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Re: Approaching retirement, withdrawal strategies?

For married filing jointly after your adjusted gross income reaches $32,000, 50% of each dollar of SS becomes part of your taxable income. At $44,000, 85% of each dollar of SS becomes taxable. This greatly increases one's tax rate until all SS income becomes taxable. Withdrawals from a tax deferred ...
by Peter Foley
Thu Dec 18, 2014 3:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Approaching retirement, withdrawal strategies?
Replies: 9
Views: 909

Re: Asset location strategy (tax deferred, tax free, taxable

I think it would be helpful to know your age and tax bracket. Are you at an age where you are doing Roth conversions on a large scale? If I were 20 years from retirement I don't think I would worry about having stocks in my tax deferred for the purpose of doing Roth conversions; other reasons to hol...
by Peter Foley
Thu Dec 18, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Asset location strategy (tax deferred, tax free, taxable)
Replies: 8
Views: 883

Re: How to allocate my 2015 Roth IRA contribution?

I own only Total Stock market in my Roth. I think the advice regarding investing for growth in one's Roth makes a lot of sense.
by Peter Foley
Wed Dec 17, 2014 11:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to allocate my 2015 Roth IRA contribution?
Replies: 7
Views: 734

Re: Approaching retirement, withdrawal strategies?

What will their ages be when they retire? Are they delaying Social Security? There would be a good argument to take funds from their tax deferred account if they have a few low income years when they first retire.
by Peter Foley
Wed Dec 17, 2014 5:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Approaching retirement, withdrawal strategies?
Replies: 9
Views: 909

Re: Suggested tax book for beginner?

The difficulty with Pub 17 is that it is not organized to take the reader from the simple to the complex. It is a great reference, but not a good learning tool. It also does not look at taxes from the perspective of managing your finances to exercise some control over your annual tax obligation.
by Peter Foley
Tue Dec 16, 2014 6:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Suggested tax book for beginner?
Replies: 17
Views: 1636

Re: What are your 2015 Financial Goals?

2015 will be year 4 of my 6 year Roth conversion plan. It will be year 3 of our plan to fund our grandchildren's education through 529 contributions. Oops . . . just had another grandchild, need to start on year 1 for his 529 plan. :D
by Peter Foley
Mon Dec 15, 2014 9:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are your 2015 Financial Goals?
Replies: 79
Views: 4967

Re: Roth conversion tax question

nbseers uncle said: " since a new 5 year period starts with each conversion, any profit, interest, dividends, etc earned after the conversion will be subject to income tax, if withdrawn within 5 years of the conversion. " Can anyone offer any insight as to how this works if one has only on...
by Peter Foley
Mon Dec 15, 2014 8:46 am
 
Forum: Personal Finance (Not Investing)
Topic: Roth conversion tax question
Replies: 23
Views: 1254

Re: Roth, 401k, or Taxable?

I agree that the Roth is a good choice for this year and probably for next. Roth space is very limited compared to 401k space so I would take advantage of it now while you are likely in a low tax bracket.
by Peter Foley
Mon Dec 15, 2014 8:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth, 401k, or Taxable?
Replies: 8
Views: 663

Re: How do you figure out the best location to buy a house?

There are lots of good criteria already listed. For me, one additional criterion was to buy with the idea of a distant future sale in mind. This relates to location, how well the house fits into the neighborhood, and some thought in advance about who potential buyers might be. We lived in our first ...
by Peter Foley
Mon Dec 15, 2014 8:19 am
 
Forum: Personal Consumer Issues
Topic: How do you figure out the best location to buy a house?
Replies: 40
Views: 2794

Re: Roth conversion, re-characterization, taxes

Placeholder wrote: Note that generally pushing into the next bracket isn't a terrible thing it just costs a bit of extra tax on the amount that goes over as long as you don't have some credits that get abruptly phased out. This has been my philosophy. A thousand into the 25% tax bracket is no big de...
by Peter Foley
Sun Dec 14, 2014 11:18 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth conversion, re-characterization, taxes
Replies: 12
Views: 611

Re: Oil's future...

This is one of those times when investors should be aware of the "stay the course" adage. As tempted as I am to buy stock in an oil company or an energy ETF, I am reminded of previous attempts to catch a falling knife.
by Peter Foley
Sat Dec 13, 2014 10:21 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 56
Views: 5824

Re: Soon To Retire - Portfolio Advice

With your pensions plus some interest and dividends let's round your annual income off to about $50,000. The top of the 15% tax bracket is $73,800 in taxable income (or about $93,000 in AGI). When you start taking SS 85% of your SS will be taxable. (Married filing Jointly AGI of $44k or more). Withd...
by Peter Foley
Fri Dec 12, 2014 2:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Soon To Retire - Portfolio Advice
Replies: 11
Views: 1808

Re: Advice needed re Financial Planner?

30k per month to support his lifestyle? 360k per year? He doesn't need a financial planner, he needs a budget. A 4% withdrawal rate for 7.5M would only provide 300k per year.
by Peter Foley
Fri Dec 12, 2014 2:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: Advice needed re Financial Planner?
Replies: 12
Views: 1481

Re: Retirees: Withdrawals by time and amount

I look ahead about a year and make sure I have cash reserves to cover anticipated expenses for the year. I'm doing this now for next year. I do a pre-end of year tax calculation and then decide the best course of action.
by Peter Foley
Thu Dec 11, 2014 5:54 pm
 
Forum: Investing - Theory, News & General
Topic: Retirees: Withdrawals by time and amount
Replies: 36
Views: 3412

Re: Personal Portfolio Advice

In your wife's 401k account use only Spartan Index 500 and Spartan Extended market. You have better options so you can round out your portfolio there
by Peter Foley
Thu Dec 11, 2014 5:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Personal Portfolio Advice
Replies: 6
Views: 689

Re: Should I put all stock in my roth

I would hold mostly total stock market in the Roth even if it meant holding some muni's in taxable.

In the early years of retirement, if you are not taking SS you may want to convert some of your deferred into Roth. I do agree, however, that RMD's will not be a significant issue for you.
by Peter Foley
Wed Dec 10, 2014 11:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I put all stock in my roth
Replies: 11
Views: 1439

Re: Backdoor Roth - timing and other questions

The answer to number 2 is that the pro rata rule keys in on the 12/31 balance in all IRAs held by an individual. The answer to number 3 is that IRAs are by individual. Her TIRA has no impact on your Roth conversion. You may want to read up on Roth conversions. You will want to set up multiple Roth a...
by Peter Foley
Wed Dec 10, 2014 11:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Backdoor Roth - timing and other questions
Replies: 5
Views: 663

Re: Help a newbie with AA decision....

Earlystart wrote: I think you could simplify things quite a bit, though. You've got both: VTI: Total US Market VXUS: Total International Market TSP F: Total US Bond Every other fund is basically an overlap of what's here, which isn't necessarily bad, but you're paying a higher expense ratio and addi...
by Peter Foley
Wed Dec 10, 2014 10:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help a newbie with AA decision....
Replies: 18
Views: 1947

Re: Help with AA, 401k and IRA

I think you have done a good job. I agree that adding extended market would be a good addition. It will give you a little more diversification and possibly increase your long term return.
by Peter Foley
Wed Dec 10, 2014 10:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with AA, 401k and IRA
Replies: 7
Views: 891

Re: After tax money to be left to Grandchildren

You might be able to add a simple codicil to the trust stating that distribution should take place when the youngest reaches Age xx. My in-laws did codicils to their trusts to change personal representatives and only needed notarized signatures to make the changes.
by Peter Foley
Wed Dec 10, 2014 4:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: After tax money to be left to Grandchildren
Replies: 15
Views: 1963

Re: Capital Gains Tax Question

If you are in the 15% bracket this year even after the capital gains are paid, I would take them in cash.

I don't know if you have any uncertainty about your tax bracket in 2015, so I'd be inclined to take the sure thing now.
by Peter Foley
Wed Dec 10, 2014 4:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Capital Gains Tax Question
Replies: 5
Views: 542

Re: How to properly allocate assets across multiple investme

To simplify things a bit I would remove the 529 plan from the mix and manage that separately. I would choose a Target retirement or Life Strategy fund for the plans (if available). Second - I agree with reducing the risk with the single stock. For tax purposes you might want to do some this year and...
by Peter Foley
Tue Dec 09, 2014 10:23 am
 
Forum: Investing - Help with Personal Investments
Topic: How to properly allocate assets across multiple investments?
Replies: 7
Views: 587

Re: After tax money to be left to Grandchildren

I agree that Target Retirement is a good, simple way to go. You could also replicate it with total stock, total international and CA muni's. Bonds pay so little now I don't think it would make much difference. A comment about your trust. I think I would have set it up so that it pays out to both at ...
by Peter Foley
Mon Dec 08, 2014 11:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: After tax money to be left to Grandchildren
Replies: 15
Views: 1963

Re: If you don't need the Soc Sec, when to start taking it?

While your question is about when to take SS, an additional question to ask is what will be my tax bracket over time and is there any way to manage that to my advantage. Can you fund a couple of years of retirement using only your pension and some taxable savings? That might allow you to do some Rot...
by Peter Foley
Mon Dec 08, 2014 10:00 pm
 
Forum: Personal Finance (Not Investing)
Topic: If you don't need the Soc Sec, when to start taking it?
Replies: 39
Views: 4246

Re: Retirement Questions

Turtle
My wife and I are in a similar situation except for the who's working and who's retired. :happy

Our plan is to do Roth conversions until I start taking SS - probably at age 67 or 68. Have you looked at RMD's? Ballpark they are $4000/$100,000 while in one's 70's.
by Peter Foley
Sat Dec 06, 2014 6:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retirement Questions
Replies: 7
Views: 1382

Re: Helping my dad with his portfolio

Burt wrote:

That Edward Jones portfolio is a mess.
The statement is ridiculous. Trying to make the customer think they are really doing something.
OP's father needs to get out of Edward Jones.

(just my two cents)

burt


Good post. You cut to the chase better than I did!
by Peter Foley
Sat Dec 06, 2014 8:34 am
 
Forum: Investing - Help with Personal Investments
Topic: Helping my dad with his portfolio
Replies: 52
Views: 2508

Re: TLH Experiences

I have only done this rarely, in 2000 and in 2009. Over 10 years ago I moved primarily to indexing so my cost basis in taxable is about 50%. Hypothetically, I would have tried to TLH during the October dip. I use Schwab for my taxable and they have an index 500 fund, an index 1000 fund and a total m...
by Peter Foley
Sat Dec 06, 2014 8:11 am
 
Forum: Investing - Help with Personal Investments
Topic: TLH Experiences
Replies: 12
Views: 921

Re: Retirement Questions

Some individuals have found the planner at http://www.i-orp.com/ to be helpful Bigfoot48 has a spreadsheet planner that I have found helpful: BigFoot48 has a spreadsheet that is very clear to use and has all you need to take just about everything about your personal situation into account. You can d...
by Peter Foley
Fri Dec 05, 2014 10:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retirement Questions
Replies: 7
Views: 1382

Re: Helping my dad with his portfolio

I would start the conversation with your father with a discussion about diversification and simplification. One Boglehead piece of advice often given here is that an allocation of less than 5% does not do much to enhance diversification nor the overall return of a portfolio. You might point out to y...
by Peter Foley
Fri Dec 05, 2014 10:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Helping my dad with his portfolio
Replies: 52
Views: 2508

Re: TIPs, Total Bond Market, or Both?

I would advocate for doing both. For TIPs I use a short duration TIPs fund. The best it will do is keep up with inflation, but that's its purpose in my portfolio; maintain buying power.
by Peter Foley
Fri Dec 05, 2014 4:04 pm
 
Forum: Investing - Theory, News & General
Topic: TIPs, Total Bond Market, or Both?
Replies: 35
Views: 3338

Re: What % of your fixed-income is TIPs?

With the market rise I'm getting close to 50/50 overall. Of the non equities TIP funds are about 7% and I-bonds about 15%. As a cushion for unanticipated inflation, I don't feel I need much more.
by Peter Foley
Wed Dec 03, 2014 4:35 pm
 
Forum: Investing - Theory, News & General
Topic: What % of your fixed-income is TIPs?
Replies: 71
Views: 3500

Re: Donor Advised Funds to Lower Capital Gains Tax

I too use Schwab. I believe that once the money is donated it belongs to the DAF, aka a charity. It is the charity that pays the fees, not you.

This is my understanding of how it works. If I am mistaken, please let me know.
by Peter Foley
Mon Dec 01, 2014 11:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Donor Advised Funds to Lower Capital Gains Tax
Replies: 5
Views: 506

Re: What is like a bond but is only taxed at long term gains

While I don't recommend this, you could look at long term covered call options.
by Peter Foley
Mon Dec 01, 2014 11:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: What is like a bond but is only taxed at long term gains.
Replies: 11
Views: 1325

Re: Fidelity or Schwab Brokerage account

I've used Schwab for many years. The web interface gets good reviews. Their mutual funds have low minimums as does the charitable account (DAF) if you are interested in that. They have a bank as well and their bank card has no foreign transaction fees, a real plus if you occasionally travel abroad. ...
by Peter Foley
Mon Dec 01, 2014 11:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity or Schwab Brokerage account
Replies: 28
Views: 2569

Re: "2015 Tax Brackets, Standard Deduction, and Other Update

Hi Mike,

Thanks for posting this. One possible edit. On your blog you state the following:

The personal exemption amount for 2014 is a nice round $4,000.


I think the reference should be to 2015 as the exemption amount for 2014 was $3950.
by Peter Foley
Mon Dec 01, 2014 11:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: "2015 Tax Brackets, Standard Deduction, and Other Updates
Replies: 13
Views: 2508

Re: 457 Plan (Gov.) - Traditional or Roth?

retired jg response in red TXAGBH wrote: My local government employer will be adding a Roth 457 Plan option next year, in addition to the traditional pre-tax 457 plan. What are some general things to consider when evaluating whether to add the Roth option? Your tax bracket and your best guess of ret...
by Peter Foley
Mon Dec 01, 2014 8:03 am
 
Forum: Investing - Help with Personal Investments
Topic: 457 Plan (Gov.) - Traditional or Roth?
Replies: 5
Views: 588

Re: AA and Pension?

Because I would have a pension when I retired, I invested much more aggressively than the age in bonds rule of thumb. A few years before retirement (and after the recession in 2000) I backed off a bit from 80% equities to about 70%. I held at about 70% until a few years before I retired. I did not, ...
by Peter Foley
Sun Nov 30, 2014 8:29 am
 
Forum: Investing - Help with Personal Investments
Topic: AA and Pension?
Replies: 31
Views: 2811

Re: 401k to IRA - pros and cons

One potential con with respect to moving 401k assets to a TIRA is that if you go to convert TIRA to Roth you will have a large TIRA balance. Primarily this has implications for individuals who want to do a back door Roth on a regular basis. A potential pro or con with respect to combining the two 40...
by Peter Foley
Sun Nov 30, 2014 8:19 am
 
Forum: Investing - Help with Personal Investments
Topic: 401k to IRA - pros and cons
Replies: 3
Views: 586

Re: TV buying recommendations

I would go with something in 50" to 60" range. Our viewing distance is about 16'. We have a 36' and the picture is not large enough to read cell phone texts and e-mails, a common occurrence in many TV programs and films set in the modern era.
by Peter Foley
Sat Nov 29, 2014 6:26 pm
 
Forum: Personal Consumer Issues
Topic: TV buying recommendations
Replies: 44
Views: 3029

Re: Do it yourself tax solutions? Should I just try turbotax

I would look at multiple products, not just Turbo Tax. I've used Turbo Tax for about 20 years. Over the past 5-7 years they have been increasing the cost of the product while reducing features.

If I were starting from scratch, I would use a different product.
by Peter Foley
Fri Nov 28, 2014 5:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do it yourself tax solutions? Should I just try turbotax?
Replies: 53
Views: 3990

Re: Diversification and Rebalancing questions

mikeski569 wrote Ok, if holding bonds are the reccomendation, when are bonds attractive to buy? I took finance so i understand how bonds work. But i've never understood when bonds are attractive from a buyers perspective. I can look at a stock and say oh it dropped 20% today, it might be a good time...
by Peter Foley
Fri Nov 28, 2014 5:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Diversification and Rebalancing questions
Replies: 27
Views: 1707

Re: Physician Assistant - Employee or Independent Contractor

lululu wrote: I briefly worked as an independent contractor years ago, but I can't remember the financial details. One thing I was thinking, is do you pay unemployment insurance? This depends on state UI law - the federal government allows some latitude here. States, within Federal conformity guidel...
by Peter Foley
Fri Nov 28, 2014 12:10 am
 
Forum: Personal Finance (Not Investing)
Topic: Physician Assistant - Employee or Independent Contractor?
Replies: 25
Views: 2474

Re: Strategy for paying for bridge years until Social Securi

I agree with cheese_breath if you are looking at the not too distant future. At some point prior to taking SS you will want to consider some draw down of your tax deferred - either through Roth conversions or withdrawals to cover ongoing expenses. 2015 - sell anything that has a loss in the Morgan S...
by Peter Foley
Wed Nov 26, 2014 9:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: Strategy for paying for bridge years until Social Security
Replies: 20
Views: 3510

Re: Physician Assistant - Employee or Independent Contractor

Bolder Boy wrote: As long as you pay your taxes due, you'll not have any trouble with the IRS over this. This is not quite the whole of the story. You were on the right track when you did your IRS research. You do not get to decide. The IRS decides, as does any state department of revenue and the st...
by Peter Foley
Wed Nov 26, 2014 4:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Physician Assistant - Employee or Independent Contractor?
Replies: 25
Views: 2474

Re: portfolio suggestions for the truly aged.

BL wrote: If she has stocks in a taxable account, send all dividends to her bank account rather than reinvesting it. Find out the Capital Gains on each stock, so you can sell up to the top of 15% bracket with a 0% tax on capital gains. Losses would off-set gains. It might increase her tax on SS if s...
by Peter Foley
Mon Nov 24, 2014 9:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: portfolio suggestions for the truly aged.
Replies: 20
Views: 2270

Re: Retiring soon- Hoping for Comments on My Plan

Emotionally I favor the annuity. You would have enough with the annuity for your "floor". Your inflationary increases could come from your SS delay and from your investments. However, I think if you go the annuity route you are locking yourself in to a relatively high tax bracket and will ...
by Peter Foley
Mon Nov 24, 2014 12:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Retiring soon- Hoping for Comments on My Plan
Replies: 8
Views: 1708

Re: portfolio suggestions for the truly aged.

I would look at this from the point of view that she might need cash in the near future if she loses her independence. Also, funds needed within 5 years should not be in the market. I would be inclined to keep not more than 25% in mutual funds in the IRA. Knowing her taxable holdings would potential...
by Peter Foley
Fri Nov 21, 2014 11:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: portfolio suggestions for the truly aged.
Replies: 20
Views: 2270

Re: TGH question - Gift to family [Tax Gain Harvesting]

We have been doing the TGH gift to family for the past couple of years. My daughters are both in the 15% tax bracket and they each have one child. We gift appreciated shares of a mutual fund to them (our cost basis and consequently theirs, is about 50%), have them sell the shares and fund a 529 plan...
by Peter Foley
Thu Nov 20, 2014 5:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax Gain Harvesting - Charity / Gift to family
Replies: 16
Views: 1484

Re: Updated IRS Rollover Chart

Alan Is there more to this? My question is that while the IRS may permit this, do all plans and plan providers permit this? For example: I'm retired and doing Roth conversions and have both pretax and post tax dollars in my traditional IRA. I also have a governmental 457 plan. Can I roll most of my ...
by Peter Foley
Wed Nov 19, 2014 8:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Updated IRS Rollover Chart
Replies: 7
Views: 1208

Re: Portfolio review and help request.

A couple of general observations. You should aim for some simplification. Positions of less than 5% in a mutual fund don't add much diversification nor are they big enough to increase your overall return in a meaningful way. Most of this simplification could be done in your IRAs. In future years som...
by Peter Foley
Wed Nov 19, 2014 6:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio review and help request.
Replies: 2
Views: 418
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