Search found 32 matches

by liuruyu
Sat Jan 06, 2024 8:05 am
Forum: Personal Finance (Not Investing)
Topic: HELP with backdoor roth Mandatory State tax withholding
Replies: 7
Views: 585

Re: HELP with backdoor roth Mandatory State tax withholding

I had a recent thread about this issue as I prepared to do my first Fidelity Roth conversion. I didn’t want a repeat of my experience (similar to yours) two years ago with Vanguard unexpectedly withholding (WH) the 6.99% even though the online conversion screen had 0% WH checked off (I had not completed the CT-W4P). CT has a mandatory 6.99% state tax WH on IRA/401k distributions even if 0% Federal taxes are WH. There is a Form CT-W4P (link below to 2023 version) that you may complete to elect 0% CT withholding on a non-periodic distribution such as a Roth conversion. For 0% CT WH on future conversions, you need to fill out the Form and get it on file with Vanguard. You will have to call them to see whether you can do 0% CT WH conversions o...
by liuruyu
Sat Jan 06, 2024 6:29 am
Forum: Personal Finance (Not Investing)
Topic: HELP with backdoor roth Mandatory State tax withholding
Replies: 7
Views: 585

HELP with backdoor roth Mandatory State tax withholding

I have been doing backdoor Roth IRA for many years. Since I always put after tax money into my traditional IRA, when I convert it to Roth, I always check the box for zero withholding for both state and Fed. However, this is the first year after I did the conversion I noticed CT tax withholding was posted as a mandatory withholding automatically imposed in my Vanguard account. Even though when I did the conversion, I specifically checked NO withholding. How do I get that tax back? If that is indeed mandatory, I think I am being double-taxed here. Or will I just pay less tax to CT at the end of my year ? (this will also mean I can only invest less than my Max amount for my Roth IRA limit each year, if it always subject to a double tax rule) T...
by liuruyu
Mon Dec 11, 2023 7:18 pm
Forum: Personal Finance (Not Investing)
Topic: social security newbie question regarding taking SS early
Replies: 23
Views: 2343

Re: social security newbie question regarding taking SS early

I just want to thank everyone for all your input and help!!! I was just about to lose faith in humanity (a separate story in my life), and here you are, total strangers reaching out with helping hands. Wish everyone a very happy holiday season!!!!! ---- Best, Li
by liuruyu
Mon Dec 11, 2023 10:31 am
Forum: Personal Finance (Not Investing)
Topic: social security newbie question regarding taking SS early
Replies: 23
Views: 2343

Re: social security newbie question regarding taking SS early

@Tom_T. I understand what you mean that it is not just 50% , rather it is a combination of my husband's own benefit plus a portual of the spousal. I used the open social security site to calculate, you are right, he doesn't get 50% of my PIA when I file at 70, but it is about 40% of my PIA (his own benefit plus spousal benefit). So it is still beneficial to file him early. I am not sure how accurate that website is. https://opensocialsecurity.com/. But according to that site, it is better off for my husband to file early at 62 and I file delayed at 70 (with our PIA and age)
by liuruyu
Mon Dec 11, 2023 9:12 am
Forum: Personal Finance (Not Investing)
Topic: social security newbie question regarding taking SS early
Replies: 23
Views: 2343

Re: social security newbie question regarding taking SS early

@Silk McCue, thank you, I did and it showed me to file my husband's at 62 (early filing) and I will file mine at age 70 and he will also file spousal benefit when I start claim mine.
by liuruyu
Mon Dec 11, 2023 8:57 am
Forum: Personal Finance (Not Investing)
Topic: social security newbie question regarding taking SS early
Replies: 23
Views: 2343

Re: social security newbie question regarding taking SS early

@ Tom_T: Per the SS website you sent me: "The spousal benefit can be as much as half of the worker's "primary insurance amount," depending on the spouse's age at retirement. If the spouse begins receiving benefits before "normal (or full) retirement age," the spouse will receive a reduced benefit. However, if a spouse is caring for a qualifying child, the spousal benefit is not reduced. If a spouse is eligible for a retirement benefit based on his or her own earnings, and if that benefit is higher than the spousal benefit, then we pay the retirement benefit. Otherwise we pay the spousal benefit." In our case, the time when my husband takes his spouse's benefit, he will be way over the full retirement age at age...
by liuruyu
Mon Dec 11, 2023 8:24 am
Forum: Personal Finance (Not Investing)
Topic: social security newbie question regarding taking SS early
Replies: 23
Views: 2343

Re: social security newbie question regarding taking SS early

thank you everyone for your response!

@ Teen Persuasion: 800 will be the reduced amount already, if he collects FRA at age 67, it will be over 1200.

And @ Tom_T:" If you took your reduced retirement first while waiting for your spouse to reach retirement age, when you add spouse’s benefits later, your own retirement portion remains reduced which causes the total retirement and spouses benefit together to total less than 50 percent of the worker’s amount." this part I don't understand. I thought once you start taking spouse benefit, you switch to take that, and you forego your own retirement. You will take the higher of the two, not combined, and capped out at 50% of spouse benefit
by liuruyu
Mon Dec 11, 2023 7:47 am
Forum: Personal Finance (Not Investing)
Topic: social security newbie question regarding taking SS early
Replies: 23
Views: 2343

social security newbie question regarding taking SS early

Here is our family situation: I am the higher earner in the family (9yr younger), my husband will be turning 62 next year, and I plan on taking my social security at 70 (god willing). My social security amount (based on current estimate via ID.gov) will be over 3600 at age 67 (assume my spouse will be able to take 50% of that, which will be 1800). My husband's own SS amount if taken at 62 will be only a little over 800/month. We are planning for him to take SS early (next year at age 62), and switch to taking spousal SS benefits once he turns 79 (when I turn 70 and start taking SS). My question is if he switched at age 79 to a spousal SS amount, would the fact that he took his own SS early at 62 instead of 67 put a % discount penalty on his...
by liuruyu
Tue Oct 16, 2018 11:36 am
Forum: Personal Finance (Not Investing)
Topic: Vanguard not allowing reversals of Roth IRA recharacterizations
Replies: 10
Views: 966

notice from Vanguard, can anyone help clarify

so, every year, myself and my husband do the back door Roth for both of us. Today, I just got a notice from Vanguard (where we hold our backdoor roth at) that " as a result of the Tax Cuts and Jobs Act signed into law late last year, investors who convert a traditional IRA or other tax-deferred retirement account to a Roth IRA after Dec 31. 2017, can no longer recharacterize the conversion."

I am not clear if that impact our ability to do backdoor conversion, as if I understand correctly, backdoor Roth conversion is not a re-characterization.

Please help me clarify this. thank you

best

Li
by liuruyu
Fri Sep 04, 2015 9:32 am
Forum: Personal Finance (Not Investing)
Topic: keep an inactive solo 401K
Replies: 7
Views: 934

Re: keep an inactive solo 401K

thx Pan! what's the occasional paperwork for this year you are referring to?
by liuruyu
Fri Sep 04, 2015 9:15 am
Forum: Personal Finance (Not Investing)
Topic: keep an inactive solo 401K
Replies: 7
Views: 934

keep an inactive solo 401K

Husband has a solo 401K in the past three years from self-employment. Recently, he started to working for a company that offers traditional 401K plan and he is shutting down his own business. So my question is: should I close the solo 401k and roll it in with the new plan (pros and cons?). I am inclined to roll, as it is just easier to track after the consolidation. But not sure if there are other factors I need to consider. His solo 401K is with Fidelity. thx!
by liuruyu
Thu Jan 01, 2015 3:43 pm
Forum: Personal Investments
Topic: roll solo 401K into a company 401K
Replies: 5
Views: 729

Re: roll solo 401K into a company 401K

Thank you guys! Understood, if it is going to roll into the company 401K, most likely the solo 401K would be closed down (terminated).
by liuruyu
Thu Jan 01, 2015 8:26 am
Forum: Personal Investments
Topic: roll solo 401K into a company 401K
Replies: 5
Views: 729

roll solo 401K into a company 401K

If one is self-employed and established a solo 401k. Can you roll that into a company group 401K plan later if you find a job with a w-2? Thx!
by liuruyu
Mon Aug 19, 2013 12:44 pm
Forum: Personal Investments
Topic: how to deal with this long term loss
Replies: 3
Views: 694

how to deal with this long term loss

So, husband bought some sprint stock way back in 1990s with his brokeage account at etrade. Fast forward 20 yrs, we have moved over to scottrade. Scottrade trade didn't port over all our innitial purchase price on those stocks, which I have to mannually input in the incoming position section on my account.

I realized sprint recently had a merger event, in which some of our sprint stocks were sold. However, Scottrade recorded the sales proceeds whole as net proceed. We should have incurred a big chunk of long term loss on this one. Not sure why it is not accounted for. Is it because this is a merger event? I can centainly use some of the long term loss, as we have incurred some long term gain so far this year.

thx!
by liuruyu
Sat Mar 16, 2013 12:16 pm
Forum: Personal Investments
Topic: how to make solo 401k contribution
Replies: 6
Views: 2593

Re: how to make solo 401k contribution

thx everyone. I actually found the contribution form (in our solo 401K application package, excuse my stupid moments!). Yes, like PP pointed out, it does listed the separation of 401K contribution vs company matching. I don't think DH will make more than the 401K self contribution limit (17.5K) this year. And since we are taking income after SE to be his wage, so there won't be any company matching. But going forward, I will have to track them myself. And yes, the only reason we opened solo at Fidelity is because they accept roll-over TIRA into the solo. . Hum... wonder if Vanguard allows us to roll the solo at Fidelity over? :) I really like the vanguard online interface more than fidelity (well, could it be I just need time to get used to...
by liuruyu
Fri Mar 15, 2013 9:42 pm
Forum: Personal Investments
Topic: how to make solo 401k contribution
Replies: 6
Views: 2593

how to make solo 401k contribution

ok, so we finally did it. Rolled over DH's roll-over TIRA in Vanguard over to Fidelity's solo 401K plan. Now we just need to figure out how to make contribution to it. 1. I don't seem to be able to link our bank information online with the fidelity solo 401K account. So I assume I can only deposit DH's contribution in check form? 2. I would think Fidelity would want to see we have withhold the self-employment tax before we make the contribution, but how do we show that? I am very confused with how to contribute to the solo 401K. As we are most likely won't pay estimated self-employment tax throughout the year. Because what he makes is still very little compare to my take home. And his self-employment tax won't throw our federal tax off by 1...
by liuruyu
Mon Feb 04, 2013 7:49 am
Forum: Personal Investments
Topic: invest for your Children
Replies: 8
Views: 1007

invest for your Children

We have two kids. Right now, we only have a 529 set up for their college fund. There is no UGMA or UTMA set up for them yet. I was talking with a friend at a parth this weekend. He mentioned he "transferred" stock shares at low cost basis to his children, and something about for kids, the first 35K of gain is taxed at low rate (or did he say no tax at all). Anyway, it was a casual conversation after a couple of glasses of wine. I didn't drill down on the details on how he achieved this or if it would be applicable to me.

Can any financial/investment smart members on this board educate me on this? Thx!!!
by liuruyu
Fri Feb 01, 2013 4:17 pm
Forum: Personal Investments
Topic: Using HSA for retirement saving
Replies: 2
Views: 745

Re: Using HSA for retirement saving

yes, that is what I plan on doing. Will have to open a file folder for that. It may be quite a bit of work to save all receipts. Can I scan those? Will IRS take Scanned copy as proof? or I need get shoe boxes ready?
by liuruyu
Fri Feb 01, 2013 4:11 pm
Forum: Personal Investments
Topic: Using HSA for retirement saving
Replies: 2
Views: 745

Using HSA for retirement saving

This is the first year we start using a HSA. The innitial thought was because DH has an expensive dental implant. And the medical FSA has been decreased to 2500. So we enrolled the HSA plan plus the special purpose FSA (which can be only used for dental and vision). And contributed both to the max.

Now, it just hit me that if we just cash flow the dental implant cost (using up the special purpose FSA, as it will lapse if not used in 2013). And keep the pretax money in HSA plan and let it grow tax free. And later on, we can withdraw the equivalent medical spending amount to pay for whatever we like, and the growth part of the HSA fund to pay for future medical cost tax free.

Does that make sense? Did I miss anything? Thx!!
by liuruyu
Tue Jan 29, 2013 9:46 am
Forum: Personal Investments
Topic: roll-over to solo 401K and backdoor Roth question
Replies: 1
Views: 431

Re: roll-over to solo 401K and backdoor Roth question

so I spoke with Vanguard rep. Here is what she adviced me (sounds reasonable to me at least) A back converstion can only be done/accounted for for the calendar year. So I can make a contribution to my husband's TIRA now and consider it a 2012 contribution, but my conversion will be counted as 2013 conversion. Which means I won't get a 1099R for my 2012 tax return, but one for 2013 tax return. I will file the 5K contribution in my 2012 return (in the deduction and credit part, which we won't get credit anyway, so doesn't matter), but no corresponding 1099R in the income part. I will be reporting both 2012 and 2013 rollover (assume no value change, so the total of 5000 from 2012 and 5500 from 2013 to Roth) in my 2013 income part with the 1099...
by liuruyu
Tue Jan 29, 2013 8:56 am
Forum: Personal Investments
Topic: roll-over to solo 401K and backdoor Roth question
Replies: 1
Views: 431

roll-over to solo 401K and backdoor Roth question

So, We are going to roll over my husband's roll-over IRA into a solo 401K this year, and that opens the Roth IRA backdoor for us. Before I kick start the process, my questions are: 1. A solo 401K plan is only valid if it is set up by the end of the year. So if we roll-over husband's roll-over IRA into it now, it will be considered to be opened in 2013, NOT 2012. Does that still allow us to do back door Roth for husband for 2012? As it is to my understanding that the back door Roth strategy is still valid up till April 15 for 2012. 2. If we contribute to husband's TIRA now for 2012, do we still get a 1099R from Vanguard for our 2012 tax filing? And would we be gettiing another 1099R from Fidelity for rolling the TIRA into the Solo 401K? Husb...
by liuruyu
Sat Jan 26, 2013 12:39 pm
Forum: Personal Investments
Topic: contribute after tax money to my 401K plan
Replies: 6
Views: 1030

Re: contribute after tax money to my 401K plan

Thanks Alan!

Unfortunately (or fortunately), my company has very good match (max out the combined 401K room). I guess I won't be able to contribute after tax money after all.
by liuruyu
Sat Jan 26, 2013 11:36 am
Forum: Personal Investments
Topic: contribute after tax money to my 401K plan
Replies: 6
Views: 1030

contribute after tax money to my 401K plan

I read in another thread here regarding contributing after-tax money to 401K plan. I wonder if anyone can help explain the reasoning behind it. I currently max out my 401K, and do a backdoor roth. I also save extra (after tax $) to my vanguard account for retirement planning. So should I also divert some of my after tax $ to my 401K (assume plan allows it)? The only benefit I can see so far is there are options/funds available in my 401K is not available for individual investors in Vanguard (due to minimum investment requirement). And seems like fee structure is better for most of the funds in my 401K as well. Any downside of doing it? (any catch?) I guess I won't be able to take the after-tax contribution in my 401K (at least not as easy a...
by liuruyu
Thu Jan 24, 2013 1:42 pm
Forum: Personal Investments
Topic: small business 401K vs IRA
Replies: 2
Views: 611

small business 401K vs IRA

To follow up with my previous post, if my husband and his business partner start hiring F/T employee later, I would assume solo 401K would no longer be a viable option. Now for a business with only total 4-5 people. What's the best retirement option plan? A small business 401K or a SEP IRA? What's their major difference? pros and cons? limitations? And can I roll my husband's solo 401K into those vehicles later?

thx!!
by liuruyu
Wed Jan 23, 2013 10:50 am
Forum: Personal Investments
Topic: solo 401K and LLC
Replies: 8
Views: 10102

Re: solo 401K and LLC

thx ! We will go ahead and open the solo 401K at fidelity for him!

This forum has been truly helpful!
by liuruyu
Wed Jan 23, 2013 6:11 am
Forum: Personal Investments
Topic: solo 401K and LLC
Replies: 8
Views: 10102

Re: solo 401K and LLC

thank you guys for the response! So I checked with husband and they are filing as partnership. So basically, income/loss will be flowing through 1040 schedule E to our joint tax return 1040 (line 17). http://www.trustetc.com/new/types-of-retirement-plans/small-business-plans/solo-401k.html based on the above links, looks like partnerships (as long as the only full-time employees are the self-employed partners), each of the partners can set up his own solo 401K. I am not interested in having a solo 401K as a spouse of the partner. Agree with PP, that the deadline for setting up the plan will be Dec 31. 2012 (above link stated that as well). That is ok, as we can set up the solo 401K plan now for 2013, and roll his roll-over IRA into it. As l...
by liuruyu
Tue Jan 22, 2013 7:52 pm
Forum: Personal Investments
Topic: solo 401K and LLC
Replies: 8
Views: 10102

solo 401K and LLC

I had a post a while back regarding how to set up solo 401K for my husband's new business. Things just got a little bit more complicated. My husband just informed me that he and a friend of his were actually both working on the project and formed a LLC in 2012(only two of them). The business actually turned slight profit towards of the end of 2012. And I would like to my husband to be able to open a solo 401K and roll his IRA into it, which open space for his Roth IRA backdoor. Now my question is: Can a two-member LLC still open a solo 401K plan? If so, if the other person decides not to make any "employee" contribution, can my husband still allow to make the contribution? (I read somewhere about the ADP/ACP testing thingy?) Thank...
by liuruyu
Fri Jul 27, 2012 12:11 pm
Forum: Personal Investments
Topic: deal with after tax IRA
Replies: 10
Views: 1049

Re: deal with after tax IRA

yes, I talked to Vanguard, they will not take roll-over in solo 401K... yes, I read somewhere that Fidelity will do it. I will have to look into that. That will involve to roll my Vanguard IRA into Fidelity IRA and then from there roll into the solo 401K.
by liuruyu
Fri Jul 27, 2012 9:22 am
Forum: Personal Investments
Topic: deal with after tax IRA
Replies: 10
Views: 1049

Re: deal with after tax IRA

thank you for your help!
by liuruyu
Thu Jul 26, 2012 7:01 pm
Forum: Personal Investments
Topic: deal with after tax IRA
Replies: 10
Views: 1049

Re: deal with after tax IRA

Thx!

Can we just set up a solo 401K for him now and roll the current IRA in? Can we open a solo 401K this year even he won't be contributing to it, and just use it for roll-over? That way, we can do the backdoor roth this year, instead of delaying it.
by liuruyu
Thu Jul 26, 2012 1:28 pm
Forum: Personal Investments
Topic: deal with after tax IRA
Replies: 10
Views: 1049

deal with after tax IRA

A little background: 1. I work full time, and fully fund my 401K at work, and do a backdoor roth. 2. My husband works on his own start up business this year and so far no positive cash flow yet. 3. My husband has rolled all his previous retirement plans (from various employers) into a Vanguard traditional IRA (all are deductible contribution). My question is: 1. If we were to make a 5K contribution to his IRA this year (it will be a non-deductible contribution) adding to his exising rolled-in Vanguard IRA account, and we will be filing form 8606 for it. What's the benefit of it? It will be after tax dollar, and since it will be in the traditional IRA account, all future earnings will also be taxed as well. 2. We are also going to contribute...