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Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Jan 26, 2013 4:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Jan 19, 2013 4:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: 401K Bond Choices

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
by Magnetar
Tue Nov 27, 2012 8:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 784

Re: 401K Bond Choices

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...
by Magnetar
Tue Nov 27, 2012 8:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 784

Re: 401K Bond Choices

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.
by Magnetar
Mon Nov 26, 2012 8:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 784

401K Bond Choices

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...
by Magnetar
Sun Nov 25, 2012 6:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401K Bond Choices
Replies: 11
Views: 784

Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Oct 20, 2012 1:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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. ...
by Magnetar
Sat Oct 20, 2012 12:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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. ...
by Magnetar
Sat Oct 20, 2012 12:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Oct 20, 2012 12:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

Thanks to everyone for the help. This board is really a great asset.
by Magnetar
Sat Oct 20, 2012 12:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Oct 20, 2012 12:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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?
by Magnetar
Sat Oct 20, 2012 11:11 am
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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?
by Magnetar
Sat Oct 20, 2012 11:08 am
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Oct 20, 2012 11:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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 ...
by Magnetar
Sat Oct 20, 2012 11:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: Spousal IRA - IRS question

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...
by Magnetar
Sat Oct 20, 2012 10:58 am
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Spousal IRA - IRS question

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...
by Magnetar
Sat Oct 20, 2012 10:36 am
 
Forum: Investing - Help with Personal Investments
Topic: Spousal IRA - IRS question
Replies: 38
Views: 2355

Re: How is paying down a loan like a bond?

Thanks to everyone for helping me understand this concept.

This forum is great.
by Magnetar
Thu Mar 08, 2012 11:45 am
 
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 1431

Re: How is paying down a loan like a bond?

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...
by Magnetar
Thu Mar 08, 2012 11:44 am
 
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 1431

Re: How is paying down a loan like a bond?

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.
by Magnetar
Thu Mar 08, 2012 10:07 am
 
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 1431

How is paying down a loan like a bond?

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...
by Magnetar
Wed Mar 07, 2012 2:41 pm
 
Forum: Investing - Theory, News & General
Topic: How is paying down a loan like a bond?
Replies: 17
Views: 1431

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...
by Magnetar
Fri May 06, 2011 4:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 923

Re: Tax Implications of MLPs

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 ...
by Magnetar
Fri May 06, 2011 4:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 923

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...
by Magnetar
Fri May 06, 2011 4:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 923

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.
by Magnetar
Fri May 06, 2011 2:37 pm
 
Forum: Personal Consumer Issues
Topic: Do you change the engine oil yourself?
Replies: 78
Views: 7013

Tax Implications of MLPs

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...
by Magnetar
Fri May 06, 2011 2:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax Implications of MLPs
Replies: 9
Views: 923

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.
by Magnetar
Wed Mar 02, 2011 6:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: A simple way to dramatically increase tax-deferred space
Replies: 40
Views: 6117

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...
by Magnetar
Wed Mar 02, 2011 5:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: Selling a car to a dealer -- fix up at all?
Replies: 21
Views: 3022

An interesting idea, but are you really increasing your tax deferred space? Your contributions will have to be used for college or face penalties.
by Magnetar
Wed Mar 02, 2011 5:38 pm
 
Forum: Personal Finance (Not Investing)
Topic: A simple way to dramatically increase tax-deferred space
Replies: 40
Views: 6117

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.
by Magnetar
Thu Feb 17, 2011 5:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

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...
by Magnetar
Thu Feb 17, 2011 5:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

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 ...
by Magnetar
Thu Feb 17, 2011 5:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

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 ...
by Magnetar
Thu Feb 17, 2011 4:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

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.
by Magnetar
Thu Feb 17, 2011 3:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: any happy/unhappy CX-9 owners?
Replies: 11
Views: 2318

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...
by Magnetar
Thu Feb 17, 2011 3:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

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.
by Magnetar
Thu Feb 17, 2011 2:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

Cost Basis for DRIP

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 ...
by Magnetar
Thu Feb 17, 2011 2:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cost Basis for DRIP
Replies: 13
Views: 1530

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.
by Magnetar
Mon Jan 31, 2011 12:06 pm
 
Forum: Personal Finance (Not Investing)
Topic: Amending Federal Tax Return
Replies: 4
Views: 532

Re: Amending Federal Tax Return

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...
by Magnetar
Mon Jan 31, 2011 11:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Amending Federal Tax Return
Replies: 4
Views: 532

Amending Federal Tax Return

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.
by Magnetar
Mon Jan 31, 2011 11:33 am
 
Forum: Personal Finance (Not Investing)
Topic: Amending Federal Tax Return
Replies: 4
Views: 532

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.
by Magnetar
Mon Jan 31, 2011 11:31 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you guys still have a "go-to" car/ car brand?
Replies: 57
Views: 6861

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

Stay the Course.
by Magnetar
Wed Jan 26, 2011 2:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Am I a fool to hold a total bond market fund right now...
Replies: 110
Views: 15304

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...
by Magnetar
Wed Jan 19, 2011 5:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922

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. ...
by Magnetar
Tue Jan 18, 2011 11:07 am
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922

Re: The Need to Take Risk

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&...
by Magnetar
Tue Jan 18, 2011 10:56 am
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922

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...
by Magnetar
Tue Jan 18, 2011 10:53 am
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922

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?...
by Magnetar
Tue Jan 18, 2011 10:51 am
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922

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...
by Magnetar
Tue Jan 18, 2011 10:25 am
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922

"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...
by Magnetar
Tue Jan 18, 2011 10:11 am
 
Forum: Investing - Help with Personal Investments
Topic: The Need to Take Risk
Replies: 28
Views: 2922
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