1 year from Retirement, Help with simplifying investments

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Topic Author
RWeThereYet
Posts: 27
Joined: Mon Sep 22, 2014 1:54 pm

1 year from Retirement, Help with simplifying investments

Post by RWeThereYet »

Hi Again,
I've been busy with transfers and think I'm pretty much done for the present, so thought I'd post an update and get comments. I have transferred all Amerprise accounts to Vanguard, with the exception of the two RiverSource Flexible Annuities. I am currently keeping these at Amerprise because I can't transfer the taxable one and to sell would generate some pretty hefty gains/taxes. I may transfer the tax deferred one at some time in the future, not sure. For the Roth/IRA's that were at Amerprise, I've opened Target Retirement 2020 accounts at Vanguard and put all $$ there. For the other Amerprise taxable accounts, have transferred to Vanguard "in kind", sold one that had minimal gains and put that into a taxable TR 2020, and have left all else as is, again due to some sizable gains/tax events. So, my somewhat simplified portfolio is now:

Amerprise:
n/a RiverSource Fexible Annuity Taxable 2%
n/a RiverSource Fexible Annuity IRA 3%

Vanguard:
VTWNX Vanguard 2020 Target Retirement Fund IRA/Roth 5%
VTWNX Vanguard 2020 Target Retirement Fund Taxable 6%
PVSAX Putnam Capital Spectrum Cl A Taxable 6%
FNICX Fidelity Advisor New Insights Cl C Taxable 3%
VAPCX Virtus Premium Alphasector Cl C Taxable 3%
INDZX Columbia Diversified Equity Income Cl A Taxable 1%

Employer Retirement Accounts (401k)
HISCX Hartford Small Cap Growth 401k 5%
VTWNX Vanguard 2020 Target Retirement Fund 401k 32%
VEIRX Vanguard Equity Income (Adm) 401k 4%
n/a Cash Balance Pension Plan Fixed 17%
n/a ESAP (company stock) Stock 8%
n/a Checking Account 5%

Summary
If my math is correct, and making some assumptions, it looks like I'm about 66% tax deferred and 34% taxable. Equities/Bonds/Fixed = 57/21/22 %.
I know that this is light on bonds and heavy on cash, but with a large cash balance pension plan (fixed, no option to move until I leave the company) and large checking account (marital harmony), there is little I can do to change this is there? All future contributions, whether 401k or IRA/Roth will go to TR 2020, very slowly lowering the cash percentage.

So, based on the above and my plan to retire at least by end of 2015, perhaps a few months sooner, to use Target 2020 (VTWNX) as my lazy portfolio account for virtually all funds, taxable/tax deferred/tax exempt, and with military pension/SS/SSDI + 1% of portfolio covering all normal expenses. Your opinions:
1. The annuities are paying a guaranteed 4%, or better. Should I keep them, or sell and pay taxes, and invest proceeds in taxable TR2020?
2. Do not plan to purchase any more company stock thru ESAP, but will invest in the plan and either buy/sell, or get investment back to stick in TR2020 taxable, depending on how the stock has performed during the year.
3. Overall, how does the above breakout look? Should I move all 401k accounts to TR 2020? Any suggestions for improvements?
4. Other comments?

And a final question/confirmation, I've just read that when converting a 401k to IRA, all taxable contributions (no limit) to the 401k can be converted tax free to a Roth. Is this correct? Any "gotchas" in doing this?

Thanks.
Ron

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Hello All,
I've just found this website a few months ago and have really enjoyed reading the postings and replies, so now I'll jump in and ask for advice. I am within a year or so (~last half of 2015) of retirement and am wanting to move from a scattered portfolio to the lazy portfolio as mentioned here. Basic background: First, I know the comments that will come about Amerprise, and agree. Am in the process of moving most, if not all, to Vanguard, probably initially moving “in kind” to avoid immediate tax consequences, then try to move to funds listed below in Question #1 as tax events allow. I’m the principal income producer, with my wife working part time. In addition to the assets shown below, combining a military pension, wife’s disability, and my social security (will begin drawing when I retire), we can cover our essential living expenses with a little left over. Major unknown is that I currently am contributing to my mother’s care (92 and pretty healthy) an amount that will cause us to dip into savings when I stop working. I believe 1% would be more than enough to cover all normal expenses…2% would cover expenses and all discretionary spending that we would want to do. I am guaranteed a 4% or better return for the two annuities shown, so plan to keep these unless there are very strong reasons to do otherwise. I understand and like the slogan “When you’ve won the war, stop fighting”, but am not wanting to totally follow that mantra. Would prefer to be a little more aggressive with equities than perhaps the “stop fighting” would imply. Now on to the information in the format suggested:

Emergency funds: Yes, more than adequate, probably 18 months, but need to keep this in a checking account to “ensure domestic tranquility”. Do plan to spend this down somewhat as the first assets to use in retirement.
Debt: None. Own home mortgage free.
Tax Filing Status: Married Filing Jointly.
Tax Rate: 25% Federal, 6.5% State (approximate).
State of Residence: Wisconsin
Age: Self – 65; Wife -- 58
Desired Asset allocation: Not fixed on this. Probably a little more in stocks than our ages would indicate by the commonly discussed formulas.
Desired International allocation: Not fixed on this either, but would prefer to weight toward US.

Portfolio size: approaching $2.0M, not including residence, personal property, or cars.

Current assets:
Symbol Name Type   % of Total
Amerprise Accounts
n/a RiverSource Flexible Annuity Taxable 2%
n/a RiverSource Flexible Annuity IRA / Roth 3%
PVSAX Putnam Capital Spectrum Cl A Taxable 6%
BCICX Blackrock Multi Aset Income Cl C Taxable 2%
FNICX Fidelity Advisor New Insights Cl C Taxable 3%
VAPCX Virtus Premium Alphasector Cl C Taxable 3%
INDZX Columbia Diversified Equity Income Cl A Taxable 1%
ACUIX Columbia Dividend Opp Fund Cl C IRA / Roth 1%
COAVX Columbia Overseas Value Fund Cl A IRA / Roth 1%
AMVAX Columbia Small/Mid Cap Value Fund Cl A IRA / Roth 2%
AMVAX Columbia Small/Mid Cap Value Fund Cl A IRA / Roth 2%
Employer Retirement Accounts (401k)
HISCX Hartford Small Cap Growth 401k 5%
MAGXX Stable Value Fund 401k 4%
VTWNX Vanguard 2020 Target Retirement Fund 401k 31%
VEIRX Vanguard Equity Income (Adm) 401k 4%
n/a Cash Balance Pension Plan Fixed 17%
n/a ESAP (company stock) Stock 8%
n/a Checking Account 5%

Summary
Amerprise Taxable 19%
Amerprise Tax Advantaged (wife and I) 8%
401k 44%
Cash Balance Plan (frozen, no access until leaving company) 16%
Company Stock 8%
Checking Account 5%

Contributions

New annual Contributions
$11k -- my 401k +3% company match, all going into VTWNX
$9k ESAP -- (risk free, can opt out at end of period and receive money contributed: plus, modest interest)
$5.5k -- wife’s IRA – going into ACUIX
$6.5k -- my Roth – going into ACUIX

Questions:
1. To transition to a “lazy portfolio” I see my options as: a) Total Retirement Fund (2015 or 2020),b) Balanced Index Fund, or c) LifeStrategy Fund, and can’t see much difference in these; or a roll your own 2 fund or 3 fund portfolio. Recommendation? Are there better scenarios? Help, please?

2. Looking a little further down the road to where I’ll have to begin RMD’s, with the guaranteed income that I mentioned above (pension, ssdi, ss), I probably will not be able to roll too much of my IRA $$ into Roth before the RMD's begin, so foresee the tax bite as being pretty large. What can I do now to try and lessen that when I turn 70.5?

Thanks in advance.
Last edited by RWeThereYet on Tue Nov 04, 2014 1:32 pm, edited 1 time in total.
Topic Author
RWeThereYet
Posts: 27
Joined: Mon Sep 22, 2014 1:54 pm

Re: 1 year from Retirement, Help with simplifying investment

Post by RWeThereYet »

Bump. First post and no replies!! Did I commit a faux pas? I think I provided required information, if not, please ask. To list the questions again:

1. To transition to a “lazy portfolio” I see my options as: a) Total Retirement Fund (2015 or 2020),b) Balanced Index Fund, or c) LifeStrategy Fund, and can’t see much difference in these; or a roll your own 2 fund or 3 fund portfolio. Recommendation? Are there better scenarios? Help, please?

2. Looking a little further down the road to where I’ll have to begin RMD’s, with the guaranteed income that I mentioned above (pension, ssdi, ss), I probably will not be able to roll too much of my IRA $$ into Roth before the RMD's begin, so foresee the tax bite as being pretty large. What can I do now to try and lessen that when I turn 70.5?
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Chan_va
Posts: 870
Joined: Wed Dec 05, 2012 6:15 pm

Re: 1 year from Retirement, Help with simplifying investment

Post by Chan_va »

1. To transition to a “lazy portfolio” I see my options as: a) Total Retirement Fund (2015 or 2020),b) Balanced Index Fund, or c) LifeStrategy Fund, and can’t see much difference in these; or a roll your own 2 fund or 3 fund portfolio. Recommendation? Are there better scenarios? Help, please?
From an asset location standpoint, it is usually recommended that you have your bonds in your tax advantaged accounts. See http://www.bogleheads.org/wiki/Principl ... _placement
This would indicate choosing a 2 or 3 fund portfolio over a single fund. The theory behind this is that your tax rate during withdrawals is likely to be lower than the rate when you accumulate. However, given today's low bond rates, and the fact that your tax bracket wont likely change much - I don't think you will lose much if you just choose a single fund.

As so which fund you should invest in, depends on your needs. How much of your basic expenses will be met with ss, ssdi and pension? If the answer is most, and your are really investing for your heirs, then you can be more aggressive than otherwise. At a first approximation, you cant go too wrong with a AA that's 60/40 or thereabouts in terms of stocks/bonds.

As for the tax question, I am not an expert, but there is likely not much more you can do - apart from giving to charity. It's a good problem to have.
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hand
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Re: 1 year from Retirement, Help with simplifying investment

Post by hand »

Wow - company stock looks really, really high as a percentage of your total portfolio.

Conventional wisdom is that company stock is a double no-no; 1) uncompensated risk for concentrated holding, 2) additional risk because your income is dependent on this company as well as your portfolio (though less of an issue if nearing retirement).

Not exactly the advice you are looking for, but if I were you, I would be looking to diversify out of the company stock if possible.
niceguy7376
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Location: Metro ATL

Re: 1 year from Retirement, Help with simplifying investment

Post by niceguy7376 »

Does the taxable and tax advantaged accounts at Ameriprise have the same funds at same %? I only see one listing of funds in ameriprise with each fund %.
There are too many funds in there. If it is tax advantaged account (Is it trad or roth ira?), you could sell them, transfer money to VG and put into a simple 3 fund portfolio.

As for ameriprise taxable account, maybe in 2015 (since you only work 3/4th of year) or 2016, you can try to sell many small funds with low gains and get them to VG.

Since you have high emergency fund, can you try to contribute to the max for your 401k? You can contribute upto 23K in 401k and 6500 for both of you. If you can do that for this year and next year, you can decrease taxes on nearly 13K for each year.
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retiredjg
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Re: 1 year from Retirement, Help with simplifying investment

Post by retiredjg »

No faux pas - sometimes the first post drops off the page because there is a delay time to get the first post approved (to be sure you are not a spambot)
RWeThereYet wrote:1. To transition to a “lazy portfolio” I see my options as: a) Total Retirement Fund (2015 or 2020),b) Balanced Index Fund, or c) LifeStrategy Fund, and can’t see much difference in these; or a roll your own 2 fund or 3 fund portfolio. Recommendation? Are there better scenarios? Help, please?
The difference between a Target Retirement Fund and a LifeStrategy fund is that the target funds migrate toward a larger percentage of bonds. The LifeStrategy funds do not migrate.

The Balanced Index Fund does not contain international stocks or international bonds. Most folks here want foreign stocks in their portfolio. Some want foreign bonds as well. So there is a big difference between this fund and the other two. If you don't want foreign investments and if you do want 60% stocks/40% bonds, this could be the fund for you.

The reason to roll your own with 2 or 3 individual funds is to achieve tax-efficiency. While working, it is generally more tax-efficient to hold your bonds in an account with a tax-advantage (a 401k, an IRA, a Roth IRA, etc.) However, in retirement, some consider this less important because you would probably be spending the dividends that arise from your taxable account. And not everyone agrees that bonds are best placed in a tax-advantaged account. Some believe it is just as good to put tax-exempt bonds in a taxable account. I doubt that argument will ever be resolved. If it matters to you, the Boglehead mantra is "bonds in 401k/IRA". Some Bodleheads have a different opinion.
2. Looking a little further down the road to where I’ll have to begin RMD’s, with the guaranteed income that I mentioned above (pension, ssdi, ss), I probably will not be able to roll too much of my IRA $$ into Roth before the RMD's begin, so foresee the tax bite as being pretty large. What can I do now to try and lessen that when I turn 70.5?
It is possible you will drop into the 15% bracket when retired. Have you checked that?

If you are going to be in the 25% bracket in retirement, it is possible that RMDs will not push you into a higher bracket - so no big deal about RMDs if that is the case.

One thing you could consider is to delay your SS and convert some IRA to Roth during early retirement. It is hard to say if this would be beneficial or not.
Topic Author
RWeThereYet
Posts: 27
Joined: Mon Sep 22, 2014 1:54 pm

Re: 1 year from Retirement, Help with simplifying investment

Post by RWeThereYet »

Thanks to all that replied. Specific responses to your replies in bold/italic/underline. Does this change anything?

Chan_VA: "How much of your basic expenses will be met with ss, ssdi and pension? If the answer is most, and your are really investing for your heirs, then you can be more aggressive than otherwise. At a first approximation, you cant go too wrong with a AA that's 60/40 or thereabouts in terms of stocks/bonds." Short term, guaranteed income (ss, ssdi, pension) + 1% should cover all expenses. Long term, guaranteed income should more than cover essential expenses. Agree with the 60/40 split, which looks like either the LifeStrategy Moderate Growth or TR 2020 fund.

hand: "....if I were you, I would be looking to diversify out of the company stock if possible." Good point. I think I will forgo the stock purchase for this year and get my contributions back to invest in tax deferred. Also, some years have seen virtually no gain, so can sell these with minimal tax consequences.

niceguy7376: "There are too many funds in there. If it is tax advantaged account (Is it trad or roth ira?) some of both, “you could sell them, transfer money to VG and put into a simple 3 fund portfolio.” Definitely plan to liquidate all tax deferred funds and open Vanguard accounts. Just trying to determine the best fund(s). "As for ameriprise taxable account, maybe in 2015 (since you only work 3/4th of year) or 2016, you can try to sell many small funds with low gains and get them to VG.” Yes, I think this will have to wait until 2016, but I’ll plan for that.

retiredjg: "It is possible you will drop into the 15% bracket when retired. Have you checked that?" I'm pretty sure I'll drop to the 15% bracket, at least until RMD's kick in. Not sure at that point.
One thing you could consider is to delay your SS and convert some IRA to Roth during early retirement. It is hard to say if this would be beneficial or not. I've run the numbers and this as well as some health issues has convinced me to take ss as soon as I retire or at fra, whichever comes later.
LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: 1 year from Retirement, Help with simplifying investment

Post by LongerPrimer »

I'd deRisk.
The most dangerous time just prior to and immediately after retirement date.
Topic Author
RWeThereYet
Posts: 27
Joined: Mon Sep 22, 2014 1:54 pm

Re: 1 year from Retirement, Help with simplifying investment

Post by RWeThereYet »

Well, I though editing would bring this to the front, but apparently not, so I've quoted myself to see if this works!!
RWeThereYet wrote:Hi Again,
I've been busy with transfers and think I'm pretty much done for the present, so thought I'd post an update and get comments. I have transferred all Amerprise accounts to Vanguard, with the exception of the two RiverSource Flexible Annuities. I am currently keeping these at Amerprise because I can't transfer the taxable one and to sell would generate some pretty hefty gains/taxes. I may transfer the tax deferred one at some time in the future, not sure. For the Roth/IRA's that were at Amerprise, I've opened Target Retirement 2020 accounts at Vanguard and put all $$ there. For the other Amerprise taxable accounts, have transferred to Vanguard "in kind", sold one that had minimal gains and put that into a taxable TR 2020, and have left all else as is, again due to some sizable gains/tax events. So, my somewhat simplified portfolio is now:

Amerprise:
n/a RiverSource Fexible Annuity Taxable 2%
n/a RiverSource Fexible Annuity IRA 3%

Vanguard:
VTWNX Vanguard 2020 Target Retirement Fund IRA/Roth 5%
VTWNX Vanguard 2020 Target Retirement Fund Taxable 6%
PVSAX Putnam Capital Spectrum Cl A Taxable 6%
FNICX Fidelity Advisor New Insights Cl C Taxable 3%
VAPCX Virtus Premium Alphasector Cl C Taxable 3%
INDZX Columbia Diversified Equity Income Cl A Taxable 1%

Employer Retirement Accounts (401k)
HISCX Hartford Small Cap Growth 401k 5%
VTWNX Vanguard 2020 Target Retirement Fund 401k 32%
VEIRX Vanguard Equity Income (Adm) 401k 4%
n/a Cash Balance Pension Plan Fixed 17%
n/a ESAP (company stock) Stock 8%
n/a Checking Account 5%

Summary
If my math is correct, and making some assumptions, it looks like I'm about 66% tax deferred and 34% taxable. Equities/Bonds/Fixed = 57/21/22 %.
I know that this is light on bonds and heavy on cash, but with a large cash balance pension plan (fixed, no option to move until I leave the company) and large checking account (marital harmony), there is little I can do to change this is there? All future contributions, whether 401k or IRA/Roth will go to TR 2020, very slowly lowering the cash percentage.

So, based on the above and my plan to retire at least by end of 2015, perhaps a few months sooner, to use Target 2020 (VTWNX) as my lazy portfolio account for virtually all funds, taxable/tax deferred/tax exempt, and with military pension/SS/SSDI + 1% of portfolio covering all normal expenses. Your opinions:
1. The annuities are paying a guaranteed 4%, or better. Should I keep them, or sell and pay taxes, and invest proceeds in taxable TR2020?
2. Do not plan to purchase any more company stock thru ESAP, but will invest in the plan and either buy/sell, or get investment back to stick in TR2020 taxable, depending on how the stock has performed during the year.
3. Overall, how does the above breakout look? Should I move all 401k accounts to TR 2020? Any suggestions for improvements?
4. Other comments?

And a final question/confirmation, I've just read that when converting a 401k to IRA, all taxable contributions (no limit) to the 401k can be converted tax free to a Roth. Is this correct? Any "gotchas" in doing this?

Thanks.
Ron

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Hello All,
I've just found this website a few months ago and have really enjoyed reading the postings and replies, so now I'll jump in and ask for advice. I am within a year or so (~last half of 2015) of retirement and am wanting to move from a scattered portfolio to the lazy portfolio as mentioned here. Basic background: First, I know the comments that will come about Amerprise, and agree. Am in the process of moving most, if not all, to Vanguard, probably initially moving “in kind” to avoid immediate tax consequences, then try to move to funds listed below in Question #1 as tax events allow. I’m the principal income producer, with my wife working part time. In addition to the assets shown below, combining a military pension, wife’s disability, and my social security (will begin drawing when I retire), we can cover our essential living expenses with a little left over. Major unknown is that I currently am contributing to my mother’s care (92 and pretty healthy) an amount that will cause us to dip into savings when I stop working. I believe 1% would be more than enough to cover all normal expenses…2% would cover expenses and all discretionary spending that we would want to do. I am guaranteed a 4% or better return for the two annuities shown, so plan to keep these unless there are very strong reasons to do otherwise. I understand and like the slogan “When you’ve won the war, stop fighting”, but am not wanting to totally follow that mantra. Would prefer to be a little more aggressive with equities than perhaps the “stop fighting” would imply. Now on to the information in the format suggested:

Emergency funds: Yes, more than adequate, probably 18 months, but need to keep this in a checking account to “ensure domestic tranquility”. Do plan to spend this down somewhat as the first assets to use in retirement.
Debt: None. Own home mortgage free.
Tax Filing Status: Married Filing Jointly.
Tax Rate: 25% Federal, 6.5% State (approximate).
State of Residence: Wisconsin
Age: Self – 65; Wife -- 58
Desired Asset allocation: Not fixed on this. Probably a little more in stocks than our ages would indicate by the commonly discussed formulas.
Desired International allocation: Not fixed on this either, but would prefer to weight toward US.

Portfolio size: approaching $2.0M, not including residence, personal property, or cars.

Current assets:
Symbol Name Type   % of Total
Amerprise Accounts
n/a RiverSource Flexible Annuity Taxable 2%
n/a RiverSource Flexible Annuity IRA / Roth 3%
PVSAX Putnam Capital Spectrum Cl A Taxable 6%
BCICX Blackrock Multi Aset Income Cl C Taxable 2%
FNICX Fidelity Advisor New Insights Cl C Taxable 3%
VAPCX Virtus Premium Alphasector Cl C Taxable 3%
INDZX Columbia Diversified Equity Income Cl A Taxable 1%
ACUIX Columbia Dividend Opp Fund Cl C IRA / Roth 1%
COAVX Columbia Overseas Value Fund Cl A IRA / Roth 1%
AMVAX Columbia Small/Mid Cap Value Fund Cl A IRA / Roth 2%
AMVAX Columbia Small/Mid Cap Value Fund Cl A IRA / Roth 2%
Employer Retirement Accounts (401k)
HISCX Hartford Small Cap Growth 401k 5%
MAGXX Stable Value Fund 401k 4%
VTWNX Vanguard 2020 Target Retirement Fund 401k 31%
VEIRX Vanguard Equity Income (Adm) 401k 4%
n/a Cash Balance Pension Plan Fixed 17%
n/a ESAP (company stock) Stock 8%
n/a Checking Account 5%

Summary
Amerprise Taxable 19%
Amerprise Tax Advantaged (wife and I) 8%
401k 44%
Cash Balance Plan (frozen, no access until leaving company) 16%
Company Stock 8%
Checking Account 5%

Contributions

New annual Contributions
$11k -- my 401k +3% company match, all going into VTWNX
$9k ESAP -- (risk free, can opt out at end of period and receive money contributed: plus, modest interest)
$5.5k -- wife’s IRA – going into ACUIX
$6.5k -- my Roth – going into ACUIX

Questions:
1. To transition to a “lazy portfolio” I see my options as: a) Total Retirement Fund (2015 or 2020),b) Balanced Index Fund, or c) LifeStrategy Fund, and can’t see much difference in these; or a roll your own 2 fund or 3 fund portfolio. Recommendation? Are there better scenarios? Help, please?

2. Looking a little further down the road to where I’ll have to begin RMD’s, with the guaranteed income that I mentioned above (pension, ssdi, ss), I probably will not be able to roll too much of my IRA $$ into Roth before the RMD's begin, so foresee the tax bite as being pretty large. What can I do now to try and lessen that when I turn 70.5?

Thanks in advance.
User avatar
retiredjg
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Re: 1 year from Retirement, Help with simplifying investment

Post by retiredjg »

RWeThereYet wrote:1. The annuities are paying a guaranteed 4%, or better. Should I keep them, or sell and pay taxes, and invest proceeds in taxable TR2020?
I dont have any opinion on this question.
3. Overall, how does the above breakout look? Should I move all 401k accounts to TR 2020? Any suggestions for improvements?
I think it probably looks as good as it can without doing further overhauling that will trigger taxes. Things are much improved and I'm sure you feel better about it all. I see no reason to keep those other 2 funds in the 401k. The stocks in those funds are already captured in the US stock market in the Target 2020.

And a final question/confirmation, I've just read that when converting a 401k to IRA, all taxable contributions (no limit) to the 401k can be converted tax free to a Roth. Is this correct? Any "gotchas" in doing this?
I think you must have seen something in one of the many current discussions regarding after-tax contributions to 401k.

But no, you absolutely cannot convert your pre-tax money in your 401k to IRA without paying tax. The money goes into your 401k tax-deferred which just means you'll pay tax later (hopefully at a lower rate).

But you didn't use the term "pre-tax". You used the term "taxable contributions". What did you mean by that? Keep in mind that a 401k can contain pre-tax money, Roth 401k money, and after-tax employee contributions. The 3rd of these is not real common and most people who have that know they have it.

You are correct that editing does not bring your post to the top. You have to send a new post to the thread to do that.
Topic Author
RWeThereYet
Posts: 27
Joined: Mon Sep 22, 2014 1:54 pm

Re: 1 year from Retirement, Help with simplifying investment

Post by RWeThereYet »

retiredjg, I did mean after tax contributions to the 401k, sorry for the confusion. I'm not sure that I have any in this category, but if so, I can convert that part directly to a Roth without triggering any taxable event, correct?
Thanks for the reply.
mhalley
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Joined: Tue Nov 20, 2007 5:02 am

Re: 1 year from Retirement, Help with simplifying investment

Post by mhalley »

I prefer having the individual funds instead of the balanced funds in a taxable account in order to take advantage of tax loss harvesting. Going forward, I would invest the 202o fund into its individual components. Plus or minus to sell it now depending on your tax situation.
Mike
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retiredjg
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Re: 1 year from Retirement, Help with simplifying investment

Post by retiredjg »

RWeThereYet wrote:retiredjg, I did mean after tax contributions to the 401k, sorry for the confusion. I'm not sure that I have any in this category, but if so, I can convert that part directly to a Roth without triggering any taxable event, correct?
Thanks for the reply.
You likely would know if you had any significant amount of after-tax contributions. However, if you contributed more than the allowed amount to your pre-tax and/or Roth 401k accounts, the excess might be sent to an after-tax account.

Yes, that money can be rolled directly to Roth if your plan allows rollovers while working. The earnings from the after-tax money must go as well - but you can choose if the earnings go to tIRA (no taxes) or to Roth IRA (taxes).
Topic Author
RWeThereYet
Posts: 27
Joined: Mon Sep 22, 2014 1:54 pm

Re: 1 year from Retirement, Help with simplifying investments

Post by RWeThereYet »

All, I'm now less than 10 weeks from retirement [ if I were counting ;-) ] and thought I'd provide feedback on the below string of assistance that I received. To summarize:

1. I have pretty much transferred all the previous accounts that I had at Amerprise to Vanguard. I have consolidated all in my 401k to TR2020 and when retired will transfer this in kind to Vanguard. When the tax situation allows, I plan to move 100% to TR2020, both taxable and tax deferred. I will begin selling company stock that I purchased through ESAP as tax consequences allow, with the goal of selling 100% within the next couple of years.

2. On the choice between receiving the Cash Balance Plan as a lump sum (rolling to IRA) or taking the non-COLA pension, the advice here was split in that since I will have adequate guaranteed income (Military pension, SS, SSDI) to cover basic expenses I could choose either with no significant downside. I have chosen to go the conservative route and selected the pension with the 20 year certain and continuous option and 100% spousal benefit. I am 99% certain that this will give us more than enough to live well on without having to touch the invested assets....unless an unforseen significant event occurs! I do not plan to get crazy aggressive with this portfolio and will leave it in TR2020 for now. The only downside I see to my choice is that when RMDs kick in I'll be writing a big check to Uncle Sam, but I guess that's a good problem to have.

Bottom line reason for all the above: Simplicity.

Much thanks again for the earlier comments.
Ron
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retiredjg
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Re: 1 year from Retirement, Help with simplifying investments

Post by retiredjg »

Thanks for the update. You have made much progress!

Do you have a good handle on what your tax bracket will be in retirement? Remember if you fall into the 15% bracket, the long term capital gains from things in your taxable account will be taxed at 0% as long as you don't sell enough to move out of the 15% bracket.
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David Jay
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Re: 1 year from Retirement, Help with simplifying investments

Post by David Jay »

Ron:

In your early retirement years, look at making some tIRA to Roth conversions. The conversion taxes are based on your tax bracket. I intend to fill up my "15%" bracket each year (about $90,000 for us, if you include deductions) with Roth conversions. That will get my tIRA balance low enough that the RMDs (after age 70) should not exceed the 15% bracket.

Something to think about...
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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