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With further trials, "mutual fund conversion" works better than "corporate acquisition". For mutual fund conversion entry is number of shares or new fund class so shares come out exact and only converts shares in the account for where the transaction is entered. Transactions stil...

Thanks for the responses. Yes, the corporate acquisition works, with additional step of editing one of the shares added to correct round off errors.

Lar

I finally hit admiral level for Primecap and converted Friday. The download from Vanguard removed PrimeCap Inv and added PrimeCap Adml. So Quicken wiped out the basis and share returns. Primecap is in a Roth, so its not terribly critical, still I'd like to have the continuity of returns. Is there a ...

If your wife and the school system she works do not pay into social security, remember her pension will be partly offset by reduced social security.

Lar

Thanks for the replies. The additional income between FRA and 70 will be welcome, and make it that much easier to wait till 70.

Lar

I have a SS question for which I don't find a clear and consistent answer. Situation will be this: Wife has no earnings record and is 5 years younger than myself I plan to delay taking SS until 70 My benefit $2,400 at FRA I file and suspend and wife files for spousal benefit at 62 (?) I delay SS to ...

There is one difference between regular and catchup TSP contributions. Catchup contributions are not eligible for matching. So maxing regular contributions before the end of the year results in loss of matching contributions, even if catchup contributions are still being made.

Lar

Liquidity risk example: 1) Extra payments are made to pay down principal on a mortgage 2) The the funds are needed for other expenses (job loss, medical, whatever) 3) Not eligible to refinance, probably because of 2 or could be that interest rates have really gone up 4) So now one is stuck with illi...

It doesn't have to be either/or. You can direct the extra income to mortgage principal until safe investments offer > 2.75% retuurn. Also, extra payments to an ARM don't carry as much liquidity risk as paying down a fixed rate mortgage.

Lar

VTPAX doesn't make a lot of sense to me due to the negative real rates and fund expenses. Estimated yield to maturity, without explicitly stating the projected inflation rate make it hard to understand exactly what one is buying. 5% of FI in individual TIPs held in IRA, because it isn't worth sellin...

Buy in January, unless you will hold in risk free account that earns more than 1.76%. I-bonds fixed rate is normally lower than TIPS fixed rate, so no realistic chance of a non-zero fixed rate.

Lar

If you don't have enough deductions to itemize or your itemized deductions are only a little above the standard deduction, you should payoff the mortgage. Paying off the mortgage also does not have the risk of investing a large sum all at once before downturn.

Lar

Perhaps the post concerning Roth TSP not being very good referred to lack of flexibility in withdrawals. Verify in TSP literature, but I understand making an early withdrawal of contributions from Roth TSP carries 10% tax penalty, withdrawals from TSP are made proportionately between traditional and...

You didn't post values for bonds or whether taxable vs. non-taxable. If the sales expenses aren't too great, you might consider selling up to your I-bond limits.

Lar

I-bonds are a great alternative to TIPS and TIPS funds for inflation protection, that is unless you expect TIPS real yields (fixed rate) to become even more negative.

Lar

You can put a value using your and your spouse's expected lifetime and discounting the cash flow. Since military pension is inflation indexed, TIPS real return is an appropriate reference. I use a real return of 1-2%, because 1-2% seems more a likely long term return and what I want to purchase TIPS...

#Cruncher confirms what I remembered. So when the 10 yr TIPS go above 1 %, I-bonds can be expected to have a fixed rate greater than 0%. Until then, I-bonds are a free lunch. Treasury may want to get rid of I-bonds because due to the extra cost vs TIPS.

Lar

COLA adjusted annuities reduce or eliminate the need for TIPS. So you can decide based on features, rates/yields, outlook for inflation and nominal interest rates. I do have two biases. The first is against mutual funds because expenses can be avoided by buying directly at auction. Second is towards...

Not an auditor, but I work for DoD and am sometimes involved in technical management of contracts. Mutual funds have to disclosed, but diversified funds funds are OK. There is probably a lawyer that handles/answers ethics questions and conflicts of interest that you may need to go to.

Lar

Seems like the loan may come proportionately from TSP fund, rather than on the G fund. So you may need to complete an interfund transfer to get to the desired asset allocation.

Lar

Cost may go on worksheets but the distribution is not reported on income taxes if used for qualifying expenses. However, the distribution is reported to the IRS. See a the disconnect? So later the IRS sends a notice stating distribution was not included in income along with a bill for taxes and pena...

The Roth TSP is supposed to be available to service members in Oct (already available to Marines). Try to arranee to get as much as possible into Roth. In regular TSP your earnings/gains will be taxed on withdrawal; with Roth TSP earnings won't be taxed.

Lar

I won't be able to contribute to Roth TSP until July, but have a question on contributions. If I split contribution between traditional and Roth options, how do I specify the split? Is it a per centage of my contribution, per cent of income or something else?

Lar

I had a little different solution to the same problem. Instead of keeping an oversized emergency fund, I maintain "buckets" of more or less liquid funds that still figured into my investment mix ( in addition to emergency fund). One bucket is I-bonds which I count as equivalent to TIPS in ...

I will make a small contributions to Roth TSP just to get the five year period started, then go back to regular TSP. Need the reduction in income this year to qualify for tax credits. After that, will see how things develop on taxes and otherwise.

Lar

I looked at the Managed Payout Funds after they had been out several months. I do not use them for other reasons; those being the commodities, REIT and Market Neutral Fund holdings and the overall expense ratio. Commodities futures seem like a zero sum (or loosing when cantango is added). I wouldn't...

American Opportunity Tax Credit is 1:1 on first $2,000, so you'll want to allocate $2,000 QHEE to the credit if you are eligible. 529 vs. I-bonds depends on current and future marginal tax rates and amount that will be taxable income. If your I-bonds have good fixed rates and significant time to mat...

Keep track of cost basis and capital gains
Import capital gains into tax software

Shares purchased after 1/1/2012 will have to match what is reported to the IRS.

Lar

I think the method for cost averaging out would be to sell a fixed number of shares each time instead of a fixed dollar amount. In order to get a fixed amount under DCA, more shares must be sold when price is low. Fixed shares reduces this risk. I'm not saying selling fixed number of share periodica...

Be sure to consider 1) will conversion cause social security payments to be taxable and 2) will conversion change taxation of social security for a surviving spouse? For my case, I will delay SS a couple years to do Roth conversions if it will prevent wife's SS survivor benefit from being taxable. U...

An example of differing tax bracket and marginal tax rate more relevant to retirement is income tax on social security. Projection for my wife after I pass away is 25% 8 1.85 = 46.25%. This leads to another point, make projections on what happens when either spouse passes away.

Lar

Since you want to maintain the same equity and fixed income allocations, suggest you consider combining Wellington with a ST Bond fund in proper proportions.

Lar

Wellington is 16.1% financials and Dividend Growth 8.3% financials (12/31/2011). So I do not consider Dividend Growth equivalent to the stock portion of Wellington. I tried using Windsor II and an investment grade bond fund as a substitute for Wellington in order to put stocks in taxable and bonds i...

Most defined pension benefits offers a survivors benefit, most common is 50%. But the annuity payment is (actuarially?) reduced to offset the cost of the survivor's benefit.

Lar

Projecting out taxes after I pass away, marginal tax for wife will be 46.25% (0.25 x 1.85). Talk about hating widows.

Lar

I don't not invest. I put a cap on how much I invest each month. Income in excess of that amount goes to I-bonds and CDs that are not included in my portfolio.

Lar

You didn't say whether the money you would be moving into bonds is the same money you are moving into stocks/stock funds to increase your equity allocation. Personally, I wouldn't move funds tabbed for equities within the next 2-3 years into bonds. But then I'm not in that situation.

Lar

Protagonist - It won't help much, but you might look at purchasing I-bonds up to the limit to keep interest out of your income, assuming that doesn't count until I-bonds are cashed.

Lar

Alan S - I recall that having a 401K available at work means you are covered whether one participates or not.

Lar

The limit for IRAs is separate from the $17K TSP limit so you can invest in both, $22K combined total. The TSP web site indicates income contributed that under combat zone exclusion doesn't count towards the $17K limit. Regular contribution plus combat exclusion (plus agency and matching for civil s...

Having one electronic account for I-bonds would simplify record keeping. Can gifted I-bonds stay in the account in which they are bought? Of is it required transfer them to account in the primary owner's name?

Lar

So does 1-2 days for fund transfer UndertheMattress mentioned, does that mean a purchase entered for 31 October is actually a Nov purchase with the new rate. Or does that just mean ACH funds transfer from bank account is in Nov? It'll be close, but I may make it for account opened in wife's name. Al...

Thanks for the answer, tbj. On effective date, shares bought before 1 Jan are "non-covered" shares. Basis won't be reported to IRS when sold. Shares bought after 1 Jan are covered shares. There are implementation differences between the share companies, probably associated with what/how th...

I noticed VG's cost basis methods web page under account profile shows IRA accounts/mutual funds, as well as taxable accounts. Any ideas why VG includes the IRA accounts, where cost basis doesn't apply and isn't used for anything?

Lar

I usually save $2-3K of contributions to my wife's traditional IRA until the following year. That way, I can use deductible contributions to get a look at taxes and use IRA contributions to fine tune a little. Think one can also recharacterize up to tax due date. Be careful on the many phase-outs as...

Reporting is only for shares purchased after 1 January 2012. I understand shares bought on/before are sold first, but I'm not sure whether that is a hard and fast IRS rule or unless specified otherwise.

Lar

Depending on how the TSP Roth is setup, I'll probably direct a little into the Roth. Until my daughters are through college, I prefer to use IRA for Roth contributions.

Lar

One benefits from TLH long term gains to offset ordinary income, up to $3,000 limit per year. When shares of new investment are sold at a gain, the is taxed at lower capital gains rate.

Lar

I'm starting a degree through "online" classes. Distance learning is more accurate as classes are the same as on campus, but delivery to off campus students is over the internet. Does it matter that classes are the same as on campus? The B&M state school is well recognized in my field ...

I paid off my mortgage in 2007, tremendous peace of mind a lot of flexibility. We moved to a higher cost area summer 2010, so I have a mortgage again. It is hard getting used to having a mortgage payment again.

Lar