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Re: IRA Contribution Question and Age

ANY earnings or gains in a traditional retirement account will be taxed as regular income. Taxable accounts receive a break on dividends and capital gains. Roths have no taxes. If you plan to invest in things that would benefit from the lower dividend/capital gains rates, it would be foolish to inv...
by retiredjg
Sun Nov 23, 2014 8:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: IRA Contribution Question and Age
Replies: 16
Views: 1329

Re: Help: Three Fund Portfolio at Fidelity

In my Fidelity account I found FSITX (Spartan US Bond Index - Advantage Class) and VBMFX (Total Bond Market Index - Investor Shares): FSITX has a .17% Gross ER and .1% Net ER VBMFX has a .2% Gross & Net ER Check your facts again. If you want a fair comparison to Spartan Advantage Class, you'd n...
by retiredjg
Sun Nov 23, 2014 8:51 pm
 
Forum: Investing - Theory, News & General
Topic: Help: Three Fund Portfolio at Fidelity
Replies: 23
Views: 1872

Re: Saving Strategy For a Young Person?

2. Do the regular 401k up to the allowed (tax deductible) maximum. <--I would vote for Roth 401k since he is in the 15% bracket at this point. Or at least some Roth 401k. This would eliminate the $1000 possible saver's tax credit though, and I'm not 100% convinced that Roth 401k is the better choice...
by retiredjg
Sun Nov 23, 2014 2:12 pm
 
Forum: Investing - Theory, News & General
Topic: Saving Strategy For a Young Person?
Replies: 14
Views: 1091

Re: IRA Contribution Question and Age

In my experience as a single person with a federal pension, it does not take much "other income" to make 85% of SS taxable. And even if you can avoid that, probably 50% will be taxable. Not saying you should not try, but I'm not sure there is much you can do. Have you seen the chart in the...
by retiredjg
Sun Nov 23, 2014 2:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: IRA Contribution Question and Age
Replies: 16
Views: 1329

Re: Saving Strategy For a Young Person?

Maybe this is the way to look at it, Leeraar. Since you are the one doing the asking, maybe it would be better for your son do the rinse and repeat approach rather than the mega back door approach (after tax sub account to Roth IRA). It's mighty confusing, even to people who have a good deal of life...
by retiredjg
Sun Nov 23, 2014 1:47 pm
 
Forum: Investing - Theory, News & General
Topic: Saving Strategy For a Young Person?
Replies: 14
Views: 1091

Re: Questions about implementing 'mega backdoor roth'

Well, that was a run-on sentence! So the way I understand this is that is long as you are 59.5 or older and your Roth is at least 5 years old none of the earnings are taxed or penalized at withdrawal yes, even those that were converted within 5 years yes , your direct or ordinary contributions are a...
by retiredjg
Sun Nov 23, 2014 1:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions about implementing 'mega backdoor roth'
Replies: 22
Views: 1272

Re: Saving Strategy For a Young Person?

You guys are making me nervous. I could be wrong, but I believe that some of these answers do not really apply to the situation you described about your son. Maybe he does want to use after-tax contributions and maybe he doesn't. But from the people here who do this, it appears that if his after-ta...
by retiredjg
Sun Nov 23, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: Saving Strategy For a Young Person?
Replies: 14
Views: 1091

Re: Moving current 401k funds into brokerage link?

Google, once again, is our friend. :D http://www.wikinvest.com/stock/Hewlett-Packard_(HPQ)/Defined_Contribution_Plans Well, the link doesn't work unless you cut and paste the whole thing, but it does say.... Effective January 31, 2004, HP designated the HP Stock Fund, an investment option under the ...
by retiredjg
Sun Nov 23, 2014 1:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Moving current 401k funds into brokerage link?
Replies: 24
Views: 1065

Re: Questions about implementing 'mega backdoor roth'

Ask again if that link doesn't help.
by retiredjg
Sun Nov 23, 2014 12:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions about implementing 'mega backdoor roth'
Replies: 22
Views: 1272

Re: Moving current 401k funds into brokerage link?

What is the description of HP STOCK FUND(.02) ? OP, will you also answer the above question? My first thoughts are that it could be (a) a total U.S. stock index fund, which would be great, or (b) an option to invest money in company stock, which wouldn't be what we're looking for. What do the plan ...
by retiredjg
Sun Nov 23, 2014 12:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: Moving current 401k funds into brokerage link?
Replies: 24
Views: 1065

Re: Need Help Allocating Assets

Here is one way to allocate what you currently have, not considering the pension as part of the mix. I'm considering the pension as a future income stream. If you cash it in, it becomes part of that mix at that time. Note the change in percentages. His 457b 54.1% 24.8% BNY Equity Index (500 Index) ....
by retiredjg
Sun Nov 23, 2014 11:58 am
 
Forum: Investing - Help with Personal Investments
Topic: Need Help Allocating Assets
Replies: 12
Views: 835

Re: Need Help Allocating Assets

I'll give it a whirl. I guess there is no 401k balance at the present. Unless I take a survivor option the pension ends when I die and all money in the fund is forfeited. This worries me a lot. Yes, if you retire, you can take the max out and invest it and that would be fine. And in the meantime, yo...
by retiredjg
Sun Nov 23, 2014 11:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Need Help Allocating Assets
Replies: 12
Views: 835

Re: Questions about implementing 'mega backdoor roth'

See page 2 of this thread. Jack Holloway works through how money is taxed when coming out of a Roth IRA that contains these rollovers from after-tax accounts.

viewtopic.php?f=2&t=137366
by retiredjg
Sun Nov 23, 2014 10:19 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions about implementing 'mega backdoor roth'
Replies: 22
Views: 1272

Re: Questions about implementing 'mega backdoor roth'

Thank you for the education. I am implementing the mega backdoor Roth and have been reading furiously and missed this This is why I was so specific in my earlier post about deciding where the earnings are going to go. If the earnings go into Roth IRA (paying taxes of course) the earnings can't be w...
by retiredjg
Sun Nov 23, 2014 10:06 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions about implementing 'mega backdoor roth'
Replies: 22
Views: 1272

Re: Questions about implementing 'mega backdoor roth'

The five year rule starts at the first tax year that you make the initial contribution and establish the account, not for each contribution. IRS publication 590. http://www.irs.gov/publications/p590/ch02.html#en_US_2013_publink1000231061 What you are saying is correct. But there is another 5 year r...
by retiredjg
Sun Nov 23, 2014 9:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions about implementing 'mega backdoor roth'
Replies: 22
Views: 1272

Re: Saving Strategy For a Young Person?

I understand livesoft's message and I'm neutral on that up to a point. But I would rather have money in Roth vehicles than in taxable vehicles (although I do see the downside of losing the ability to tax loss harvest). In this situation with a person who is probably not going to be able to max out b...
by retiredjg
Sun Nov 23, 2014 9:37 am
 
Forum: Investing - Theory, News & General
Topic: Saving Strategy For a Young Person?
Replies: 14
Views: 1091

Re: Saving Strategy For a Young Person?

1. IRA (at Vanguard), $5,500. At the moment this is Roth. Should it be Traditional? I think it should be Roth. 2. 401k, $17,500. Should this be Roth, if available? I'm not clear on this one. If there were no saver's credit, I think the answer should be Roth until he makes enough money to move out o...
by retiredjg
Sun Nov 23, 2014 7:24 am
 
Forum: Investing - Theory, News & General
Topic: Saving Strategy For a Young Person?
Replies: 14
Views: 1091

Re: Need Help Allocating Assets

Which one is your 401k?

I'm confused about the pension thing. It apparently has a dollar value. Can that change? Is it invested in some way? Do you plan to take this as an income stream or cash it in and put it in an IRA or something?
by retiredjg
Sat Nov 22, 2014 4:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need Help Allocating Assets
Replies: 12
Views: 835

Re: WiseBanyan AA question

Decide if this is a goal that you need to save for or if you can invest the money for this goal. Those are 2 different things. If your goal is a certain date or even a certain year, you need to save, not invest. CDs, money market, high yield savings, maybe a small amount in short term bonds.
by retiredjg
Sat Nov 22, 2014 3:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: WiseBanyan AA question
Replies: 5
Views: 489

Re: WiseBanyan AA question

If you need the money at a certain time, you probably don't want any of it to be invested in stocks. If your goal can easily be delayed if there is a market crash, some stocks might be OK.
by retiredjg
Sat Nov 22, 2014 3:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: WiseBanyan AA question
Replies: 5
Views: 489

Re: Please provide feedback on my current asset allocation

You could make your Taxable accounts simpler by going with a one fund Target Retirement Fund as you did in your Nontaxable, or one of the Lifestrategy Funds. They rebalance for you. I don't believe this is a good choice for taxable in the 33% tax bracket. The bonds are not tax-efficient and you can...
by retiredjg
Sat Nov 22, 2014 3:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Please provide feedback on my current asset allocation
Replies: 11
Views: 737

Re: Questions about implementing 'mega backdoor roth'

Before you do this, you need to make a decision, or at least know your options. If you take out the after-tax money, the earnings that money has made must come with it. The earnings can go -to Roth IRA (you pay tax at ordinary rate) or -to tIRA (no tax, but the presence of this tIRA interferes if yo...
by retiredjg
Sat Nov 22, 2014 3:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions about implementing 'mega backdoor roth'
Replies: 22
Views: 1272

Re: Please provide feedback on my current asset allocation

Some of the money going into taxable could be going into Roth IRA via the "back door". Otherwise, I think it looks fine if you wish to have separate allocations for your two accounts. If you wish to use CDs or I Bonds or EE Bonds, that would be fine as well. Just not as simple. http://thef...
by retiredjg
Sat Nov 22, 2014 3:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: Please provide feedback on my current asset allocation
Replies: 11
Views: 737

Re: After Tax Contributions to 401k???

Oh, I did not know we were talking about your specific situation. I thought we were helping people who might be considering adding money after-tax now to their 401(k)s. Well, we are and we are not. Based on my own experience, I am counseling my 23-year old son to contribute after-tax dollars to his...
by retiredjg
Sat Nov 22, 2014 2:49 pm
 
Forum: Investing - Theory, News & General
Topic: After Tax Contributions to 401k???
Replies: 16
Views: 1305

Re: After Tax Contributions to 401k???

What happens if the tax law changes again? I suppose from a tax perspective you aren't worse off than if you had invested in a brokerage account. What happened recently was not really a change in tax law, but a clarification of some muddled up stuff. People have been doing after-tax contributions f...
by retiredjg
Sat Nov 22, 2014 2:48 pm
 
Forum: Investing - Theory, News & General
Topic: After Tax Contributions to 401k???
Replies: 16
Views: 1305

Re: Am I short-changing myself? 401k vs ROTH contributions

You need to know how to figure out your tax bracket. This number is crucial to many decisions.

Compare your taxable income, line 43 on Form 1040, to this chart. http://www.moneychimp.com/features/tax_brackets.htm Be sure to click on the right year and filing status.
by retiredjg
Sat Nov 22, 2014 1:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Am I short-changing myself? 401k vs ROTH contributions
Replies: 9
Views: 535

Re: Help with my portfolio! New to investing.

Guys in my 401k hp fund, i I been invested for about 6 months now, but the only thing keeping me up is my cmpany match, otherwise i'm sitting a few dollars below what i actually put in, just doesn't seem like it growing.. im tempted to switch to these index funds that Laura suggested...... someone ...
by retiredjg
Sat Nov 22, 2014 9:30 am
 
Forum: Investing - Help with Personal Investments
Topic: Help with my portfolio! New to investing.
Replies: 19
Views: 2457

Re: Moving current 401k funds into brokerage link?

You are not using the best choices in your 401k. From an earlier thread, it appears your choices are: HP INT'L EQUITY FUND(.51) HP INTL EQUITY INDEX(.08) <--- HP SM/MID-CAP EQUITY(.72) HP US LARGE CAP EQTY(.37) US LARGE CAP EQ INDX(.04) <--- US SM/MID CAP EQ IDX(.05) <--- HP CORE BOND FUND(.15) HP C...
by retiredjg
Sat Nov 22, 2014 8:54 am
 
Forum: Investing - Help with Personal Investments
Topic: Moving current 401k funds into brokerage link?
Replies: 24
Views: 1065

Re: IRA Contribution Question and Age

tfb makes the argument that many federal employees should be using Roth TSP instead of traditional, because of the pension. http://thefinancebuff.com/most-tsp-participiants-should-switch-to-the-roth-tsp.html I can't see any argument to put money into taxable space instead of Roth space (TSP, 401k, o...
by retiredjg
Sat Nov 22, 2014 6:50 am
 
Forum: Investing - Help with Personal Investments
Topic: IRA Contribution Question and Age
Replies: 16
Views: 1329

Re: What to do with $76000 IRA Rollover

People use the term "dollar cost averaging" in different ways, but what they usually mean is to invest money frequently. This is not new money. This is a sideways move. Just put your money in the market. If you can't do it, put in half and DCA the other half over a short time. http://www.b...
by retiredjg
Sat Nov 22, 2014 6:23 am
 
Forum: Investing - Help with Personal Investments
Topic: What to do with $76000 IRA Rollover
Replies: 10
Views: 1279

Re: Who to Use: CPA, Financial Advisor, Someone Else?

Scott62 wrote:Health insurance after retirement is probably the thing that would keep me up at night.

I've noticed several threads on the ACA (Obamacare) lately - I guess it is open season. Maybe you would find useful information there.
by retiredjg
Fri Nov 21, 2014 4:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: what is the CRSPTM1 index?

It's real name is CRSP US Total Market Index . If you plug that into the google box in the upper right, you might find what you are looking for.

Vanguard made this switch relatively recently (2012 or 2013?). Before that, they used MSCI I think.
by retiredjg
Fri Nov 21, 2014 2:19 pm
 
Forum: Investing - Theory, News & General
Topic: what is the CRSPTM1 index?
Replies: 4
Views: 397

Re: New job / Old 401k

As mentioned, if you roll this money to IRA, it will interfere with your ability to use the "back door" to contribute to Roth IRA if you should need to. Here is some information on what the back door is.

http://thefinancebuff.com/the-backdoor- ... ow-to.html
by retiredjg
Fri Nov 21, 2014 1:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: New job / Old 401k
Replies: 8
Views: 743

Re: smartphone over wifi - still possible?

I too recommend Consumer Cellular. You can pick how many minutes you want and how much data you want, a different amount each month if you want. So you can have no data most of the time and have it available if you find you need it for something specific. I'll even sell you my smart phone that I use...
by retiredjg
Fri Nov 21, 2014 1:32 pm
 
Forum: Personal Consumer Issues
Topic: smartphone over wifi - still possible?
Replies: 31
Views: 2192

Re: Who to Use: CPA, Financial Advisor, Someone Else?

My wife and I are both engineers, so dealing with this one equation and many unknowns is painful for us. That is certainly understandable. It is counter-intuitive, but the field of investing is hardly precise.n You would think it would be very precise. But surely there must be something similar som...
by retiredjg
Fri Nov 21, 2014 1:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Does investing in a 401k actually save any money?

dbr wrote:That's pretty good. Maybe somebody can find a link to those charts that tfb had that show how income is stacked for purposes of assessing taxes.

Here is the thread with the income stack charts.

viewtopic.php?f=10&t=86849
by retiredjg
Fri Nov 21, 2014 1:08 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 44
Views: 3243

Re: Does investing in a 401k actually save any money?

TradingPlaces wrote:- 33% while working, but 40% in retirement (either due to over-saving, or due to tax law change)....

Again...having a marginal rate of 40% does not mean that everything is taxed at 40%. Some is not taxed, some taxed at 10%, 15%, 25%, 33% and 35% before you even get to taxing some at 40%.
by retiredjg
Fri Nov 21, 2014 1:05 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 44
Views: 3243

Re: Questions About 401k and AGI and Traditional vs Roth IRA

I'm pretty sure I've read some people using this method, possibly in conjunction with others, to completely avoid paying taxes on the conversion amounts from the 401k > IRA > Roth. I suspect a misunderstanding. There is very little money that does not get taxed at some point, either going into an a...
by retiredjg
Fri Nov 21, 2014 12:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2626

Re: Who to Use: CPA, Financial Advisor, Someone Else?

If you end up in the 25% bracket, you might as well pay that now on some of your 403b. But if you end up in the 15% bracket, it would be better to have used traditional now instead of 403b. Without a crystal ball, it may be unknowable. So you just have to do the best you can and put things where you...
by retiredjg
Fri Nov 21, 2014 10:52 am
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Questions About 401k and AGI and Traditional vs Roth IRA

I don't know what a Roth conversion pipeline is. I don't either, but this is the 3rd reference to a "pipeline that I've run across recently (here at Bogleheads). I'm wondering if someone made up a new term and used it in an article or something. I'll probably explain this poorly, but it's basi...
by retiredjg
Fri Nov 21, 2014 9:56 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2626

Re: Who to Use: CPA, Financial Advisor, Someone Else?

In my case, I am planning on the backdoor Roth to move assets I already have that have already been taxed into a tax-advantaged account, because I don't need them to live on. Just so you'll know, this does not sound like a back door. This sounds like an ordinary Roth conversion (which is step 2 of ...
by retiredjg
Fri Nov 21, 2014 9:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Who to Use: CPA, Financial Advisor, Someone Else?

Ok, with this new information, I'm starting to change my thinking. First, you are in the 25% bracket. Second, you said we will have pensions . You need to check what your tax bracket is likely to be in retirement, but if there are 2 pensions, there is a good possibility you will be in the 25% bracke...
by retiredjg
Fri Nov 21, 2014 9:13 am
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Questions About 401k and AGI and Traditional vs Roth IRA

I'm going to need to read up on the pro rata rule and back door Roth, but would this also cause complications for a Roth conversion pipeline? Are the back door and the pipeline the same thing, similar or completely different? I don't know what a Roth conversion pipeline is. I don't either, but this...
by retiredjg
Fri Nov 21, 2014 7:47 am
 
Forum: Investing - Help with Personal Investments
Topic: Questions About 401k and AGI and Traditional vs Roth IRAs
Replies: 47
Views: 2626

Re: Investing Only In a 401k

What do you mean by "pulling out of it and investing full time into my 401k"?

If you mean not putting more money in the tIRA, that's fine and your plan looks fine. If you mean trying to take the money out of the IRA and putting it into the 401k....not so fine.
by retiredjg
Thu Nov 20, 2014 3:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k questions
Replies: 10
Views: 1147

Re: Who to Use: CPA, Financial Advisor, Someone Else?

We have a new concept for your reading pleasure. It's called "tax-efficiency". Just a heads up since you don't want to discuss specific funds right now. It boils down to placing funds in accounts in such a way that you pay less in tax. And, I actually realized we are already in the 25% tax...
by retiredjg
Thu Nov 20, 2014 3:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Who to Use: CPA, Financial Advisor, Someone Else?

In my case, I am planning on the backdoor Roth to move assets I already have that have already been taxed into a tax-advantaged account, because I don't need them to live on. Just so you'll know, this does not sound like a back door. This sounds like an ordinary Roth conversion (which is step 2 of ...
by retiredjg
Thu Nov 20, 2014 2:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Help: Three Fund Portfolio at Fidelity

Use the Spartan Total Stock Index and the Spartan US bond Index at Fidelity because these are essentially identical to the Vanguard versions. Use Vanguard's Total International Index because it is more complete than the Fido funds. If you must hold international at Fido, use the Spartan Global Excep...
by retiredjg
Thu Nov 20, 2014 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Help: Three Fund Portfolio at Fidelity
Replies: 23
Views: 1872

Re: Transferring S&P 500 index fund in kind

No. If the money were in a taxable account, you could, but not from a 401k. But you could make several transfers if you are worried about time out of the market.
by retiredjg
Thu Nov 20, 2014 2:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Transferring S&P 500 index fund in kind
Replies: 13
Views: 1177

Re: Who to Use: CPA, Financial Advisor, Someone Else?

Since about 70% of our nest egg is in tax deferred (my and my wife's 401ks, and my trad. IRA), I'm thinking maybe we need to have a bit more of a hedge against future tax law changes. So, maybe for our last 10-15 years of employment (starting now), we should fill up some Roths - my 403b can be set ...
by retiredjg
Thu Nov 20, 2014 1:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452

Re: Who to Use: CPA, Financial Advisor, Someone Else?

By the way, when you catch up on your reading and if you want a portfolio suggestion, we can help with that. See the link at the bottom of this message for how.
by retiredjg
Thu Nov 20, 2014 11:24 am
 
Forum: Investing - Help with Personal Investments
Topic: Who to Use: CPA, Financial Advisor, Someone Else?
Replies: 63
Views: 3452
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