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You should request a return of her contribution soon, because any earnings on the contribution will have to be added to your 2012 tax return on line 15b because the contribution was made IN 2012. There will also be a 10% penalty on the earnings portion only unless she is over 59.5. You will know th...

This whole "covered, eligible, uncovered" thing can be quite misleading. During Bush the Younger's term, the deductibility of health insurance premiums by self-employed people who also had an employer which "provided" a health plan the participation in which was voluntary, was c...

I don't think you can purchase Ibonds in a 401K or an IRA. They are only sold electronically directly by the Treasury. The 401K or an IRA would be unable to purchase them. Hi NYnative, I assumed that Grok meant I should buy them outside the 401K in an effort to increase my tax deferred space. Regards

Thanks for the replies. I am not crazy about using an active bond fund, but it is the only one I can use to increase my tax deferred space. Well don't forget about Ibonds. they are a much better deal right now than Pimco REal return, and they are tax deferred. cheers, Thanks, Grok Good point. I wil...

Thanks for the replies. I am not crazy about using an active bond fund, but it is the only one I can use to increase my tax deferred space.

Hi All, I will be able to join my company's 401K in about 3 months. I have limited tax deferred space and would like to use the 401K to build up my bond position. The only two bond choices are: PIMCO Real Return D (0.85%) PIMCO Total Return Instl (0.46%) Presently, all of my bond allocation is in Va...

OK, that doesn't seem very difficult. If I take it out, do I need to remove any gains that the $5000 generated since 2009? This could get really complicated. Any withdrawal (*any*) that you make at this point from that account will be reported to you as a "distribution" in the year you ma...

Since the rest of her IRA is deductible, do I need to take the $5000 out? Maybe you might want to take it out but it isn't required, you just can't deduct it if you make too much money. Anyone no matter how high their income can contribute to an IRA, the only limits are on the deductibility of it. ...

Since the rest of her IRA is deductible, do I need to take the $5000 out? Maybe you might want to take it out but it isn't required, you just can't deduct it if you make too much money. Anyone no matter how high their income can contribute to an IRA, the only limits are on the deductibility of it. ...

I will send the letter in to the IRS stating that she wasn't covered and wait for their response. Are you indirectly telling us that she was in a defined contribution plan? The letter from the company says "...Box 13 on your 2012 W-2 Form was appropriately checked because you were eligible for...

Thanks to everyone for the help. This board is really a great asset.

I think the company goofed when they checked the box for someone who was not an active participant. Now I have to get ready for my saturday morning soaps (yes, some run on the weekends), so I will let you read the details on the active participant rules yourself (forget pub 590). Edit added: P.S. N...

BolderBoy wrote:

Magnetar wrote:

dbr wrote:Covered will mean eligible as indicated by the check box on the W-2.

So, that means I am losing a $5000 IRA deduction because she made $425 in wages?

Yes. That is the Catch-22 I was referring to.

Since the rest of her IRA is deductible, do I need to take the $5000 out?

dbr wrote:Covered will mean eligible as indicated by the check box on the W-2.

So, that means I am losing a $5000 IRA deduction because she made $425 in wages?

If you haven't done so, I'd encourage you to read IRS Publication 590. Thanks, I did read it. From IRS 590: "You can have a traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is cov...

The W-2 may not have been correct. You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a: Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to ...

Do you fall under the exceptions quoted in this article from "Smartmoney": "A nonworking spouse can make a deductible IRA contribution of up to $5,000 for 2012 ($6,000 if age 50 or older as of 12/31/12) as long as the couple files a joint return, and the working spouse has enough ear...

Hi All, I just got a notice from the IRS that they are not allowing the $5000 Spousal IRA deduction I took in 2010 because my wife was eligible for a retirement plan at work. On her W2, the box for was checked for retirement plan. She only made $425 working part time and didn't contribute to the pla...

Thanks to everyone for helping me understand this concept.

This forum is great.

Look at your mortgage statement... Say you're paying $1000 in interest in every month... You pay down the loan by $50k... Now you're only paying $800 a month in interest. You're gaining $200 a month on your "investment" of $50k which is 5%. Your net worth is increasing by $200 more a mont...

Thanks for all the informative replies.

Vanguard long term treasury has a 15 year duration and a 2.41% yield. I have a mortgage that has 20 years left at 5%, I would guess, based on my reading, it would make more sense for me to use extra money to pay down the mortgage than invest in the bond fund.

What a wonderful place to get information. I have read numerous posts about how paying down a loan is like owning a bond of the same interest rate. I don't understand this. For example, If I have a loan that is 10 years at 5%, should I pay this down before I invest in a bond? Assuming bond yields ar...

My understanding is that the reduction in basis (due to untaxed distributions being received from the MLP) will result in ordinary income when you sell the MLP. If the share price you receive when you sell is higher than the original purchase price (not the new basis), you will also have some capit...

I am in the process of simplifying my portfolio. I still own quite a bit of individual stocks that I would like to transition to Total Stock Market. I am probably in the 25-28% federal, about 7% state tax range. I bought some MLPs a couple of years ago and am sitting on large capital gains. I also ...

My understanding is that the reduction in basis (due to untaxed distributions being received from the MLP) will result in ordinary income when you sell the MLP. If the share price you receive when you sell is higher than the original purchase price (not the new basis), you will also have some capit...

I used to change my own oil. Now, I stop by a shop on my way to work, surf the internet on their wifi and spend about an additional $15 twice a year.

I am in the process of simplifying my portfolio. I still own quite a bit of individual stocks that I would like to transition to Total Stock Market. I am probably in the 25-28% federal, about 7% state tax range. I bought some MLPs a couple of years ago and am sitting on large capital gains. I also w...

SobeCane wrote:What's the penalty on taking any leftover money out of the 529 plan after the youngest kid is done with school?

I believe that the IRS imposes a 10% penalty.

I traded in an old minivan last year that was beaten to hell by my kids. I got it detailed for $100 before bringing it to the dealer. The dealer checked it out while I was on a test drive and the only thing he said was "That van is very clean. You must have taken good care of it". Not sure...

An interesting idea, but are you really increasing your tax deferred space? Your contributions will have to be used for college or face penalties.

Thanks for all the help. This is truly a great site.

I will contact the transfer agent and see what they can tell me.
If that doesn't help, I will add up all my dividends from the previous years tax returns and use that as my basis.

The IRS will not argue with you if you report your cost basis as $0. That's what I had to do with a portion of shares in my wife's old GE DRIP that we sold in 2009. Most of the DRIPs have a website with long history. GE went back 10 years as I recall. This may be my best option. The worst part is I...

Don't you have tax returns? Didn't you report dividends and capital gains from the stock in the drip? Did you own stock outside the drip? Did the dividends and capital gains from the stock outside the drip go into the drip? If everything was in the drip or everything went into the drip, your basis ...

I assumed the transfer agent would keep a cost basis for me. Live and learn. as Yipee-Ki-O pointed out, they do keep transaction records, with which it would be very easy to calculate cost basis. it would simply be a matter of logging in to your account, downloading the record, and calculating the ...

We have a 2010 Touring AWD. We looked at the MDX. It seems a lot smaller. We use the third row on a regular basis without problems. The CX-9 was recalled for a seat heater issue, other than that no problems. Rides nice and much sportier than other comparable models.

Why should I pay tax on gains I didn't get. A couple of reasons: 1. Because you don't want an IRS audit. 2. As penance for not keeping records of the dividend reinvestments. :wink: If you know when the original purchase was made you might be able to reconstruct a close approximation of the reinvest...

livesoft wrote:The IRS will not argue with you if you report your cost basis as $0.

Agreed.
However, I think my cost basis is higher than my sale price. Why should I pay tax on gains I didn't get.

Hi All, Last year, I sold a number of stocks I had that were from a DRIP. I have no idea of the cost basis. I bought about 80% of the shares with cash, the remaining 20% from dividends. I am thinking of taking the average price of the stock for the year I bought them and coming up with a cost basis ...

tomd37 wrote:The 1040 is not to be included with the mailing of the 1040X. The 1040X takes the place of the 1040. Attach other forms and schedules that are being changed as well as W-2s etc.

Thanks.

I am amending my federal tax return using a 1040X. Do I need to resubmit the 1040 for that year or just the 1040X? Thanks. What does the IRS say? IRS says: Attach copies of any forms or schedules that are being changed as a result of the amendment, including any Form(s) W-2 received after the origi...

I am amending my federal tax return using a 1040X. Do I need to resubmit the 1040 for that year or just the 1040X?

Thanks.

Used to be a Toyota fan until my 2001 Sienna suffered from the dreaded sludge in the engine and died a premature death.

Been happy with Honda.

My AA says to increase bonds. I just bought some more TBM this morning.

Stay the Course.

I see that Firecalc is mentioned quite frequently here, so I tried it out with my hypothetical portfolio shown above. I entered the following data: Start Here: Spending = 80000 Portfolio = 1000000 Years = 30 Other Income: 0 Not retired: Year = 2035, Add to portfolio = 0 Spending Model: CPI, Constant...

Hopefully you got some useful answers from your numerical example to wit: There is not currently a "safe" way to meet that objective. It is good that the objective was difficult enough to have a good insight into why there is not a safe method. Was that helpful? Yes, it was very helpful. ...

Hi All, I am in the process of reading the following books: - All About Asset Allocation by Rick Ferri - The Only Guide You'll Ever Need for the Right Financial Plan by Larry Swedroe - The Bogleheads' Guide to Retirement Planning I am trying to understand the concept of the "need to take risk&...

OK, I'll buy that. But, how can he balance his need to take risk and his attempt to enjoy life? He is obviously not neglecting his retirement, he has saved $1M. Well, it's impossible to say. If his top priority is ensuring exactly 2M at retirement, he should continue to save as much as he can until...

But, how can he balance his need to take risk and his attempt to enjoy life? He is obviously not neglecting his retirement, he has saved $1M. What was the hypothetical investor's annual savings rate while he was accumulating his $1M portfolio? What if he saved 25%, 50%, 75% of the old savings rate?...

He thought he reached his goal and could coast into retirement with a 3% return. Apparently, a 3% real return is hard to come by. It might be easy to come by. But there's just no way to guarantee it happens. OK, I'll buy that. But, how can he balance his need to take risk and his attempt to enjoy l...

"Need to take risk" strikes me as a tricky concept. It always seems to be applied in what I consider to be the wrong direction, i.e. by people who start saving late or who haven't saved enough and who then say "I need to take lots of risk." That always seems to me to be a disast...