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Re: A couple Noob tax questions

Postby aaronl » Mon Jan 12, 2015 2:15 am Contributing to a 401(k) won't impact the amount of Social Security/Medicare tax you pay. In general, the tax applies to gross wage income subject to certain limits. Certain pre-tax payroll deductions like employee health care premiums and FSA contributions ...
by bobsmith
Mon Jan 12, 2015 9:16 am
 
Forum: Investing - Help with Personal Investments
Topic: A couple Noob tax questions
Replies: 6
Views: 692

A couple Noob tax questions

1. What exactly is medicare/ss collected on? Gross income? If I make 100,000 and then contribute 15,000 to an 401k, my taxable income goes down to 85,000. But do I pay 7.65% (2015) on 100,000 or on 85,000? 2. I was playing around with the taxcaster tax calculator (2014) and I put in nothing but 125,...
by bobsmith
Mon Jan 12, 2015 12:43 am
 
Forum: Investing - Help with Personal Investments
Topic: A couple Noob tax questions
Replies: 6
Views: 692

Re: IRA Deduction Tax Question

Thank you for all the replies. I do need to juggle a few other things around to lock down my MAGI, but at least I know what the IRS requires. You're making Roth 403b/457b contributions right? Traditional 403b/457b contributions are always deductible and not subject to phase outs." This is what ...
by bobsmith
Sat Jan 10, 2015 5:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: IRA Deduction Tax Question
Replies: 7
Views: 625

Re: IRA Deduction Tax Question

Toons, Thanks. :D Playing with that calculator and extrapolating backwards.... 98-118 makes for a 20k spread. Over $5500 (for under 50) that's a loss in deduction of $275 for every $1000 I go over. I think this answers my question but if anyone has the official parameters, please post. More importan...
by bobsmith
Sat Jan 10, 2015 11:52 am
 
Forum: Investing - Help with Personal Investments
Topic: IRA Deduction Tax Question
Replies: 7
Views: 625

IRA Deduction Tax Question

Hi, I'm trying to determine if I can deduct an IRA contribution. I do have a defined benefit plan. http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2014-IRA-Contribution-and-Deduction-Limits-Effect-of-Modified-AGI-on-Deductible-Contributions-If-You-ARE-Covered-by-a-Retirement-Plan-at-W...
by bobsmith
Sat Jan 10, 2015 11:06 am
 
Forum: Investing - Help with Personal Investments
Topic: IRA Deduction Tax Question
Replies: 7
Views: 625

Re: Help determining dividends

2. Personally when I am forecasting my taxes regarding whether dividends are qualified I often refer to my prior 1099-Div for that information.I have a couple of brokerage accounts that will indicate whether a dividend is qualified or not ,in the monthly statement when the distribution occurs. It's...
by bobsmith
Thu Jan 08, 2015 5:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help determining dividends
Replies: 15
Views: 816

Re: Help determining dividends

Thanks for the replies. I'm getting a little conflict in answers given. Perhaps if I restate things a bit... First, is it fair to say that whatever the nature of the distributions, the SEC yield represents the approximate percentage of the fund which is distributed each year? I have some understand...
by bobsmith
Thu Jan 08, 2015 4:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help determining dividends
Replies: 15
Views: 816

Re: Help determining dividends

SEC yields are for bond funds, not stock funds. And large-stock index funds almost never have Capital Gains Distributions. So you'll just be getting taxable dividend income. Simply check payouts over the last year or two to get an approximate percentage estimate... Thanks for your reply. Actually, ...
by bobsmith
Thu Jan 08, 2015 4:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help determining dividends
Replies: 15
Views: 816

Re: Help determining dividends

Thanks for the replies. I'm getting a little conflict in answers given. Perhaps if I restate things a bit... First, is it fair to say that whatever the nature of the distributions, the SEC yield represents the approximate percentage of the fund which is distributed each year? I have some understandi...
by bobsmith
Thu Jan 08, 2015 1:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help determining dividends
Replies: 15
Views: 816

Re: Converting Trad IRA to Roth IRA question

Thanks to both of you for the replies. No penalty in the first situation. I believe the second situation would result in an early withdrawal penalty. For a conversion you are penalized on any amount you withdraw before 5 years. Here's a link for the two 5-year rules for Roth accounts I found helpful...
by bobsmith
Thu Jan 08, 2015 12:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Converting Trad IRA to Roth IRA question
Replies: 9
Views: 728

Converting Trad IRA to Roth IRA question

I've got a pretty good understanding of roths vs. Traditional retirement account. However, I'm a little confused about what's taxable from Roths under special circumstances. Although I would never want to dip into a retirement account early, I want to understand what would happen if I did in terms o...
by bobsmith
Thu Jan 08, 2015 11:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Converting Trad IRA to Roth IRA question
Replies: 9
Views: 728

Help determining dividends

Here's a real basic question. I'm looking at some information regarding certain vanguard funds and trying to determine historically what they pay out in dividends which I'm hoping to understand as a percentage. For example, let's look at VTSAX, Vanguards TSMI-admiral shares. https://personal.vanguar...
by bobsmith
Thu Jan 08, 2015 11:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Help determining dividends
Replies: 15
Views: 816

Re: Seeking clarity about income and capital gains taxes

There's a lot of good information here and a lot of thought provoking questions and considerations. I really appreciate that and it's one of the reasons this is such a valuable forum. I'm still running some scenarios and re-debating within myself the roth or non-roth question. I'm not a typical case...
by bobsmith
Tue Jan 06, 2015 12:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Re: Seeking clarity about income and capital gains taxes

First, thanks to everyone for all your help, suggestions, and corrections. I really appreciate it. I've ordered a tax book online and plan to get a better core understanding. In the meantime, I've played with the Taxcaster software. To be clear, I never once meant to suggest that investing in Roths ...
by bobsmith
Mon Jan 05, 2015 10:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Re: Seeking clarity about income and capital gains taxes

Here's a link to IRS Form 1040 Schedule A itemized deductions which will show you what's included in itemized deductions: http://www.irs.gov/pub/irs-pdf/f1040sa.pdf You should itemize deductions if the sum of your itemized deductions exceeds the standard deduction. Common itemized deductions are: 1...
by bobsmith
Mon Jan 05, 2015 1:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Re: Seeking clarity about income and capital gains taxes

You asked us not to comment on the wisdom of your Roth contributions, but is that 457 plan even a Roth kind of thing? In my case, yes, a roth 457 is available. You should probably try out Taxcaster which isn't so intimidating for just testing the big picture like you are trying to do: https://turbo...
by bobsmith
Mon Jan 05, 2015 1:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Re: Seeking clarity about income and capital gains taxes

Question: Is my modified gross income $87,600 or is it $111,000? Neither. Your standard deduction (and exemptions) reduces taxable income but doesn't reduce your AGI (or MAGI). With $100k salary and the $23k of cap gains your AGI will be $123k. The best way to reduce your AGI is to make 401k or oth...
by bobsmith
Mon Jan 05, 2015 1:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Re: Quick Noob Question

Unfortunately, no, you take the basis as of the time of the inheritance, whether that is a step-up or step-down in basis. You cannot harvest the tax loss yourself. Sorry, not to be dense, but I'm not sure I understand what you mean by "take the basis as of the time of inheritance". Using ...
by bobsmith
Mon Jan 05, 2015 12:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Quick Noob Question
Replies: 4
Views: 540

Re: Seeking clarity about income and capital gains taxes

You forgot to subtract your personal exemptions. For 2015, each personal exemption is $4,000 and the standard deduction is $12,600. I believe you'd have 4 exemptions which would reduce your taxable income by $16,000. Taxable Income = AGI - deductions - exemptions. On 100K Salary without capital gai...
by bobsmith
Mon Jan 05, 2015 12:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Quick Noob Question

I understand that when inheritance is received by a beneficiary, the beneficiary may take advantage of the "step-up in basis". I understand what that is and how it works. What about when an unrealized loss is passed down to a beneficiary? Can the beneficiary harvest that tax loss? Must he ...
by bobsmith
Mon Jan 05, 2015 11:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Quick Noob Question
Replies: 4
Views: 540

Seeking clarity about income and capital gains taxes

Hi, I've got a guy doing my taxes each year because I find the whole process very intimidating and hard to understand. He's a good CPA, but I'm trying to understand some basic concepts on my own. I'm going to lay out a lot of information here, but at the end I will only have a couple basic questions...
by bobsmith
Mon Jan 05, 2015 10:54 am
 
Forum: Investing - Help with Personal Investments
Topic: Seeking clarity about income and capital gains taxes
Replies: 22
Views: 1775

Re: Help calculating inflation

Thanks everyone. I'll be able to get something together. I do see the value of using real returns to run simulations. However, in this case I'm not doing anything particularly sophisticated. Other than just trying to get a mental picture of my own about how much buying power I'll have in retirement,...
by bobsmith
Tue Dec 09, 2014 5:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help calculating inflation
Replies: 9
Views: 456

Help calculating inflation

Couple of inflation questions... 1. I'm testing out different hypothetical allocations by projecting out 20 years under different hypothetical market gains. Is there an accepted approximation for the average annual inflation rate (US)? Of course I know there real rate varies, but what's a fair guess...
by bobsmith
Tue Dec 09, 2014 1:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help calculating inflation
Replies: 9
Views: 456

Re: VanG 500 IN + VanG Xtnd Mkt = TSMI?



BTW.. this is a good source, but be aware it's from 2008.
by bobsmith
Mon Dec 08, 2014 5:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: VanG 500 IN + VanG Xtnd Mkt = TSMI?
Replies: 5
Views: 522

Re: VanG 500 IN + VanG Xtnd Mkt = TSMI?

Okay, I got what I need then.

Thanks guys. You rock!
by bobsmith
Mon Dec 08, 2014 5:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: VanG 500 IN + VanG Xtnd Mkt = TSMI?
Replies: 5
Views: 522

VanG 500 IN + VanG Xtnd Mkt = TSMI?

I'm a passive investor only using index funds and I'm trying to reallocate for drift. I'd love to just have the TSMI for simplicity, but I hold both the Vanguard 500 Index and the Vanguard Extended Market inside a taxable account and each have about 50% unrealized gains, so I don't want to mess with...
by bobsmith
Mon Dec 08, 2014 2:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: VanG 500 IN + VanG Xtnd Mkt = TSMI?
Replies: 5
Views: 522

Re: Seeking Historical returns for Core Indexes

siamond,

That's a neat website, but I'd like to have traditional graph I can tweak and use on Excel. Much like the VanG link, I'd like to have the data the website used to create that calculator. I've bookmarked it for later use.

Thanks anyway.
by bobsmith
Mon Nov 17, 2014 3:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking Historical returns for Core Indexes
Replies: 10
Views: 1783

Re: Seeking Historical returns for Core Indexes

You guys are great, but I don't have the time and I'm not sure I have the interest to work so hard for that data. Maybe I'll pick this up later or simply approach it another way. I guess I could just use the DJI or S&P but I don't think it represents the market the way a TSMI index would. That s...
by bobsmith
Mon Nov 17, 2014 11:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Seeking Historical returns for Core Indexes
Replies: 10
Views: 1783

Re: Seeking Historical returns for Core Indexes

123,

Yes, of course your are correct and good points on the measurement errors.

1926 would be fine, but I'm still looking for the actual annual returns as described in my OP.
by bobsmith
Sun Nov 16, 2014 6:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking Historical returns for Core Indexes
Replies: 10
Views: 1783

Seeking Historical returns for Core Indexes

Hi, I'm trying to explain to a friend the kind of peaks and valleys he should expect depending upon his stock to bond ratio. Besides providing an overall picture of the roller coaster ride, I'd also like to be able to use historical data to cherry pick some inopportune times of getting into the mark...
by bobsmith
Sun Nov 16, 2014 5:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Seeking Historical returns for Core Indexes
Replies: 10
Views: 1783

Re: Help finding Prudential Funds similar to Vanguard TSMI

He's looking to find something as close as possible to Vanguard's Total Stock Market Index paired with Vanguard's Total International Stock Market Index in a 70/30 split, I'm looking over some of the fund choices, but this is confusing. You said your friend is very risk averse, so it's surprising h...
by bobsmith
Tue Aug 12, 2014 11:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help finding Prudential Funds similar to Vanguard TSMI
Replies: 11
Views: 1100

Re: Help finding Prudential Funds similar to Vanguard TSMI

LongerPrimer, Thanks, this is all good information. As so often happens here, I've gone beyond my first question and I'm interested in exploring what you are talking about but I feel I need to do more homework to spare you and others having to explain basic concepts. Besides my ignorance of annuitie...
by bobsmith
Tue Aug 12, 2014 3:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help finding Prudential Funds similar to Vanguard TSMI
Replies: 11
Views: 1100

Re: Help finding Prudential Funds similar to Vanguard TSMI

Check the actual terms here; many variable annuities limit what you can invest in and still keep the guaranteed benefit, in order to prevent investors from taking extreme risks with the house's money. I plan to contact the agent again soon and will mention this concern, but considering that they li...
by bobsmith
Mon Aug 11, 2014 7:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help finding Prudential Funds similar to Vanguard TSMI
Replies: 11
Views: 1100

Re: Tax on Death beneift held inside an annuity inside an IR

LongerPrimer, Yes, I need to speak again with the Prudential agent and I will soon and it's true I'm not familiar with all the various forms annuities take, but I am pretty familiar with the particular one that my friend is in and I'm sure it's not an "income" annuity. In fact, there are h...
by bobsmith
Sat Aug 09, 2014 11:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Tax on Death beneift held inside an annuity inside an IR

LongerPrimer, I spoke to the rep a few years back. It was a long call. My friend thought he was getting a guaranteed 5% return but there was really no such thing. The 5% had something to do with the minimum he could withdraw under certain situations. It was a convoluted explanation that offered no b...
by bobsmith
Fri Aug 08, 2014 8:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Tax on Death beneift held inside an annuity inside an IR

Thanks to everyone for your responses. Ron's link was helpful, but I think Alan S really addressed my question best. First, to be clear, we are talking about a traditional IRA, not a roth. RMDs are being accounted for each year without being subjected to a surrender fee and they do in fact lessen th...
by bobsmith
Fri Aug 08, 2014 12:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Tax on Death beneift held inside an annuity inside an IR

bob, After you get back, can you tell us if there is non-annuity money in the IRA? For example, did the person put part of their wages in the IRA, then at some point, use some of the account (but not all of it) to buy the annuity? Has the person died? He has other IRAs, but this IRA (traditional) h...
by bobsmith
Fri Aug 08, 2014 11:39 am
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Help finding Prudential Funds similar to Vanguard TSMI

Grabiner, You raise a lot of good points. It's hard to offer a straight forward post/question here on the forums without elaborating on the background enough to ward off tangent questions and concerns, yet I understand and appreciate your thoroughness. It's true my friend is not "locked in"...
by bobsmith
Fri Aug 08, 2014 11:23 am
 
Forum: Investing - Help with Personal Investments
Topic: Help finding Prudential Funds similar to Vanguard TSMI
Replies: 11
Views: 1100

Re: Tax on Death beneift held inside an annuity inside an IR

Oicuryy wrote:This guy's understanding is different from yours, bobsmith. Decide for yourself if he knows what he is talking about.
Annuity Death Benefit Tax Implications

Ron


Ron,

Thank you, I'll take a good look at that.

(On my way out. Be back in a week)
by bobsmith
Sat Aug 02, 2014 12:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Tax on Death beneift held inside an annuity inside an IR

It's not an IRA held inside and IRA. It's an annuity held inside an IRA. I'm not sure how more plainly I can state it. While IME, it's rarely a good idea to purchase and annuity inside an IRA, it's hardly uncommon. If you can answer my tax question based on the information I have given you, then I'...
by bobsmith
Sat Aug 02, 2014 12:06 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Tax on Death beneift held inside an annuity inside an IR

It's not an IRA held inside and IRA. It's an annuity held inside an IRA. I'm not sure how more plainly I can state it. While IME, it's rarely a good idea to purchase and annuity inside an IRA, it's hardly uncommon. If you can answer my tax question based on the information I have given you, then I'd...
by bobsmith
Sat Aug 02, 2014 11:29 am
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Tax on Death beneift held inside an annuity inside an IR

sscritic,

Annuity (b) is held inside an IRA (a).

(still expect to be gone for about a week, just haven't left yet...)
by bobsmith
Sat Aug 02, 2014 10:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Tax on Death beneift held inside an annuity inside an IRA?

I have a pretty good understanding about how IRAs are handled by descendents once the benefactor dies. However, what I'm posting about is an annuity with a death benefit held inside of a (traditional) IRA. Upon death, the death benefit pays out a lump sum. It's my understanding that outside of an IR...
by bobsmith
Sat Aug 02, 2014 9:15 am
 
Forum: Personal Finance (Not Investing)
Topic: Tax on Death beneift held inside an annuity inside an IRA?
Replies: 21
Views: 1349

Re: Help finding Prudential Funds similar to Vanguard TSMI

Is he locked into Prudential (for example, is this his employer 403(b))? If not, he could exchange the annuity to Vanguard. If he is, then you need to look at the options in his specific plan; the Prudential page says that not all products may be available in all states or firms. Thanks for the rep...
by bobsmith
Sat Aug 02, 2014 7:41 am
 
Forum: Investing - Help with Personal Investments
Topic: Help finding Prudential Funds similar to Vanguard TSMI
Replies: 11
Views: 1100

Help finding Prudential Funds similar to Vanguard TSMI

I'm a passive investor who deals primarily with Vanguard. A friend of mine holds a prudential annuity. He's looking to find something as close as possible to Vanguard's Total Stock Market Index paired with Vanguard's Total International Stock Market Index in a 70/30 split, respectively. Good diversi...
by bobsmith
Fri Aug 01, 2014 5:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help finding Prudential Funds similar to Vanguard TSMI
Replies: 11
Views: 1100

Re: What's important.

Is it probably safe to assume that in the long run the differences between a 70/30 and 81.5/18.5 allocation will continue to be negligible? Bob: In my opinion, the 11.5% allocation difference (return & risk) in these two stock funds will be negligible in the long run. It is far down on the list...
by bobsmith
Thu Jan 02, 2014 3:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Correct ratio for creating TSMI with 500IN/Xtnd Mrkt?
Replies: 5
Views: 415

Re: Correct ratio for creating TSMI with 500IN/Xtnd Mrkt?

sscritic wrote:
These percentages were computed on Aug 16, 2008, except where otherwise noted.


Good catch. Wonder if/when this will be updated...
by bobsmith
Thu Jan 02, 2014 3:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Correct ratio for creating TSMI with 500IN/Xtnd Mrkt?
Replies: 5
Views: 415

Re: What was your 2013 return?

All index funds, 59.5 us stock/25.5 I'ntl stock/15% bonds..... 22.5% (with a little rough math in there)
by bobsmith
Thu Jan 02, 2014 2:43 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] What was your 2013 return?
Replies: 209
Views: 9853

Correct ratio for creating TSMI with 500IN/Xtnd Mrkt?

My topic is the recreation Vanguard's Total Stock Market Index using Vanguards 500 Index and Vanguard's Extended Market Index. My preference would be simply to hold Vanguard TSMI only, but the 500IN and Xtnd Mkt funds that I hold each have about 45% unrealized so I'm not in any hurry to cash them in...
by bobsmith
Thu Jan 02, 2014 11:45 am
 
Forum: Investing - Help with Personal Investments
Topic: Correct ratio for creating TSMI with 500IN/Xtnd Mrkt?
Replies: 5
Views: 415

Re: How often to do re-allocate for drift?

For those who go by percentage, 5% seems to be a common choice. I'm wondering if any research has been on on the benefits of rebalancing sooner rather than later, sooner meaning perhaps annually instead of every 4-5 years. I suppose the answer is this would have to do with the peaks and valleys of t...
by bobsmith
Thu Aug 08, 2013 11:05 am
 
Forum: Investing - Help with Personal Investments
Topic: How often to do re-allocate for drift?
Replies: 14
Views: 846
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