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Re: If you leave your job, can you use up your whole FSA?

The IRS code and regulations most of the time are about what is, not what isn't. So I don't know if there is exact prohibitions about employer claw-back. The application evolves from IRS notices/Q&A, patterns and practices. Maybe some professional can chime in, but like Luke Duke, I have taken a...
by Spirit Rider
Thu Apr 17, 2014 11:40 am
 
Forum: Personal Finance (Not Investing)
Topic: If you leave your job, can you use up your whole FSA?
Replies: 22
Views: 1394

Re: If you leave your job, can you use up your whole FSA?

Yes you can; one caveat is that generally you must use up your FSA by your last day (or sometimes the last day of the month) of your employment. So a 4/20 term date means you need to have your receipts on or before 4/20. Etc. Right. What I'm wondering is if by law an employer can demand the employe...
by Spirit Rider
Thu Apr 17, 2014 10:33 am
 
Forum: Personal Finance (Not Investing)
Topic: If you leave your job, can you use up your whole FSA?
Replies: 22
Views: 1394

Re: Let's compare 2013 effective tax rates

I would ask some questions about the federal "effective" tax rate. 1. Is the most important criteria simplicity? 2. What should income include? 3. Should elective contributions reduce income? 4. Should items such as SE tax and SE health insurance deduction (which are simply leveling the pl...
by Spirit Rider
Thu Apr 17, 2014 10:16 am
 
Forum: Personal Finance (Not Investing)
Topic: Let's compare 2013 effective tax rates
Replies: 46
Views: 2139

Re: Legal Liability Question [Sole Proprietorships vs. LLCs]

Trying to figure out if there is really any advantage to an LLC for someone contracting as a Project Manager for an hourly rate. My lawyer explained it to me as having layers of liability protection when you are essentially providing professional services. 1. Contract language 2. LLC or S-Corp 3. L...
by Spirit Rider
Wed Apr 16, 2014 10:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: Legal Liability Question [Sole Proprietorships vs. LLCs]
Replies: 6
Views: 379

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

The first thing to understand about a "solo 401k" is that it is not a new type of qualified plan. From the IRS, quote: "The “one-participant 401(k) plan” is not a new type of plan. It is a traditional 401(k) plan covering only one employee. The plans have the same rules and requiremen...
by Spirit Rider
Wed Apr 16, 2014 7:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: IRA deduction or contribution limits if you have solo 401k
Replies: 3
Views: 131

Re: solo 401k

The S-Corp could have accumulated lots of cash from previous years . Each year, when S Corp does its returns, it issues a K1 to the owner for the profit. If this amount is not withdrawn and deposited in indiv bank account, is this the way to accumulate cash for future years? So, If i dont take out ...
by Spirit Rider
Tue Apr 15, 2014 11:05 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 870

Re: solo 401k

So lets say I have a S-Corp with 50K of revenue. The S-Corp can "borrow" 25K (from my other funds) and pay me a salary of 75K (ignoring FICA, etc)? And borrow more for the employer match? Sounds kind of odd. There better be no "" around the borrowing. An S-Corp is just like any ...
by Spirit Rider
Tue Apr 15, 2014 10:36 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 870

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 expense...
by Spirit Rider
Mon Apr 14, 2014 11:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 870

Re: solo 401k

In this context I was using "business profit" to be (revenue minus non-employee expenses). This is because you asked for how much income/profit is required max out a solo 401k. In this case the business must pay a W2 wage of $138K, employer FICA share of $9.25K, employer profit sharing of ...
by Spirit Rider
Mon Apr 14, 2014 11:00 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 870

Re: solo 401k

Take J295's advice. My calculation for the sole proprietor number is incorrect. In my calculation to go from self-employment income to business profit, I was adding back in the 1/2 SE tax. Unfortunately, I was not incorporating the $117K max wage base. The sole proprietor number is more like $182K.....
by Spirit Rider
Mon Apr 14, 2014 1:16 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 870

Re: solo 401k

The identified 200% match does not exist. A solo 401k does not have an employer elective match. It has an employee elective deferral and a employer non-elective profit sharing. The profit sharing max is 25% of compensation, but is calculated differently for a sole proprietor than an S-Corp. For a So...
by Spirit Rider
Mon Apr 14, 2014 12:49 am
 
Forum: Investing - Help with Personal Investments
Topic: solo 401k
Replies: 16
Views: 870

Re: Wife to work as a Contractor - Advice needed

I am now a contractor, part-time, for my previous employer. The contract is between my closely-held corporation and my ex-employer. Such an arrangement has a lot of advantages, especially with regard to options for retirement accounts that aren't available otherwise. Exactly what retirement account...
by Spirit Rider
Sun Apr 13, 2014 11:33 pm
 
Forum: Personal Finance (Not Investing)
Topic: Wife to work as a Contractor - Advice needed
Replies: 30
Views: 2088

Re: SEP instead of IRA?

Well you actually have to have some sort of independent business to open the SEP-IRA and I'm pretty sure the SEP-IRA had to have been established prior to the end of 2013 though the contribution could happen until April 15, 2014. This is not correct. You have until 4/15 to both open and contribute ...
by Spirit Rider
Sun Apr 13, 2014 6:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP instead of IRA?
Replies: 28
Views: 938

Re: Heartbleed at Treasury Direct?

I saw a list online of fifty major sites. Mostly all the financial sites did not use the vulnerable implementation of the technology. Whereas, almost all the social media (including email) sites did.

I verified that none of my financial sites used the exploitable implementation.
by Spirit Rider
Sat Apr 12, 2014 11:10 am
 
Forum: Investing - Theory, News & General
Topic: Heartbleed at Treasury Direct?
Replies: 5
Views: 840

Re: HSA cost benefit analysis

Two additional items you did not factor for. The $5,500 in HSA contributions are also not subject to FICA taxes. If your income for 2014 is <= $117K, this is 7.65%, if it is > $117K it is 1.45% + 0.09% if you exceed the ACA Medicare surtax threshold. So best case <= $117K, you have an additional $42...
by Spirit Rider
Sat Apr 12, 2014 11:02 am
 
Forum: Personal Finance (Not Investing)
Topic: HSA cost benefit analysis
Replies: 23
Views: 1656

Re: Thrift Savings Plan -- the G Fund

I don't have anything to add to the chorus (I agree with every post about the utility of the G Fund).

I would just place the claims of a self-described "savvy" investor in the same category as Honest John's used car sales, and Reliable Roofing company.
by Spirit Rider
Fri Apr 11, 2014 6:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Thrift Savings Plan -- the G Fund
Replies: 6
Views: 687

Re: Wife to work as a Contractor - Advice needed

My wife will not be able to participate in a 401K, but I was planning on increasing my contributions & converting them back to a traditional basis as well as start to max out a ROTH IRA under her name in addition to continuing maxing my ROTH IRA. If she is paid via a 1099, she is self employed ...
by Spirit Rider
Fri Apr 11, 2014 12:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Wife to work as a Contractor - Advice needed
Replies: 30
Views: 2088

Re: B&M Bank: BoA or Wells Fargo?

BoA is in the news to the tune of $783 million settlement http://www.bbc.com/news/business-26966518 In the interest of fair disclosure some of WF biggest hits: WF $869M settlement with Freddie Mac WF $591M settlement with Freddie Mae WF $175M settlement with DOJ over discriminatory lending practice...
by Spirit Rider
Thu Apr 10, 2014 3:28 pm
 
Forum: Personal Finance (Not Investing)
Topic: B&M Bank: BoA or Wells Fargo?
Replies: 25
Views: 1245

Re: Can you Max out 2 457b plans during the same year?

There is a special catch-up contribution for 457b plans, This only applies if you have not maxed your contribution in the last few years. Also, while the IRS permits it, many plans have not adopted the provision. If you are with-in three years of retiring, you can make a special catch-up contributio...
by Spirit Rider
Thu Apr 10, 2014 10:31 am
 
Forum: Personal Finance (Not Investing)
Topic: Can you Max out 2 457b plans during the same year?
Replies: 12
Views: 740

Re: Solo 401k Contribution Limit Confusion

The Wiki is not wrong. It is just does not cover this less than common circumstance. This boundary condition only occurs when the employee deferral exceeds 60% of the net self-employment income. This is for the reasons outline by mah001. Most of the online calculators do not properly calculate this ...
by Spirit Rider
Wed Apr 09, 2014 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: Solo 401k Contribution Limit Confusion
Replies: 5
Views: 451

Re: Medicare - wanting basic info, choices, checklist

There is a three month window to sign up, before your birthday, and I think a three month period after as well. I signed up as soon as I was within the 3 month period so didn't really consider the latter. Close. Everything is by month, so it's not 3 months before your birthday, but the 3 months bef...
by Spirit Rider
Tue Apr 08, 2014 10:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: Medicare - wanting basic info, choices, checklist
Replies: 7
Views: 352

Re: FDIC insurance (for "cash" in brokerage account)

Thank you. Never thought, FDIC insurance applies pretty much to commercial banks only and not to cash held in brokerage houses. I suppose than its always risky to hold any amount of "cash" in a brokerage account. Best to put cash immediately into cd's or treasury's . Even if the brokerage...
by Spirit Rider
Tue Apr 08, 2014 1:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: FDIC insurance (for "cash" in brokerage account)
Replies: 6
Views: 259

Re: Going from S-Corp to Sole Proprietor

Ok, I will take a shot, but I am not a professional. So you will want to verify this. Note: It is not unknown that CPA's are sometimes ill-informed especially When it comes to retirement accounts. 1. No, you do not pay yourself as a W2. All net self-employment income in a sole proprietorship flows t...
by Spirit Rider
Fri Apr 04, 2014 12:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Going from S-Corp to Sole Proprietor
Replies: 7
Views: 654

Re: Signing bonus as 401k contribution?

Companies have some latitude in making 401k discretionary employer contributions that do not violate ownership and HCE non-discrimination rules. These generally take the form of individual/group performance bonuses and individual/group/company revenue/profit goals. A sign-on bonus as a discretionary...
by Spirit Rider
Tue Apr 01, 2014 5:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: Signing bonus as 401k contribution?
Replies: 14
Views: 1238

Re: Maintenance $$'s spent over the lifetime on your Car

I replace tires when they blow out. That seems to happen about yearly, as well Realize that this could be a fatal event if you are driving at highway speeds when the blowout occurs. I guess I would also want to know where?, how fast you drive?, what kind of cars your drive?, what tires you use?, an...
by Spirit Rider
Tue Apr 01, 2014 4:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: Maintenance $$'s spent over the lifetime on your Car
Replies: 38
Views: 2352

Re: HSA Tax Question

Your 2013 HSA contributions (up to 04/15/14) are based on the number of months of eligibility in 2013. Your 2014 HSA contributions (up to 04/15/15) are based on the number of months of eligibility in 2014. If you had 3 months of eligibility in 2013, then your maximum HSA contribution is (3/12) * (ye...
by Spirit Rider
Tue Apr 01, 2014 2:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: HSA Tax Question
Replies: 3
Views: 227

Re: Need Rollover help! Solo 401k as employee?

I would be curious to hear others comment on this as well. This is the crux of my concern. I worked as an IC for 4 years generating my SepIRA (now self-directed IRA). Currently I am an employee but I still have my personal LLC (but very little 1099 income). Do I need current 1099 income in order to...
by Spirit Rider
Mon Mar 31, 2014 12:15 am
 
Forum: Personal Finance (Not Investing)
Topic: Need Rollover help! Solo 401k as employee?
Replies: 9
Views: 392

Re: Small business SIMPLE IRA contribution question

First, I don't know the answer, I am just raising come concerns. Have you considered what your plan would need to do when the employee leaves the company during the year. The employee deferral is one thing. You can allow a high contribution percentage to allow front loading. However, the profit shar...
by Spirit Rider
Fri Mar 28, 2014 5:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Small business SIMPLE IRA contribution question
Replies: 4
Views: 380

Re: Schedule C - business on hold for a year

Hi all, I've been doing freelance work on the side for the last couple of years. I have an EIN and have reported my income and expenses every year. Last year I got a new full-time job and put all my freelance work on hold while I was in transition. As a result I have $0 gross income and no expenses...
by Spirit Rider
Thu Mar 27, 2014 11:17 pm
 
Forum: Personal Finance (Not Investing)
Topic: Schedule C - business on hold for a year
Replies: 2
Views: 308

Re: Thinking About a New Laptop

The motherboard in the Dell Latitude laptop I've had since '04 bit the dust. My wife's Dell Inspiron also bit the dust so we are sans laptops. I am thinking of replacing mine with a Lenovo Thinkpad. I won't buy another Dell. So your Dell lasted 10 years and you won't buy another. Seems a little mis...
by Spirit Rider
Thu Mar 27, 2014 6:59 pm
 
Forum: Personal Consumer Issues
Topic: Thinking About a New Laptop
Replies: 45
Views: 2359

Re: nice IBD article on C Schwab

There is a very nice article/interview in today's Investor Business Daily on page 3 about Charles Schwab. I first used CS online brokerage back in the 80's and have an account with them now. I do believe his firm has individual investors' best interest at heart. I know there are a lot of CS clients...
by Spirit Rider
Thu Mar 27, 2014 11:58 am
 
Forum: Personal Finance (Not Investing)
Topic: nice IBD article on C Schwab
Replies: 2
Views: 390

Re: 529 Grandparents investing my money

Wow, I stand corrected. I have a much shorter list by state, from my provider. It showed NY as the only state allowing penalty free ownership transfer (then only by court owner). I never thought about it, but maybe my list is only for plans from that provider. It appears that the OP might be in the ...
by Spirit Rider
Thu Mar 27, 2014 11:41 am
 
Forum: Personal Finance (Not Investing)
Topic: 529 Grandparents investing my money
Replies: 13
Views: 1400

Re: 529 Grandparents investing my money

No, I think you have thought this through. If there will be no financial aid, then the grandparents owning the 529 will have no negative impact. I just wanted you to understand that 529 assets are assets of the owners. The designation of the beneficiary means the funds can be distributed for that be...
by Spirit Rider
Wed Mar 26, 2014 6:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: 529 Grandparents investing my money
Replies: 13
Views: 1400

Re: 529 Grandparents investing my money

In most plans, no ownership change is allowed. The Arizona plan allows a transfer, but treats it as a non-qualified distribution. That is really no different than cashing out and re-establishing a new plan. A 529 is an asset of the participant (529 terminology for owner). The named beneficiary (desi...
by Spirit Rider
Wed Mar 26, 2014 2:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: 529 Grandparents investing my money
Replies: 13
Views: 1400

Re: Load-Waived A-Share Funds Better Than Indexing?

Again though, most of the comparisons that praise the virtues of index investing are comparing performance against active funds THAT HAVE LOADS (which are hurting their performance). You have stated this over and over again, it doesn't make it true. Most recent comparisons of active management vs. ...
by Spirit Rider
Tue Mar 25, 2014 11:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Load-Waived A-Share Funds Better Than Indexing?
Replies: 30
Views: 1152

Re: Worth forming an LLC for side gig? Tax question

Are 1099s really big red flags? I operate a sole proprietorship and have 1099s coming in and going out every year. I don't see how they will be red flags. I always show a profit after deductions. IMO more of a red flag would be claiming a loss. I didn't say they were big red flags. I said they migh...
by Spirit Rider
Tue Mar 25, 2014 4:17 pm
 
Forum: Personal Finance (Not Investing)
Topic: Worth forming an LLC for side gig? Tax question
Replies: 9
Views: 607

Re: Worth forming an LLC for side gig? Tax question

At your annual revenue projections, I would question the cost effectiveness of an LLC. Even in my state where the annual cost is just $100/year. Beyond the liability issues, there is one other reason why I have an LLC. My revenue is intermittent, but usually 100% personal services. I am always borde...
by Spirit Rider
Tue Mar 25, 2014 12:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: Worth forming an LLC for side gig? Tax question
Replies: 9
Views: 607

Re: UGMA/UTMA/529 for newborn

2. A child can earn up to $2000 a year in investment income TAX FREE so there is a net advantage to the family for the child to have an UGMA earning this amount each year (roughly $20-30K) Note this income is tax free with no restrictions whereas earnings on a 529 are only tax free if used for QHEE...
by Spirit Rider
Mon Mar 24, 2014 10:37 am
 
Forum: Personal Finance (Not Investing)
Topic: UGMA/UTMA/529 for newborn
Replies: 20
Views: 585

Re: Do you work part time in retirement?

I don't have an answer for the first part, but the second part of your goal may be a challenge. The IRS has fairly extensive guidelines in determining whether you should be paid as an independent contractor vs. an employee. I would think that a substitute teacher is highly constrained by the school ...
by Spirit Rider
Mon Mar 24, 2014 9:10 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you work part time in retirement?
Replies: 59
Views: 3904

Re: Why are SEP IRA's so much better than 401ks?

I have mine setup as S Corp (as per CPA). Do solo owners not take any as salary in such cases? I just received my first invoice payment over the weekend and thus did not do anything yet on my S Corp since I registered it in early Feb. So provide me any and all relevant info in this situation. I was...
by Spirit Rider
Sun Mar 23, 2014 12:24 am
 
Forum: Investing - Help with Personal Investments
Topic: Why are SEP IRA's so much better than 401ks?
Replies: 30
Views: 2894

Re: Why are SEP IRA's so much better than 401ks?

This would be my first year for my self employment income and was planning on opening a solo 401k this weekend. With the post by Spirit Rider, I am now a bit confused and might need a mathematical example. if I bring in say 100k, i can take salary of say 60K and contribute 17.5 as employee. Out of ...
by Spirit Rider
Fri Mar 21, 2014 8:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why are SEP IRA's so much better than 401ks?
Replies: 30
Views: 2894

Re: Why are SEP IRA's so much better than 401ks?

Thanks for the summary. One thing I want to verify (this is not something I am planning this year but just want to understand): In a one-person firm, regardless of whether it is a SEP-IRA or a solo 401(k), the max percentage of income that can be contributed as an 'employer' varies from 20% to 25% ...
by Spirit Rider
Fri Mar 21, 2014 5:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why are SEP IRA's so much better than 401ks?
Replies: 30
Views: 2894

Re: SS Disability Benefits - Recommend a Book?

Thank you for your quick responses. My cousin has been disabled and receiving SS disability since a work accident crushed his legs in 1973. So the focus now is understanding what other assistance he might be eligible for given his financial condition. He seems to have his medical care in hand throu...
by Spirit Rider
Tue Mar 18, 2014 2:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: SS Disability Benefits - Recommend a Book?
Replies: 4
Views: 282

Re: An 8% SWR ???

It is not an 8%SWR. You are misinterpreting the 12X salary number. As others have indicated they are factoring in social security, pensions, and other factors. For example, the average social security recipient receives 40% of their total income from their SS benefit. So your real number is to deter...
by Spirit Rider
Mon Mar 17, 2014 10:12 pm
 
Forum: Investing - Theory, News & General
Topic: An 8% SWR ???
Replies: 12
Views: 2084

Re: I-Bond in Roth or Rollover IRA?

A savings bond redeemed at less than five years will be assessed a three month interest penalty.
by Spirit Rider
Mon Mar 17, 2014 9:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: I-Bond in Roth or Rollover IRA?
Replies: 4
Views: 323

Re: Can Employer Limit 401K Contribution?

10%, 15% percent limitation, cry me a river. Try my previous company (3.2%) or my current company (5%). I do have access to a non-qualified plan. I do not participate, because there are too many gotchas. The key one being that it is a company asset subject to creditors. 5 out of the last 6 previous ...
by Spirit Rider
Sat Mar 15, 2014 11:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Can Employer Limit 401K Contribution?
Replies: 17
Views: 1569

Re: 401K Required Minimum Distribution Question

I think it's best to take the first distribution before December 31, 2014, then take another one before April 1, 2015. I don't understand why this is good. You are splitting the 2014 RMD into these two parts. Then you need to take the 2015 RMD too before December 31, 2015. So you will reduce first ...
by Spirit Rider
Fri Mar 14, 2014 2:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401K Required Minimum Distribution Question
Replies: 10
Views: 760

Re: Solo 401k questions re: formalities

A couple of additional points" 1. You do not need to have a business entity. However, having a state chartered business entity, i.e. LLC and being paid via that LLC would be another helpful factor in the contractor vs. employee status. You would be paid corp to corp rather than 1099. 3. If you ...
by Spirit Rider
Fri Mar 14, 2014 2:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Solo 401k questions re: formalities
Replies: 4
Views: 469

Re: Solo 401k questions re: formalities

With a single lump sum payment it is easy to structure a written contract to meet many of the IRS' attributes to be considered a contractor. You already have two primary criteria of contractor: 1. You have a written contract. 2. You have a one time payment for the contract deliverable. The other thi...
by Spirit Rider
Fri Mar 14, 2014 11:06 am
 
Forum: Investing - Help with Personal Investments
Topic: Solo 401k questions re: formalities
Replies: 4
Views: 469

Re: Improving Credit Score by Timing Credit Card Payments

Just know that its a myth to keep a balance on a credit card, its just a waste of money in interest payments. They can see full well how much you are using your credit simply by paying in full each month. To clarify, even though you might have meant this also. When you carry any balance, not only d...
by Spirit Rider
Thu Mar 13, 2014 4:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Improving Credit Score by Timing Credit Card Payments
Replies: 17
Views: 1024
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