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Re: Thoughts: Buy Muni's for an IRA?

the only muni bonds that might make sense to hold in an ira at this time would be ones with substantial prospects for capital gains. Yes , I am talking about Puerto Rico and/or Detroit but these investments are high risk high reward and it is unlikely you know more about their proospects than the p...
by grabiner
Fri Apr 18, 2014 10:36 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts: Buy Muni's for an IRA?
Replies: 4
Views: 252

Re: Extra Mortgage Payments and Emergencies

Welcome to the forum! If you make an extra payment towards principal on a mortgage, this does not eliminate the requirement to make regular payments in the future. (Depending on how your mortgage is set up, it may reduce the payments due; for example, on an ARM, the payment will reset annually based...
by grabiner
Fri Apr 18, 2014 9:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: Extra Mortgage Payments and Emergencies
Replies: 1
Views: 163

Re: Let's play mortgage roulette!

Our broker is providing three options for us. I confess that the term "jumbo" loan scares me. I fear it is irresponsible or that we're somehow being taken. Please note we're in a HCOL, so our mortgage of $460,000 conforms (in our area, it must be under $470,000 to conform). Here are our t...
by grabiner
Fri Apr 18, 2014 9:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: Let's play mortgage roulette!
Replies: 1
Views: 256

Re: Is it ever okay to use IRA to pay off student loan?

The decision you are making is another version of a very common decision: should you pay off a student loan or contribute to a Roth IRA? The disadvantage of paying off the student loan, in either situation, is that you will lose some tax-deferred savings. You can make that up in future years as long...
by grabiner
Fri Apr 18, 2014 8:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: Is it ever okay to use IRA to pay off student loan?
Replies: 5
Views: 389

Re: Thoughts: Buy Muni's for an IRA?

This won't work. All withdrawals from an IRA are taxed at your regular tax rate, no matter what the IRA was invested in. (Similarly, in most states, IRA withdrawals are taxed even if the IRA was invested in Treasury bonds which are exempt from state tax.) Therefore, if you want to hold muni bonds, h...
by grabiner
Fri Apr 18, 2014 8:20 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts: Buy Muni's for an IRA?
Replies: 4
Views: 252

Re: Tried to get credit report - security questions don't ma

Edit: Equifax was the problem for me recently when I tried to open a Pentagon Federal CU account. Turns out Equifax did not have my most recent address. I was told that they are to be informed by the credit card companies about a new address. Anyway, I was glad to get that fixed. My Equifax report ...
by grabiner
Fri Apr 18, 2014 7:53 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tried to get credit report - security questions don't match
Replies: 53
Views: 5772

Vanguard IRA Insights

Vanguard IRA Insights: are investors breaking from the traditional? There are three graphs in the article. 2/3 of all Vanguard IRA contributions are made to Roths, and this has been consistent for several years. (Allowing backdoor Roths doesn't have much effect here; before the backdoor was possibl...
by grabiner
Thu Apr 17, 2014 10:02 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard IRA Insights
Replies: 7
Views: 611

Re: High Yield Bonds as an Annuity?

David, is it the result of bonds in the portfolio literally defaulting, or is it a result of their market price dropping because investors see an impending default, and the fund manager selling at a loss rather than waiting for the default? Either one can happen. If a bond has a 50% chance of defau...
by grabiner
Thu Apr 17, 2014 9:51 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds as an Annuity?
Replies: 23
Views: 1568

Re: Switching Banks

Thanks for the replies. Interesting about the recommendation to have more than one credit card. My credit rating is very good so I'm not trying to build it up and I prefer the simplicity of a single credit card, but I thought I had read somewhere that opening up additional credit cards was a negati...
by grabiner
Thu Apr 17, 2014 9:38 pm
 
Forum: Personal Finance (Not Investing)
Topic: Switching Banks
Replies: 18
Views: 1237

Re: Taxes owed in taxable account

Has VTSAX ever distributed capital gains? They certainly haven't recently. It hasn't distributed a capital gain since the ETF class was created, and the ETF class should allow it to avoid future gains. I have held Total Stock Market since 1997, and my records show that the last capital gain distrib...
by grabiner
Thu Apr 17, 2014 9:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: Taxes owed in taxable account
Replies: 18
Views: 918

Re: High Yield Bonds as an Annuity?

...I have seen discussions about the inherent NAV erosion in VWEHX, which apparently is something deliberate on the part of the Wellington managers. I can't remember the exact cause, though I believe it has something to do with managing bond purchases and sales only with income in mind, at a detrim...
by grabiner
Thu Apr 17, 2014 9:21 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds as an Annuity?
Replies: 23
Views: 1568

Re: How is bond average maturity measured/reported

I believe that Vanguard and Morningstar calculate maturity differently for callable bonds; Morningstar uses final maturity, while Vanguard uses maturity adjusted for call provisions. Consider a bond issued in 2009 which matures in 2039 and which is callable in 2019. Since interest rates have fallen ...
by grabiner
Thu Apr 17, 2014 9:12 pm
 
Forum: Investing - Theory, News & General
Topic: How is bond average maturity measured/reported
Replies: 4
Views: 213

Re: How Are Catch Up Contributions Made?

I'm in the exact same boat. I max out my TSP and also max out a Roth with Vangaurd. I had previously heard that if you max max out the catch up contributions you lose the 5% agency max, is this true? If you max out contributions before the end of the year , you lose the match for the pay periods in...
by grabiner
Thu Apr 17, 2014 9:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: How Are Catch Up Contributions Made?
Replies: 15
Views: 1353

Re: Tried to get credit report - security questions don't ma

The same thing happened to me with Equifax. In April 2013, Equifax asked me, "You may have an auto loan, opened in or about March 2013. Which of these banks holds the loan?" I don't have one, but someone could have opened an auto loan in my name, which is why I want to check my Equifax cr...
by grabiner
Wed Apr 16, 2014 11:48 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tried to get credit report - security questions don't match
Replies: 53
Views: 5772

Re: IRA Required Withdrawal and Tax Inefficiency

In the course of educating myself on personal finance I see that bond funds are recommended for regular IRAs because of bond tax inefficiencies. The income that bonds pay out then becomes deferred. However, my wife and I are at the age when we must take the required annual distribution from our IRA...
by grabiner
Wed Apr 16, 2014 10:40 pm
 
Forum: Investing - Theory, News & General
Topic: IRA Required Withdrawal and Tax Inefficiency
Replies: 9
Views: 858

Re: Asset Allocation in taxable account

Welcome to the forum! I'm active duty military and looking to invest in a taxable account with the purpose of building equity to be used to purchase a retirement home in 10-15 years. Will likely work approx. 10 years after military retirement but I do not want a mortgage once fully retired. Situatio...
by grabiner
Wed Apr 16, 2014 10:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset Allocation in taxable account
Replies: 4
Views: 693

Re: I don't understand whether there are costs to rebalancin

My own strategy is to have a tolerance band for rebalancing, and only rebalance to the edge of the band. For example, if you have a 5% tolerance, you are willing to let your US stock be anywhere between 35% and 45% of your portfolio. With this tolerance, and with dividends not reinvested, you have r...
by grabiner
Wed Apr 16, 2014 10:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: I don't understand whether there are costs to rebalancing
Replies: 16
Views: 1125

Re: B-shares

You should sell the B shares and not wait for them to convert to A shares. The reason is that you have already lost the redemption fee; it just hasn't been deducted from your account. For example, suppose you have a B share with a 5% redemption fee and a 1% 12b(1) fee which converts to an A share in...
by grabiner
Wed Apr 16, 2014 9:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: B-shares
Replies: 6
Views: 419

Re: Taxable account

Since you are using your taxable account for retirement, you should treat the taxable and tax-deferred accounts as a single portfolio. If you want to hold small-cap value, you could hold Small-Cap Value Index (which is available as a fund, or as the ETF VBR), but it would probably be better to hold ...
by grabiner
Wed Apr 16, 2014 9:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Taxable account
Replies: 2
Views: 383

Re: HSA cost benefit analysis

All I needed to see was the premium savings(2160-771.60 = 1388.40) plus the employer contribution($1,000), that's $2388.40 which is almost your deductible of $2,500? Am I missing something? You are missing something which makes it even more attractive; contributing to the HSA is tax-deductible, and...
by grabiner
Wed Apr 16, 2014 9:24 pm
 
Forum: Personal Finance (Not Investing)
Topic: HSA cost benefit analysis
Replies: 23
Views: 1641

Re: Last Minute Help with Foreign Tax Paid and 1099R

Not knowing how much foreign tax was withheld from your distributions, I am going to punt and suggest completing form 1116. It looks scary but for passive investments in funds (RIC) it is really quite simple. The foreign tax $ listed in the Foreign Tax Paid form is small: $163.55 for one fund and $...
by grabiner
Tue Apr 15, 2014 1:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: Last Minute Help with Foreign Tax Paid and 1099R
Replies: 12
Views: 324

Re: HSA cost benefit analysis

Have you, yet, personally encountered a situation where you actually had to pay the full deductible? Based on other postings in the forum, I get the impression that people judge, quite correctly, that an economic analysis favors the high deductible plan--they can afford the risk and it is beneficia...
by grabiner
Tue Apr 15, 2014 12:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: HSA cost benefit analysis
Replies: 23
Views: 1641

Re: Last Minute Help with Foreign Tax Paid and 1099R

Not knowing how much foreign tax was withheld from your distributions, I am going to punt and suggest completing form 1116. It looks scary but for passive investments in funds (RIC) it is really quite simple. The foreign tax $ listed in the Foreign Tax Paid form is small: $163.55 for one fund and $...
by grabiner
Tue Apr 15, 2014 12:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Last Minute Help with Foreign Tax Paid and 1099R
Replies: 12
Views: 324

Re: Tax Treatment of HSA in California

I understand that they are handed similar to a brokerage account, however, there's a few specific points that I am not completely clear on as it relates to California. Are the maintenance fees somehow tax deductible in California? Are capital losses on the HSA account deductible in California? Are ...
by grabiner
Tue Apr 15, 2014 12:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax Treatment of HSA in California
Replies: 9
Views: 485

Re: Asset location question

Vanguard International Value is an actively managed fund, and is thus much more likely to distribute capital gains than any of your tax-managed and index funds. It should go in an IRA. Of the index funds you hold, Value Index is probably the least tax-efficient, because value funds have higher divid...
by grabiner
Tue Apr 15, 2014 12:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset location question
Replies: 4
Views: 191

Re: Roth IRA vs Traditional

You can use a deductible IRA regardless of whether you have the Roth, as long as you meet the eligibility requirements. Contributing to a Roth now (whether frontdoor or backdoor) is the best way for you to get tax deferral if you are ineligible for a deductible IRA. The problem occurs in the other d...
by grabiner
Mon Apr 14, 2014 10:59 am
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA vs Traditional
Replies: 3
Views: 341

Re: Asset allocation vs. pooling for admiral shares

My own philosophy is that I am willing to deviate from my target allocation within my rebalancing limits without rebalancing, so I should also be willing to make the same deviation to save a few dollars in expenses. Thus, my Investment Policy Statement says that I will deviate within the rebalancing...
by grabiner
Mon Apr 14, 2014 10:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Asset allocation vs. pooling for admiral shares
Replies: 9
Views: 787

Re: Use brokerage window for REITS and TIPS?

Despite the reported expense, TIAA Real Estate is an excellent investment. It holds the real estate directly, rather than holding an index of REITs. Therefore, the expense ratio includes the management costs, while the expense ratio of a REIT fund does not include the costs that the REITs themselves...
by grabiner
Mon Apr 14, 2014 10:45 am
 
Forum: Investing - Help with Personal Investments
Topic: Use brokerage window for REITS and TIPS?
Replies: 7
Views: 471

Re: Taxes and SEP IRA fund choice

Taxes don't matter in a tax-deferred account; if you invest in the wrong fund, you can switch without penalty. If your entire portfolio is tax-deferred (excluding cash in bank accounts and emergency funds), you can put any fund in any account for the same tax cost, so your investments should be dete...
by grabiner
Mon Apr 14, 2014 10:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Taxes and SEP IRA fund choice
Replies: 6
Views: 403

Re: TaxAct HSA Question

I have the same situation. My premium pass-through (paid by the health plan, not the employer) is not reported with code W, but I have to tell TaxAct that it is code W so that it goes in the right place on the Form 8889, as a contribution which I cannot deduct but which reduces my deductible limit. ...
by grabiner
Fri Apr 11, 2014 10:47 pm
 
Forum: Personal Finance (Not Investing)
Topic: TaxAct HSA Question
Replies: 8
Views: 462

Re: Corporate Bond in Tax-deferred vs Muni Bonds in Taxable

So for tax-deferred accounts you'd hold treasuries and/or corporate. But what got me thinking is when you do have to pay taxes on withdraws, what will be the after tax return be? Will it be better to just hold munis in taxable? The after-tax rate of return is the same as the pre-tax return. If you ...
by grabiner
Fri Apr 11, 2014 10:38 pm
 
Forum: Investing - Theory, News & General
Topic: Corporate Bond in Tax-deferred vs Muni Bonds in Taxable
Replies: 8
Views: 758

Re: Paying a load fee for a lower expense ratio?

NJ does treat Roths the same as the IRS does, so you could open a Roth IRA, which is probably a better deal than either a state-nondeductible IRA or an inferior 401(k).
by grabiner
Fri Apr 11, 2014 10:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Paying a load fee for a lower expense ratio?
Replies: 6
Views: 741

Re: Bond Allocation with 6.8% Student Loans

You can't rebalance from your loan into equities when the market slumps, so I think that if you decide to save rather than put everything towards the loan, you should still hold some cash/bonds so that you have some 'dry powder' to make it possible to rebalance and buy stocks when they're 'on sale'...
by grabiner
Fri Apr 11, 2014 12:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond Allocation with 6.8% Student Loans
Replies: 12
Views: 802

Re: I saw a "Boglehead" on my flight yesterday!

One of my co-workers sent an internal Email a few months ago about a computer program I wrote at work, and also asked, "Are you a Boglehead?" Presumably she recognized my last name, which is my username.
by grabiner
Wed Apr 09, 2014 11:49 pm
 
Forum: Local Chapters and Bogleheads Community
Topic: I saw a "Boglehead" on my flight yesterday!
Replies: 65
Views: 7486

Re: Always understand taxes do not trust software

2) By the time you get to something as complicated as the long form and Schedule D, simply entering data accurately and complete becomes a nontrivial job. dbltrbl, I'll bet a nickel your issues are with data entry errors, not software functions. And that's why I use tax software. The first time I f...
by grabiner
Wed Apr 09, 2014 11:46 pm
 
Forum: Personal Consumer Issues
Topic: Always understand taxes do not trust software
Replies: 33
Views: 2661

Re: Do Professional Active Investors have short-term incenti

I would say that professional active investors have a short-term incentive, and this is a significant disincentive for long-term investors to use them. You, as an investor, would prefer a fund which matches the market to one which is equally likely to outperform or underperform by 10%; the extra ris...
by grabiner
Wed Apr 09, 2014 11:16 pm
 
Forum: Investing - Theory, News & General
Topic: Do Professional Active Investors have short-term incentives?
Replies: 10
Views: 700

Re: Investing in foreign government bonds - theory and pract

Funny that you say "Living in a small (and economically insignificant) country, I don't have the luxury of thinking of my government treasuries as a riskless investment. For that reason I've decided to allocate at least 33% of my bond portion to US treasuries." That insignificant country ...
by grabiner
Wed Apr 09, 2014 10:45 pm
 
Forum: Investing - Theory, News & General
Topic: Investing in foreign government bonds - theory and practice
Replies: 19
Views: 1139

Re: Placement of Balanced Fund and Stock Funds in Roth Accou

There isn't a tax disadvantage. However, you might want to use something other than LifeStrategy Growth in your Roth IRA. Since you have individual funds elsewhere (and you need to do this, given your taxable account), LifeStrategy Growth doesn't make your portfolio any easier to manage; you still h...
by grabiner
Wed Apr 09, 2014 10:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Placement of Balanced Fund and Stock Funds in Roth Accounts
Replies: 2
Views: 259

Re: Bond Allocation with 6.8% Student Loans

I don't think I have ready anything that takes the amount of debt one owes into account when figuring your asset allocation. Dave Ramsey of course would tell you not to save anything at all until you paid this loan off. I disagree, and think that the sooner you start your retirement investing the b...
by grabiner
Wed Apr 09, 2014 10:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond Allocation with 6.8% Student Loans
Replies: 12
Views: 802

Re: Finally! TIAA-CREF class action for delays

The lawsuit seems to say that the cause for action is not the delay, but the fact that TIAA-CREF did not pay investment gains during the delay. If you initiated a TIAA-CREF withdrawal in March, the withdrawal actually took place in May, and you were paid at the May value of the funds, you didn't los...
by grabiner
Wed Apr 09, 2014 10:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Finally! TIAA-CREF class action for delays
Replies: 1
Views: 429

Re: Income Taxes v. Net Interest on Home Purchase?

Yes, this is exactly my question - better to have a lower initial mortgage with a TIRA withdrawal or to convert TIRA to Roth? I'm not real savvy on bond funds or Treasuries, as I've been aggressive in the accumulation phase, so in my mind I'm comparing to historical returns (10 year) on something l...
by grabiner
Wed Apr 09, 2014 10:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Income Taxes v. Net Interest on Home Purchase?
Replies: 5
Views: 463

Re: (CA, USA) Recommendations for choosing between HSA Healt

Note that in California, none of your HSA contributions, your employer contributions, or the earnings in the HSA account are tax deductible (or exempt) from state income tax. Tracking your basis in the account over many years could be a pain, especially if you build up money in the account and then...
by grabiner
Wed Apr 09, 2014 10:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: (CA, USA) Recommendations for choosing between HSA Health Pl
Replies: 3
Views: 212

Re: What's a good credit score?

Thanks. This is a big help. According to credit karma, my credit score is 738, due to my only debt being credit card related (paid off in full every month) and my lack of credit longevity - only a couple years or so. Credit Karma gives you two different credit scores, neither one FICO. The Trans Un...
by grabiner
Wed Apr 09, 2014 12:00 am
 
Forum: Personal Consumer Issues
Topic: What's a good credit score?
Replies: 25
Views: 2031

Re: (CA, USA) Recommendations for choosing between HSA Healt

You have slightly overestimated the costs of the low-deductible plans, because they provide some coverage before you meet your deductible. For example, a high-deductible plan might charge you the negotiated rate of $75 for your office visit, while a low-deductible plan would charge a $20 co-payment ...
by grabiner
Tue Apr 08, 2014 11:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: (CA, USA) Recommendations for choosing between HSA Health Pl
Replies: 3
Views: 212

Re: Vanguard All world ETF or Vanguard region ETFs?

By deciding to reduce your presence in the US market, you are actually saying that you know something that the market does not. After all the allocation in the global index is not arbitrary. In essence you are drifting, however slightly, from the passive strategy that is the foundation of modern po...
by grabiner
Tue Apr 08, 2014 11:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard All world ETF or Vanguard region ETFs?
Replies: 17
Views: 816

Re: Family Entangled in Variable Annuities. Need help...

@JW: Yes, my family wants to get out of the investments, but they don't know how and are afraid of tax penalties so they keep putting it off. There is no tax penalty changing accounts in the IRAs, because you can buy and sell freely. If your grandparents and uncle are in a low tax bracket, it may b...
by grabiner
Tue Apr 08, 2014 11:24 pm
 
Forum: Investing - Help with Personal Investments
Topic: Family Entangled in Variable Annuities. Need help...
Replies: 6
Views: 775

Re: Hold/Invest Cash or Put Down on Mortgage?

The advantage of putting more money down at the start is that you reduce all of your mortgage payments. If you take out a 15-year mortgage, paying extra at the start gives you an annual benefit for 15 years, which has only a 7-year duration. Once you have already taken out the mortgage, paying off p...
by grabiner
Tue Apr 08, 2014 11:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: Hold/Invest Cash or Put Down on Mortgage?
Replies: 3
Views: 439

Re: Income Taxes v. Net Interest on Home Purchase?

This is a version of the usual decision whether to pay down a mortgage or invest, but with a twist: it is considerably more attractive to pay down a mortgage before you take it out than it is to pay down an existing mortgage. (The reason is that any payment made on an existing mortgage eliminates pa...
by grabiner
Tue Apr 08, 2014 12:07 am
 
Forum: Personal Finance (Not Investing)
Topic: Income Taxes v. Net Interest on Home Purchase?
Replies: 5
Views: 463

Re: Calculate effect of mortgage-interest deduction

It is better for most investors to contribute to a 401(k) or IRA rather than to pay down a mortgage, because of the long-term benefit of tax deferral. Most investors who do not have this choice (because they are maxing out their 401(k) and IRA) do itemize deductions. In order to max out a 401(k) and...
by grabiner
Mon Apr 07, 2014 11:48 pm
 
Forum: Personal Finance (Not Investing)
Topic: Calculate effect of mortgage-interest deduction
Replies: 11
Views: 686

Re: Reporting Adjusted Gross Income on Individual State Tax

David - Thank you for your suggestions. I checked both CO and IN returns forms and they both have exclusive fields to indicate what portion of the income was earnt in that state. However, I still have the original question. Under the part where it says "Your income as reported on the Federal f...
by grabiner
Mon Apr 07, 2014 11:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Reporting Adjusted Gross Income on Individual State Tax Form
Replies: 6
Views: 326
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