (gains on shares held 1 yr or less) are taxed at marginal tax rates...
by DSInvestor
Wed Apr 16, 2014 3:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: I don't understand whether there are costs to rebalancing
Replies: 16
Views: 1134

Re: Taxes and SEP IRA fund choice

In this thread that you started in January, you indicated that you have 25K to be invested in a taxable account? Do you still have this account and are those assets part of your long term retirement portfolio? What is your age? I ask because a good place to start for your asset allocation may be age...
by DSInvestor
Wed Apr 16, 2014 1:26 am
 
Forum: Investing - Help with Personal Investments
Topic: Taxes and SEP IRA fund choice
Replies: 6
Views: 403

Re: Tax Withholding with After-Tax Adjustments to Income

Have you tried the IRS withholding calculator? http://apps.irs.gov/app/withholdingcalculator/ Yeah, I guess I've been more confident in increasing my federal withholding because of the decent online calculators. However, my state doesn't seem to have the same tools available. For instance, all the ...
by DSInvestor
Tue Apr 15, 2014 9:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax Withholding with After-Tax Adjustments to Income
Replies: 6
Views: 294

Re: TSP and Backdoor Roth IRA

TSP is not an IRA. Form 8606, which handles Roth conversion, considers assets in Traditional IRA (includes Rollover IRA), SEP-IRA and SIMPLE-IRA.

You're good.
by DSInvestor
Tue Apr 15, 2014 9:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: TSP and Backdoor Roth IRA
Replies: 2
Views: 255

Re: SEP instead of IRA?

mah001, thanks for your guidance on SEP-IRA active participant. Alan S, thank for confirming and for giving us something easier to read than the IRS notice.
by DSInvestor
Tue Apr 15, 2014 6:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP instead of IRA?
Replies: 28
Views: 936

Re: SEP instead of IRA?

A SEP that's begun today and deducted for 2013 means you and wife are 'covered by a retirement plan at work' for 2014. So your traditional IRA deduction possibilities for 2014 are potentially more limited. But a new SEP does not affect your 2013 TIRA deduction. I was under the impression that SEP-I...
by DSInvestor
Tue Apr 15, 2014 4:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP instead of IRA?
Replies: 28
Views: 936

Re: 401k / Roth IRA Allocation Advice

The Lifestrategy funds or Target Retirement funds that match your desired asset location are a great way to go if you do not invest in taxable accounts. You indicated that you wanted 80/20 stock/bond AA. If you hold Lifestrategy Growth 80/20 with Four-IN-One 85/15, you will have a little more than 8...
by DSInvestor
Tue Apr 15, 2014 2:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k / Roth IRA Allocation Advice
Replies: 6
Views: 397

Re: Backdoor Roth IRA Conversion - Worth it for us?

All A while ago, I posted about cleaning up our finances (we have multiple 401ks, Rollover IRA, Traditional IRAs (non-deductible) etc. We have moved the rollover IRA for her into her 401k and now both are left with a 401k each, and a traditional IRA that we contribute $5500 per year to that is non-...
by DSInvestor
Tue Apr 15, 2014 1:34 pm
 
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Conversion - Worth it for us?
Replies: 8
Views: 604

Re: TRAD. IRA CONVERSION TO ROTH USING RMD

I agree with pshonore. Your RMD cannot be converted to Roth IRA. If you want to convert, you must first take a distribution to satisfy RMD and then whatever assets are remaining in TIRA can be converted to Roth IRA. I see from your other posts that you are married. If you're still working you and yo...
by DSInvestor
Tue Apr 15, 2014 12:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Trad. IRA Conversion to Roth Using RMD
Replies: 2
Views: 164

Re: 401k / Roth IRA Allocation Advice

Is there a fee to use that Financial Engines service? If you seek 80/20 AA, do not use Vanguard Target Retirement 2050 as that is 90/10 AA. Further, your Roth IRA is holding Fidelity Four-In-One index which is 85/15 AA. I would suggest picking a TR fund with AA just under 80/20 in the 401k if you wi...
by DSInvestor
Tue Apr 15, 2014 12:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k / Roth IRA Allocation Advice
Replies: 6
Views: 397

Re: Should I be using standard or itemized deduction?

What's annoying about Standard vs Itemized is that if you are 65 or older (or blind), they just increase your Standard deduction by some amount. They do NOTHING to benefit older folks who are still itemizing deductions due to large property tax and/or state income tax payments. Or have I missed som...
by DSInvestor
Tue Apr 15, 2014 12:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: Should I be using standard or itemized deduction?
Replies: 10
Views: 679

Re: Should I be using standard or itemized deduction?

Look at Schedule A Itemized Deductions to see what kinds of deductions you can itemize:
http://www.irs.gov/pub/irs-pdf/f1040sa.pdf

If your state income taxes are higher than the standard deduction amount, then you can itemize deductions. Take a look to see if you can itemize anything else.
by DSInvestor
Tue Apr 15, 2014 12:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: Should I be using standard or itemized deduction?
Replies: 10
Views: 679

Re: IRA Contributions AFTER 70 1/2 years of age??

Isn't anyone going to help the OP out on the real question? 401K/SEP-IRA We have beaten the traditional IRA to death; it's time to move on (me, to my current soap). Alan S posted something about 401k/SEP/SIMPLE in this fairmark thread: http://fairmark.com/forum/read.php?2,57460 Yes, a qualified ret...
by DSInvestor
Tue Apr 15, 2014 11:29 am
 
Forum: Investing - Help with Personal Investments
Topic: IRA Contributions AFTER 70 1/2 years of age??
Replies: 12
Views: 734

Re: Almost out of time: Roth, Intrm Investment OR Intrm Bond

If you need more time to study your options, just put your 2013 contribution in the Short term fund that you already own and take your time. There are no tax consequences to exchange to a different fund inside IRA accounts. IMO, for emergency funds return of your money is more important than return ...
by DSInvestor
Tue Apr 15, 2014 11:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Almost out of time: Roth, Intrm Investment OR Intrm Bond Idx
Replies: 13
Views: 505

Re: traditional ira question

If you want your 2014 contribution and conversion to be handled by the same tax return 2014, make sure to make your 2014 contribution and full conversion before Dec 31, 2014. It is OK to do two Roth IRA conversions in one year. Vanguard will send you a 1099-R for 2014 showing your total conversion a...
by DSInvestor
Tue Apr 15, 2014 10:09 am
 
Forum: Investing - Help with Personal Investments
Topic: traditional ira question
Replies: 17
Views: 492

Re: traditional ira question

Looks right, assuming you didn't do any Roth conversions in calendar 2013. The total basis from line 14 will appear in line 2 of the 2014 8606. Your 2014 contributions will appear in Line 1 and/or 3 depending on when your 2014 contributions are made. That will bring your IRA basis up to 11K. Assumin...
by DSInvestor
Tue Apr 15, 2014 9:55 am
 
Forum: Investing - Help with Personal Investments
Topic: traditional ira question
Replies: 17
Views: 492

Re: Taxes and SEP IRA fund choice

I knew you would give an "it depends" answer! I really just wanted a basic catch-all, here's a good, low-cost fund that most people would be happy to own. I haven't had time to organize my investments, so I'm just looking for a decent place to park it for a while A money market mutual fun...
by DSInvestor
Mon Apr 14, 2014 9:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Taxes and SEP IRA fund choice
Replies: 6
Views: 403

Re: 40% tax rate???

What is the difference between the marginal rate and effective rate in a case like that? Marginal rate is the tax on the last dollar. If you add $100 of income and an increase in tax of $40, that's a marginal tax rate of 40%. Effective rate is the average tax on all income. If you add up your gross...
by DSInvestor
Mon Apr 14, 2014 7:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: 40% tax rate???
Replies: 26
Views: 1208

Re: traditional ira question

I would go back into Turbotax 2013 and enter your TIRA contribution. This way your 2013 tax return file has your 8606 in it. When it comes time to prepare your 2014 tax return, the software will import your 2013 return and see the 8606 showing IRA basis. If the 2013 return doesn't have the 8606, the...
by DSInvestor
Mon Apr 14, 2014 7:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: traditional ira question
Replies: 17
Views: 492

Re: 40% tax rate???

You're not taxed an extra 15% as a sole proprietor. Self employment tax is essentially social security and medicare. You pay social security and medicare taxes as an employee also. Your paychecks have the employee sides of social security and medicare deducted. Your employer pays the employer side. ...
by DSInvestor
Mon Apr 14, 2014 7:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: 40% tax rate???
Replies: 26
Views: 1208

Re: Confusing self-employed tax question

You may want to PM Alan S. on this. He knows this stuff inside out. In your opening post, you indicated the 2010 tax return prepared by CPA had correct number on line 28 43K. The first 1099R shows 49K which is for the conversion. The second 1099R shows 6K with P2 code, 1099 Instructions indicate tha...
by DSInvestor
Mon Apr 14, 2014 6:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: Confusing self-employed tax question
Replies: 8
Views: 613

Re: Late Roth Contribution - have to amend taxes?

Thanks for bringing this up. I am worried that her MAGI may put her into the phaseout range for the Roth. Will have her do as you suggest and use TuboTax to "redo" the 2013 taxes to see if that is an issue. I did look at Pub 590 Worksheet 2-1 Modified Adjusted Gross Income for Roth IRA Pu...
by DSInvestor
Mon Apr 14, 2014 4:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Late Roth Contribution - have to amend taxes?
Replies: 6
Views: 304

Re: Confusing self-employed tax question

To further clarify, I'm comfortable with all contribution totals. What I am not comfortable with, and can't seem to find an explanation to, is the different totals on line 15a and line 28 and what to do about it. Assuming the SEP and Roth were her only accounts, and no gains/losses inside the SEP b...
by DSInvestor
Mon Apr 14, 2014 4:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Confusing self-employed tax question
Replies: 8
Views: 613

Re: Late Roth Contribution - have to amend taxes?

Yes, she can still contribute to Roth IRA for 2013 up to April 15, 2014. No need to amend tax return. Traditional IRA contributions are allowed no matter how high your income but for those who are covered by an employer plan, there are MAGI limits to take the tax deduction. I assume your friend is c...
by DSInvestor
Mon Apr 14, 2014 3:33 pm
 
Forum: Personal Finance (Not Investing)
Topic: Late Roth Contribution - have to amend taxes?
Replies: 6
Views: 304

Re: Whats with the internet cap-100GB/ month?

In the US, we really don't have much choice with ISPs so you just have to work with the options available. Here's a page showing limits for various Cox internet plans: http://ww2.cox.com/aboutus/policies/speedsdataplans.cox?campcode=classicpop_policy-limitations_0609 We have preferred which offers 2...
by DSInvestor
Mon Apr 14, 2014 2:53 pm
 
Forum: Personal Consumer Issues
Topic: Whats with the internet cap-100GB/ month?
Replies: 11
Views: 1180

Re: 15 year vs 30 year fixed

The tax savings from mortgage interest deduction depends on your tax situation. You'll get full tax benefit if your other deductions (real estate taxes, charitable donations, state income or sales tax) exceeds the standard deduction. If your other deductions are less than the standard deduction, you...
by DSInvestor
Mon Apr 14, 2014 2:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: 15 year vs 30 year fixed
Replies: 62
Views: 5698

Re: Too Late to Open Roth IRA for 2013?

For folks who mail in a check, does the envelope needs to be postmarked by 15-Apr or does it need to be received by 15-Apr? At Vanguard, they will accept 2013 contribution if postmarked by April 13, 2014. Here's something from Vanguard on upcoming tax deadlines: https://personal.vanguard.com/us/ins...
by DSInvestor
Mon Apr 14, 2014 1:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Too Late to Open Roth IRA for 2013?
Replies: 9
Views: 725

Re: solo 401k

Also what would change if half my salary is w2 and half is 1099 consultant? I could change things around if needed. If the solo 401k is set up for the S-Corp's tax ID, then only the S-Corp's W-2 salary is eligible for consideration for the Solo 401k contributions? S-Corp Solo 401k employer profit s...
by DSInvestor
Mon Apr 14, 2014 11:45 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 869

Re: Too Late to Open Roth IRA for 2013?

She may be able to open an IRA online at vanguard.com today April 14, give them her bank routing and acct numbers to pull the 2013 contribution. If she doesn't know what to invest in, just put it all in a money market mutual fund like Prime Money Market. She should be aware that the contribution scr...
by DSInvestor
Mon Apr 14, 2014 11:31 am
 
Forum: Investing - Help with Personal Investments
Topic: Too Late to Open Roth IRA for 2013?
Replies: 9
Views: 725

Re: solo 401k

Spirit Rider, In my conversations with the small business retirement groups at Fidelity and Vanguard, I don't think that the S-Corp Employer Profit Share contribution requires a profit. It is driven only by W-2 salary. However, It is important that the S-Corp has sufficient cash to meet all expenses...
by DSInvestor
Mon Apr 14, 2014 11:24 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 869

Re: Taxes and SEP IRA fund choice

It is difficult to give suggestions without knowing what your desired asset allocation is and what hold in other accounts. I see that your Roth IRA is in a target retirement fund but see from your other threads that you also have taxable accounts. If you're under pressure to contribute by tuesday, y...
by DSInvestor
Mon Apr 14, 2014 3:58 am
 
Forum: Investing - Help with Personal Investments
Topic: Taxes and SEP IRA fund choice
Replies: 6
Views: 403

Re: solo 401k

If you're S-Corps paying W-2 salary, the Solo 401k contribution is easy. It is purely driven by your W-2 salary. 1) Employee salary deferral 17.5K (23K if over age 50). 2) Employer profit share can be 0-25% of W-2 salary. If you're under age 50, you can max out for 52K if salary is 138K (17.5K + 25%...
by DSInvestor
Mon Apr 14, 2014 3:44 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 869

Re: SEP instead of IRA?

You are allowed to contribute to Traditional/Roth IRA as well as a SEP-IRA, so no change may be needed. If you're eligible for SEP-IRA contribution for 20K, you can open a SEP-IRA now and contribute for 2013 tax year. Do you have employees in your business or it is just you? If just you, it's simple...
by DSInvestor
Sun Apr 13, 2014 6:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP instead of IRA?
Replies: 28
Views: 936

Re: Roth to Traditional and then backdoor to Roth

If we now want to make backdoor Roth IRA contributions, would it be best to make those backdoor contributions to our Vanguard Roth IRA accounts on April 15th so that those contributions are considered for tax-year 2013? You've recharacterized your 2013 Roth IRA contributions to 2013 Traditional IRA...
by DSInvestor
Sun Apr 13, 2014 2:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Roth to Traditional and then backdoor to Roth
Replies: 2
Views: 189

Re: IRA rollover/general investment help

Gross Income 80K minus std deduction and exemptions is taxable income of 60K. That's in 15% bracket.
by DSInvestor
Sun Apr 13, 2014 12:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: IRA rollover/general investment help
Replies: 5
Views: 307

Re: Order of how should I invest

Steady wrote:Maxing out the 403b before investing in taxable is the way to go?

Max out all tax advantaged before investing in taxable.
by DSInvestor
Sun Apr 13, 2014 1:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Order of how should I invest
Replies: 5
Views: 556

Re: Use credit cards to pay rent: Amex Serve?

The Amex Serve Fee page seems to suggest that loading amex serve with a credit card will be treated as a cash advance from the credit card: Are there fees to add money to American Express Serve? American Express Serve does not charge fees to add money to your Account. You can add money to your Ameri...
by DSInvestor
Sat Apr 12, 2014 4:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: Use credit cards to pay rent: Amex Serve?
Replies: 56
Views: 3578

Re: Indv. 401k/SEP-IRA contribution questions

I am looking to do a backdoor Roth contribution every year, and no I'm not familiar with all of that. Thanks for your help. I made an edit after you responded. Here's the addition to explain how SEP-IRA assets affect IRA basis in Roth conversions: With no SEP-IRA assets, I would encourage you to ma...
by DSInvestor
Sat Apr 12, 2014 2:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Indv. 401k/SEP-IRA contribution questions
Replies: 11
Views: 253

Re: Indv. 401k/SEP-IRA contribution questions

So, in theory, I could do 17.5 employee deferral into the solo401k Then do 17.25 into solo401k for employer contributions and 17.25 into sep-ira at LC? Or would that make things more complicated. Having the second small business retirement plan makes things more complicated. I think you can structu...
by DSInvestor
Sat Apr 12, 2014 2:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Indv. 401k/SEP-IRA contribution questions
Replies: 11
Views: 253

Re: Indv. 401k/SEP-IRA contribution questions

Let's assume you can max out small business retirement plan for 52K/yr. Option 1: SOlo 401k employee salary deferral: 17.5K <- Vanguard Solo 401k employer profit share: 34.5K <- Vanguard Roth IRA (via backdoor): 5.5K conversion of 5.5K basis is tax free. <- can be at any IRA custodian including Lend...
by DSInvestor
Sat Apr 12, 2014 1:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Indv. 401k/SEP-IRA contribution questions
Replies: 11
Views: 253
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