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Re: Federal Taxes - Sticker Shock (And how to reduce)

This thread is just bugging me. Going back to the original post, there are two questions posed. 1) How to reduce taxable income for this year? 2) How to plan for next year? I think these are two entirely separate things. For this year , you can contribute to your spouse's IRA and it will be deductib...
by retiredjg
Sat Dec 20, 2014 11:36 am
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 50
Views: 3423

Re: How to allocate my 2015 Roth IRA contribution?

Here's what you currently have. Taxable 66.3% 22.9% 500 Index 11% Extended Market 21.4% Total International 11% Intermediate Term Tax Exempt 401k 22.7% 22.7% 500 Index Roth IRA 10.9% 7.4% Total Bond Index 3.5% Investment Grade Bonds I'm making a guess at how the percentages will change with the addi...
by retiredjg
Sat Dec 20, 2014 10:23 am
 
Forum: Investing - Help with Personal Investments
Topic: How to allocate my 2015 Roth IRA contribution?
Replies: 11
Views: 1352

Re: How to allocate my 2015 Roth IRA contribution?

Can you clarify (or point me in the direction of a link that explains) when one might need to use a back door Roth IRA contribution and how a traditional IRA would interfere with that? There is an income limit that affects your ability to contribute directly to Roth IRA. When you reach that limit, ...
by retiredjg
Sat Dec 20, 2014 8:35 am
 
Forum: Investing - Help with Personal Investments
Topic: How to allocate my 2015 Roth IRA contribution?
Replies: 11
Views: 1352

Re: Performed backdoor Roth and accountant did not file 8606

To follow-up, it appears, if I'm not mistaken, that the 5498s are for record-keeping purposes and not necessary to prepare our taxes for 2014 (neither of us is yet 59.5 years old). Is that correct? This is correct. You won't even get the form until a few months after your taxes are due. Regarding a...
by retiredjg
Sat Dec 20, 2014 7:07 am
 
Forum: Personal Finance (Not Investing)
Topic: Performed backdoor Roth and accountant did not file 8606
Replies: 46
Views: 2944

Re: Performed backdoor Roth and accountant did not file 8606

Can the issue of keeping all the forms forever be solved by simply making sure you 8606 is up to date every year? No. Form 8606 only keeps up with non-deductible contributions to tIRA. And you do have to keep that until all those non-deductible contributions are withdrawn. I was talking about Roth ...
by retiredjg
Fri Dec 19, 2014 6:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: Performed backdoor Roth and accountant did not file 8606
Replies: 46
Views: 2944

Re: Performed backdoor Roth and accountant did not file 8606

But what about the transfer of her Ameriprise Roth? What form(s) will we receive from Ameriprise, and what should we do with it/them? And I'm unclear what to do with the 5498s that we'll receive from both Vanguard and Ameriprise; my understanding is that these are sent after the regular tax filing ...
by retiredjg
Fri Dec 19, 2014 5:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Performed backdoor Roth and accountant did not file 8606
Replies: 46
Views: 2944

Re: Federal Taxes - Sticker Shock (And how to reduce)

Student loans have mixed rates, anywhere from 2% to 6.8%; however, interest rate is capped at 6.8% regardless of what happens from here on out. I had a spreadsheet on that info but can't find exact numbers. If I recall, the effective rate across all loans was ~4.8% for the combined $115k debt. The ...
by retiredjg
Fri Dec 19, 2014 10:13 am
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 50
Views: 3423

Re: Federal Taxes - Sticker Shock (And how to reduce)

Your real question is whether to invest more for retirement or pay more on the loans. That depends on the interest rates on the loans - information which we don't have. In general, if the loans are high interest, save up to the employer match and put everything else into the loans, paying off ahead ...
by retiredjg
Fri Dec 19, 2014 9:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Federal Taxes - Sticker Shock (And how to reduce)
Replies: 50
Views: 3423

Re: How to allocate my 2015 Roth IRA contribution?

I'm just trying to decide which of those makes the most sense to tackle first. Sounds like you'd put REITs at the top of that list? Now that's the question you are really asking. I don't think it matters much which you tackle first. It might just be a matter of convenience and space. I would not ne...
by retiredjg
Fri Dec 19, 2014 9:17 am
 
Forum: Investing - Help with Personal Investments
Topic: How to allocate my 2015 Roth IRA contribution?
Replies: 11
Views: 1352

Re: Help with 401k and 403b

Oh dear. Another bogle-monster is created.
by retiredjg
Fri Dec 19, 2014 8:46 am
 
Forum: Investing - Help with Personal Investments
Topic: Help with 401k and 403b
Replies: 9
Views: 978

Re: Help me choose a bond fund

Looks like the best choice.
by retiredjg
Fri Dec 19, 2014 8:34 am
 
Forum: Investing - Help with Personal Investments
Topic: Help me choose a bond fund
Replies: 9
Views: 1285

Re: Performed backdoor Roth and accountant did not file 8606

I wonder if the terms "backdoor Roth IRA" or "backdoor Roth IRA contribution" are confusing CPAs. It may be more clear to list the actual steps that were taken during the tax interview: I feel sure the tax people are bewildered by some of this. Wait till "mega back door&quo...
by retiredjg
Thu Dec 18, 2014 7:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Performed backdoor Roth and accountant did not file 8606
Replies: 46
Views: 2944

Re: Windfall… Revised Portfolio Review

2014 tax rate: 33% federal/3.0% state (PA) Current salary: husband $150,000/wife $12,000 This salary should put you into the 25% tax bracket. Is 33% what you were in last year? His simple Schwab 401K: 1.13% 100.00% Schwab Total Stock Market Index (SWTSX) .09% His Vanguard IRA: 27.91% 100.00% Vangua...
by retiredjg
Thu Dec 18, 2014 4:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Windfall… Revised Portfolio Review
Replies: 2
Views: 647

Re: Help me choose a bond fund

What you've got is fine. The PIMCO fund is good enough and likely what I'd choose too. If you want to improve...

    What total stock and/or 500 index is available in His 401k?

    What bond funds are available in Her 401k?
by retiredjg
Thu Dec 18, 2014 4:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help me choose a bond fund
Replies: 9
Views: 1285

Re: SEP IRA vs Self 401k

Keep in mind that the contribution to a SEP IRA is made by the employer, not the employee. So I suppose the tax-deferral goes to the business, not the worker. I have no idea how that works out when the worker is the owner of the business. I'm curious to know though.
by retiredjg
Thu Dec 18, 2014 3:56 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP IRA vs Self 401k
Replies: 11
Views: 471

Re: allocation strategy across roth IRA, trad 401k, and taxa

Looks fine to me as a snapshot in time. We would ordinarily suggest International in taxable to get the foreign tax credit, but the lower ER likely makes that a wash. I suspect you will have to hold Total Stock (or a substitute) in your 401k because that is usually the account that is getting the mo...
by retiredjg
Thu Dec 18, 2014 3:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: allocation strategy across roth IRA, trad 401k, and taxable
Replies: 5
Views: 516

Re: Trad IRA --> Roth in anticipation of backdoor Roth, or w

No way to know without an accurate crystal ball. I doubt it matters much. I'd probably just convert it because 2% is a nuisance account.
by retiredjg
Thu Dec 18, 2014 3:47 pm
 
Forum: Personal Finance (Not Investing)
Topic: Trad IRA --> Roth in anticipation of backdoor Roth, or wait
Replies: 4
Views: 369

Re: SEP IRA vs Self 401k

At the risk of sounding like a horse's behind, does your advisor actually know anything about taxes? Many don't. I wonder what simpler/cleaner means and why you should care. Do you/will you have any employees other than perhaps your spouse? If there are nurses and insurance people and billing people...
by retiredjg
Thu Dec 18, 2014 3:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP IRA vs Self 401k
Replies: 11
Views: 471

Re: How to allocate my 2015 Roth IRA contribution?

In thinking about this more, you really should be considering your Roth contribution in light of all your other contributions for 2105. And your post really has nothing to so with your Roth IRA contribution. It is about the asset classes you want to hold in your portfolio. It seems you don't yet hav...
by retiredjg
Thu Dec 18, 2014 3:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to allocate my 2015 Roth IRA contribution?
Replies: 11
Views: 1352

Re: SEP IRA vs Self 401k

If you want to continue using the back door to contribute to Roth IRA, don't use SEP. That is because the SEP IRA would be pro-rated with your back door contribution.

I don't know a lot about SEP IRA. Why does your advisor think this is a better option?
by retiredjg
Thu Dec 18, 2014 3:24 pm
 
Forum: Personal Finance (Not Investing)
Topic: SEP IRA vs Self 401k
Replies: 11
Views: 471

Re: Where to find the cheapest mortgage?

I did a mortgage with PenFed this summer. It was miserable and I cannot recommend them. Every time I sent something to them it was like a black hole. Then a couple of weeks later I'd learn that I had not sent what they wanted. Phone calls and emails were not returned...consistently. I had to send ev...
by retiredjg
Thu Dec 18, 2014 3:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: Where to find the cheapest mortgage?
Replies: 19
Views: 1590

Re: How to allocate my 2015 Roth IRA contribution?

If you want to tilt to REIT, the Roth IRA is the only place to do it. You could hold SCV in taxable but there may be some years when it is not very tax-efficient. I think you will find that you need to find the best bond fund or stable value fund available in your 401k. I know you don't want to do t...
by retiredjg
Thu Dec 18, 2014 2:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to allocate my 2015 Roth IRA contribution?
Replies: 11
Views: 1352

Re: Asset allocation tool?

I know some people do use spreadsheets, but I usually do this with a pencil and paper and a $5 calculator. If it requires more than that, you may be trying to do something that can't be done and perhaps you need to adjust your plan. Maybe this will help you. 1) Set your asset allocation on target pe...
by retiredjg
Thu Dec 18, 2014 2:24 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset allocation tool?
Replies: 9
Views: 722

Re: Bond Fund vs CDs - which to use?

I use bond funds. Some other people here use CDs. Some use both. And there are probably some who use neither. I think this decision is a personal one - if you have a preference, that is what you should do. If you just don't know what to do, don't worry about it too much because neither is likely to ...
by retiredjg
Thu Dec 18, 2014 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 41
Views: 2355

Re: Performed backdoor Roth and accountant did not file 8606

Interesting. He said it was characterized as a rollover on your your return.... That does seem to be true, but it is not accurate. It appears that perhaps he didn't know what to do with what you had done - so he found a way to report it and the tax comes out right. Unfortunately, the way he chose wa...
by retiredjg
Thu Dec 18, 2014 1:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Performed backdoor Roth and accountant did not file 8606
Replies: 46
Views: 2944

Re: Performed backdoor Roth and accountant did not file 8606

The accountant says the form was not filed and that it is not required. He says the contribution was characterized as a rollover on my return and that should be fine. The amount that was "backdoored" was listed on line 16a. What do I need to do to fix this? What are the consequences here?...
by retiredjg
Thu Dec 18, 2014 11:31 am
 
Forum: Personal Finance (Not Investing)
Topic: Performed backdoor Roth and accountant did not file 8606
Replies: 46
Views: 2944

Re: IRA question

There are a few states that tax things differently from most of the other states. I don't think this will make a difference in what you do, but find out ahead of time how your state taxes a contribution to tIRA that is not deducted and how your state taxes a Roth conversion. I believe there is one s...
by retiredjg
Thu Dec 18, 2014 9:04 am
 
Forum: Investing - Theory, News & General
Topic: IRA question
Replies: 3
Views: 484

Re: Problems with Fidelity Backdoor

Keep in mind that folks have until April 15, 201 5 to make a 2014 IRA contribution and the date of conversion is irrelevant for a backdoor Roth. I agree that the date of conversion is not relevant financially. But some people may prefer to do them in the same year because it is easier to understand...
by retiredjg
Thu Dec 18, 2014 8:52 am
 
Forum: Personal Finance (Not Investing)
Topic: Problems with Fidelity Backdoor
Replies: 12
Views: 1560

Re: Close to Roth IRA limit should I do Roth or Back door?

Or is the contribution in 2015 for 2014 allowed but then the conversion in 2015 is for 2015. I bet that is the case, correct? And that is why it spans or carry's over through to next years tax return? Correct. If you do both steps in January, you will report the contribution with the 2014 taxes you...
by retiredjg
Wed Dec 17, 2014 5:09 pm
 
Forum: Investing - Help with Personal Investments
Topic: Close to Roth IRA limit should I do Roth or Back door?
Replies: 12
Views: 1193

Re: Close to Roth IRA limit should I do Roth or Back door?

rkhusky wrote:
retiredjg wrote: Got any charitable donations you want to make earlier than planned?

I don't think charitable donations affect the MAGI.

Thanks for catching that. Edited. :happy
by retiredjg
Wed Dec 17, 2014 9:49 am
 
Forum: Investing - Help with Personal Investments
Topic: Close to Roth IRA limit should I do Roth or Back door?
Replies: 12
Views: 1193

Re: 401K- Clueless

Assuming $9k in the 401k and $5k in the Roth IRA... 401k 64% 43% Fidelity Spartan 500 Index Advt (FUSVX) .05% 11% Vanguard Small Cap Index ADM (VSMAX) .09% 10% Prudential Total Return Bond Z (PDBZX) .58% Roth IRA 36% <---move to Vanguard 9% Vanguard Target Retirement 2015 <---this is a place holder ...
by retiredjg
Wed Dec 17, 2014 9:36 am
 
Forum: Investing - Help with Personal Investments
Topic: 401K- Clueless
Replies: 8
Views: 1025

Re: Low Income 401k/IRA Contribution Limits

Ok, I get the point and the difference re: Fido is worth noting. However, Schwab's list of index funds is so ludicrous that I don't even see them in a comparison for people who want to use mutual funds instead of ETFs. But for the purpose of this investor, since there's apparently no cost to run a S...
by retiredjg
Wed Dec 17, 2014 9:04 am
 
Forum: Personal Finance (Not Investing)
Topic: Low Income 401k/IRA Contribution Limits
Replies: 12
Views: 1323

Re: Low Income 401k/IRA Contribution Limits

I'm not sure a Solo 401k is worth the cost with so little to invest in it at this time. Then again, I don't know what it would cost. It costs about 0.1% at Vanguard (Investor shares only), nothing at Fidelity and Schwab. I'm not sure what your answer means. I was talking about the cost of running a...
by retiredjg
Wed Dec 17, 2014 7:27 am
 
Forum: Personal Finance (Not Investing)
Topic: Low Income 401k/IRA Contribution Limits
Replies: 12
Views: 1323

Re: Low Income 401k/IRA Contribution Limits

Suggest you fill a Roth IRA and use taxable for the rest. What bothers you about a taxable account? I'd rather not pay the taxes on capital gains and dividends. If I put it in tax-deferred I am less likely to touch it until I retire. You need an emergency fund anyway. Do that if you don't have one....
by retiredjg
Tue Dec 16, 2014 8:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Low Income 401k/IRA Contribution Limits
Replies: 12
Views: 1323

Re: 401K- Clueless

I'd use these in your 401k: Fidelity Spartan 500 Index Advt (FUSVX) .05% Vanguard Small Cap Index ADM (VSMAX) .09% Prudential Total Return Bond Z (PDBZX) .58% How does my IRA look? Pretty nuts. Transfer your Roth IRA to Vanguard and put Total International Index in it. You may pay a fee to close the...
by retiredjg
Tue Dec 16, 2014 3:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401K- Clueless
Replies: 8
Views: 1025

Re: Close to Roth IRA limit should I do Roth or Back door?

I'd just go ahead and use the back door. There is no harm - you just have to do paperwork (front and back of Form 8606). Seem's like Her situation is already set - you will be or will not be under the limit and will have to wait and see and re-characterize if necessary. Got any charitable donations ...
by retiredjg
Tue Dec 16, 2014 3:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: Close to Roth IRA limit should I do Roth or Back door?
Replies: 12
Views: 1193

Re: Physician doing consulting on side - individual 401k?

kkhanmd wrote:For anything less than 12K, its easier to do a SIMPLE IRA and then roll it in your current or past 401 or 403. This way SIMPLE IRA wont interfere with backdoor ROTH.

Wouldn't you have to wait 2 years before rolling the SIMPLE into the 457b?
by retiredjg
Tue Dec 16, 2014 3:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Physician doing consulting on side - individual 401k?
Replies: 28
Views: 2007

Re: Over witholding in Roth Conversion

The question really is this a backdoor technique to penalty free withdrawals if under 59-1/2? No. (I am assuming you are using the word "backdoor" in its generic sense, not referring to back door contributions to Roth IRA.) If you do a conversion of tIRA to Roth IRA, that conversion start...
by retiredjg
Tue Dec 16, 2014 3:08 pm
 
Forum: Personal Finance (Not Investing)
Topic: Over witholding in Roth Conversion
Replies: 14
Views: 678

Re: Is my calculation of cost correct?

I think you are going a bit overboard. Once you get your expenses low, getting them lower is an exercise in quickly diminishing returns. When people talk about avoiding high costs, they are talking about avoiding funds with an ER of 1.5% or paying a 5.75% load to buy something. For a $100,000 invest...
by retiredjg
Tue Dec 16, 2014 2:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is my calculation of cost correct?
Replies: 7
Views: 510

Re: Managing a windfall & fixing my high-fee portfolio

Here's one scenario: $500k cash cushion 40% Total Stock Market — yields $68,850 at 1.6% 40% Total International Stock Market — yields $114,000 at 3.37% (is this the correct figure?) 20% VCADX CA Muni Bonds — yield $25,500 at ~1.5% (again, is that correct yield figure?) I think you've got the right ...
by retiredjg
Tue Dec 16, 2014 2:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Managing a windfall & fixing my high-fee portfolio
Replies: 18
Views: 2420

Re: Would you invest $2500 or ?

Supposedly he has been clean for 10 out of 11 months with a one month lapse. I have no idea of the truth of any of his comments. This is not how people count sobriety. It starts when it started. If there is a lapse, the counting starts again. There is no 10 out of 11 months. If there is some way to...
by retiredjg
Tue Dec 16, 2014 1:47 pm
 
Forum: Personal Consumer Issues
Topic: Would you invest $2500 or ?
Replies: 21
Views: 1632

Re: Should CASH be counted in allocation planning

Since you are 63 and retired, I think the cash is part of your retirement portfolio. But I also think it does not matter much what you call it at this point. I think young people should keep their emergency funds separate because the E fund can be such a hugh part of their assets and including/exclu...
by retiredjg
Tue Dec 16, 2014 9:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Should CASH be counted in allocation planning
Replies: 15
Views: 1088

Re: Should we keep all bonds in inherited tIRA?

I don't think it matters much financially, so I would do what is convenient.
by retiredjg
Tue Dec 16, 2014 9:47 am
 
Forum: Investing - Help with Personal Investments
Topic: Should we keep all bonds in inherited tIRA?
Replies: 7
Views: 540

Re: Low Income 401k/IRA Contribution Limits

martin7 wrote:I am a student but I run a small business in my free time. I am hesitant to invest in taxable accounts. I really would like to increase my tax-deferred, but I don't make a lot of money.

Suggest you fill a Roth IRA and use taxable for the rest. What bothers you about a taxable account?
by retiredjg
Tue Dec 16, 2014 9:03 am
 
Forum: Personal Finance (Not Investing)
Topic: Low Income 401k/IRA Contribution Limits
Replies: 12
Views: 1323

Re: How do I split between VG & Fidelity?

I think this is a great idea and I would like to learn to fish rather than be given a fish. However, I really do not even know what I am looking for....would you be able to direct me to a few portions of the pages (fidelity or morningstar) and some things I should look for please? thanks If you hav...
by retiredjg
Tue Dec 16, 2014 7:33 am
 
Forum: Investing - Help with Personal Investments
Topic: How do I split between VG & Fidelity?
Replies: 19
Views: 2050

Re: Does your work define you?

If you love what you do but have "concerns" that need to be "figured out", it sounds like nothing is wrong but that something is missing. Perhaps you need a family, or a dog, or to tend your spiritual garden, or do some volunteer work.
by retiredjg
Tue Dec 16, 2014 7:07 am
 
Forum: Personal Consumer Issues
Topic: Does your work define you?
Replies: 30
Views: 2716

Re: 403b providers (NOT portfolio advice)

All things being equal, the 457b has the best costs. But there are some excellent choices if you have reason to use the 403b instead. Or both.
by retiredjg
Tue Dec 16, 2014 6:59 am
 
Forum: Investing - Help with Personal Investments
Topic: 403b providers (NOT portfolio advice)
Replies: 10
Views: 821

Re: Federal Retiree Insurance and Medicare

I have not completely figured this out yet myself (start Medicare next year), but I've decided NOT to give up the Federal insurance. If you do, as I understand it, you'll need both Medicare Part B and Part D. I figure with that, I might as well just keep the fed insurance. My current plan is to Pay ...
by retiredjg
Mon Dec 15, 2014 5:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: Federal Retiree Insurance and Medicare
Replies: 8
Views: 494

Re: Do Vanguard Bond funds include many high yield bonds?

To help with that, you have to know where junk bonds start on the scale. The chart I looked at said Baa and above is investment grade and that <Baa is less than investment grade - a high yield (junk) bond. As a very general statement, I think most VG bond funds (including Total Bond Index) do not co...
by retiredjg
Mon Dec 15, 2014 3:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Do Vanguard Bond funds include many high yield bonds?
Replies: 5
Views: 610
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