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by Bob's not my name
Sat Feb 25, 2017 6:45 pm
Forum: Investing - Help with Personal Investments
Topic: Portfolio questions - wife starting new job
Replies: 4
Views: 323

Re: Portfolio questions - wife starting new job

I don't know your specific numbers, but it seems unlikely you could be in the 28% bracket and fully Roth-eligible. $153,100 threshold of 28% bracket + $8,100 personal exemptions + $30,000 itemized deductions given your mortgage ($16,000 interest), state tax (maybe $8,000), property tax (maybe $4,000...
by Bob's not my name
Mon Jan 30, 2017 8:54 am
Forum: Investing - Help with Personal Investments
Topic: The whole Roth vs. Traditional IRA
Replies: 56
Views: 8303

Re: The whole Roth vs. Traditional IRA

Another consideration is no RMDs, and if you plan on not spending it at all and leaving the money to your heirs. Early retirees have significant conversion opportunity. Late retirement years are a second opportunity. I managed the finances of an elderly widow and was able to convert all of her (rem...
by Bob's not my name
Sat Jan 28, 2017 4:22 pm
Forum: Investing - Help with Personal Investments
Topic: The whole Roth vs. Traditional IRA
Replies: 56
Views: 8303

Re: The whole Roth vs. Traditional IRA

most workers don't know how to include AGI-based taxes in their marginal rate calculation. Finally, most posters don't do the math right in comparing Roth and traditional contributions. It's important to consider that if your marginal rate (federal nominal + AGI-based taxes + state) is 33%, a $10,0...
by Bob's not my name
Sat Jan 28, 2017 12:51 pm
Forum: Investing - Help with Personal Investments
Topic: The whole Roth vs. Traditional IRA
Replies: 56
Views: 8303

Re: The whole Roth vs. Traditional IRA

This is a very old thread, and I didn't re-read it. More recent threads have pointed out that it's marginal rate in both situations, since you are always deciding on an increment. The central weakness of short (albeit correct) summations is that (1) most people know neither their current nor future ...
by Bob's not my name
Fri Jan 27, 2017 8:14 pm
Forum: Investing - Help with Personal Investments
Topic: Tax Deferred or After Tax Retirement Question
Replies: 14
Views: 1434

Re: Tax Deferred or After Tax Retirement Question

I doubt you're in the 25% bracket. It starts at $37,950 taxable income, which is about $48,350 AGI, which is probably over $50,000 gross income if you have any pre-tax health, dental, or disability insurance premiums or FSA/HSA contributions withheld from your pay. When you're comparing Roth and tra...
by Bob's not my name
Fri Jan 13, 2017 5:57 am
Forum: Investing - Help with Personal Investments
Topic: 403b contributions - Roth vs. Traditional
Replies: 22
Views: 824

Re: 403b contributions - Roth vs. Traditional

In considering what you can afford to contribute and in using the term "evenly splitting" it appears you aren't considering the tax cost of Roth contributions. If you make about $135,000 after pre-tax insurance premiums and FSA contributions, you are in the 30% federal bracket. The 30% fed...
by Bob's not my name
Wed Dec 28, 2016 1:37 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

Putting possible credits aside for now, I think I'm starting to see the current priority picture: 1. Contribute minimum to 401K to get employer match. 2. Contribute as much as possible to Roth since there are no RMDs, and no tax on distributions. (For next year at least, if 0% tax rate, tax bracket...
by Bob's not my name
Wed Dec 28, 2016 1:34 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

OkanePlease wrote:Aside from this year's 401K contributions, health insurance package plus HSA contributions account for about $7,000.
Duh, I should have thought of that. Everybody always overlooks the significant effect of pre-tax insurance premiums, FSA/HSA, etc.
by Bob's not my name
Wed Dec 28, 2016 12:36 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

That would make her gross income $32,000, which is not equal to $10,000 + $16,000, so I'm still confused (maybe you're including the employer contribution in the $16,000?), but the 0% tax bracket argument still holds in any case. $20,800 of regular income fits in the 0% bracket, not including the ef...
by Bob's not my name
Wed Dec 28, 2016 11:51 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

401k max $24,000 + $10,000 + $20,000 divs = $54,000
by Bob's not my name
Wed Dec 28, 2016 9:06 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

3. determine what deduction you can use to lower your AGI (mortgage, tuition, etc) 5.if there are no financial aid to consider OP doesn't have a mortgage, and itemized and tuition deductions don't reduce AGI in any case. Financial aid, if available at all, typically takes gross income into account,...
by Bob's not my name
Wed Dec 28, 2016 6:29 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

And if you're going to attend school in multiple calendar years, be sure to pay tuition in multiple calendar years. For example, if Spring 2018 is your last semester, DO NOT pay your last tuition bill before 1/1/2018. Pay it on 1/1/2018 so you get a second Lifetime Learning Credit in 2018. If your s...
by Bob's not my name
Wed Dec 28, 2016 6:24 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 943

Re: Dilemma: Fund 401K or Roth in my new income scenario?

1. Husband going back to school, so no meaningful income in 2017 and maybe longer. 2. Wife maxing out her 401K contributions (putting her taxable income at under $10,000/year) 4. Taxable accounts have index funds currently yielding about $20,000 in dividends per year, mostly qualified dividends. no...
by Bob's not my name
Sun Nov 27, 2016 8:06 pm
Forum: Investing - Help with Personal Investments
Topic: Nearing Roth Contribution Limit - Check My Math?
Replies: 6
Views: 774

Re: Nearing Roth Contribution Limit - Check My Math?

LateStarter1975 wrote:Roth contributions begins to phase out after $183,000 for those MFJ.
$184,000
by Bob's not my name
Tue Nov 08, 2016 6:31 am
Forum: Investing - Help with Personal Investments
Topic: Confused about 401k vs Roth 401k vs Roth IRA
Replies: 13
Views: 1157

Re: Confused about 401k vs Roth 401k vs Roth IRA

The deadline for opening an individual 401(k) is December 31 of the first year for which you wish to make contributions. For a sole proprietor, contributions can be made up until the due date (including extensions) of your tax return for the year (i.e., April 15 of the following year, or October 15...
by Bob's not my name
Tue Nov 08, 2016 6:05 am
Forum: Investing - Help with Personal Investments
Topic: Confused about 401k vs Roth 401k vs Roth IRA
Replies: 13
Views: 1157

Re: Confused about 401k vs Roth 401k vs Roth IRA

Spouse: - Rollover IRA from previous company If we don't qualify, is it worth it to do backdoor? Your spouse's rollover IRA will be subject to the pro rata rule if he does a backdoor Roth IRA contribution. If you max both traditional 401k's, you should qualify for direct contributions to Roth IRAs ...
by Bob's not my name
Tue Nov 08, 2016 4:14 am
Forum: Investing - Help with Personal Investments
Topic: To Roth or not to Roth that is the question
Replies: 18
Views: 3135

Re: To Roth or not to Roth that is the question

In the 25% bracket, contributing $18,000 to a Roth 403b consumes $24,000 of gross income and throws $6,000 away to taxes. You could instead contribute $18,000 of gross income to a traditional 403b (none of which goes to taxes), with $6,000 of gross income left over. That $6,000 could be used for a $...
by Bob's not my name
Fri Oct 07, 2016 7:26 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2025

Re: Is my employer's stock purchase plan worth it?

It is earning interest. It's a weird vehicle, but your ESPP is like a 6-week CD. Every quarter you sell immediately for a 5.26% gain minus $15. Your money is invested for an average 1/8 year, so your annualized return is (1.0526^8) - 1 = 51% The $15 is significant because it's charged on every plan ...
by Bob's not my name
Fri Oct 07, 2016 3:34 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2025

Re: Is my employer's stock purchase plan worth it?

Is the plan period one year? Is the discount 5% off the market price at the end of the plan period? Is there a lookback provision? (Some plans offer 5% off the lesser of the market prices at the beginning and end of the plan period.) Can you sell immediately after purchase? If you can, you have a g...
by Bob's not my name
Thu Oct 06, 2016 6:35 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2025

Re: Is my employer's stock purchase plan worth it?

5/95 = 5.26%

(1.0526^2) - 1 = 10.8% annualized return

IF that's the deal, contribute the max and sell immediately.
by Bob's not my name
Thu Oct 06, 2016 5:27 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2025

Re: Is my employer's stock purchase plan worth it?

Is the plan period one year? Is the discount 5% off the market price at the end of the plan period? Is there a lookback provision? (Some plans offer 5% off the lesser of the market prices at the beginning and end of the plan period.) Can you sell immediately after purchase? If you can, you have a gu...
by Bob's not my name
Mon Aug 15, 2016 1:34 pm
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3012

Re: Parents over 80: End of life tax stragegies?

Good point that the tax headroom will drop when a joint filing becomes a single filing. Survivor gets full pension? Also, tax headroom may increase when one or both or the survivor are in assisted living, as celia has pointed out. 1) Removing as much IRA money as possible at 15%, passing on cash. C...
by Bob's not my name
Fri Aug 12, 2016 3:21 am
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3012

Re: Parents over 80: End of life tax strategies?

I'm thinking definitely don't touch the appreciated stocks, because of the "opposite of death tax" that basis step up provides. I'm not convinced this is a definite. If the stocks represent an inappropriate risk, that risk could be mitigated by selling, IF there is opportunity to sell at ...
by Bob's not my name
Fri Aug 12, 2016 3:14 am
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3012

Re: Parents over 80: End of life tax stragegies?

A little bit (few hundred) could I think even be put back into a Roth, as there is taxable rental income that could be offset. Only earned income qualifies for IRA contributions. In addition, Roth contributions do not "offset" taxable income. If your goal is to increase the Roth IRA(s), t...
by Bob's not my name
Thu Aug 11, 2016 5:32 am
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3012

Re: Parents over 80: End of life tax stragegies?

celia wrote:7.5% of their AGI
10% starting 2017 -- the 7.5% threshold was changed by the ACA but extended to 2016 for 65-and-older taxpayers.
by Bob's not my name
Sun Aug 07, 2016 3:49 am
Forum: Investing - Theory, News & General
Topic: Dave Ramsey over simplifying Roth vs. Traditional IRA?
Replies: 52
Views: 5220

Re: Dave Ramsey over simplifying Roth vs. Traditional IRA?

MikeT, you had the math right from the beginning. It is a common error to do the math upside down and thus understate the tax cost of choosing Roth over Traditional. This common error is often denied by jumping into a "saturated case" argument in which all tax-advantaged space is filled. I...
by Bob's not my name
Thu Aug 04, 2016 6:25 pm
Forum: Investing - Help with Personal Investments
Topic: 403(b) to IRA - any issues to consider?
Replies: 11
Views: 989

Re: 403(b) to IRA - any issues to consider?

A non spouse beneficiary of a 403b has the option to do a direct rollover to an inherited Roth as well as an inherited TIRA. A non spouse beneficiary of an IRA cannot currently convert to an inherited Roth IRA. Only in the "saturated" case, in which the beneficiary and spouse are maxing a...
by Bob's not my name
Thu Aug 04, 2016 5:55 am
Forum: Personal Finance (Not Investing)
Topic: 401k or Roth 401k?
Replies: 14
Views: 879

Re: 401k or Roth 401k?

If you are contributing only the 8%, that's $6,000 into a traditional 401k and $5,500 into a Roth IRA. The $5,500 contribution to the Roth consumes $7,333 of gross income, of which $1,833 is thrown away to taxes (25% federal, no state tax). So you are contributing $7,333 of gross income to Roth and ...
by Bob's not my name
Thu Aug 04, 2016 3:29 am
Forum: Investing - Help with Personal Investments
Topic: 403(b) to IRA - any issues to consider?
Replies: 11
Views: 989

Re: 403(b) to IRA - any issues to consider?

Some states tax 403b and IRA distributions differently. For example, grabiner has pointed out that Maryland (which has a very high tax rate) exempts some employer plan distributions but not IRA distributions, so a Maryland taxpayer shouldn't roll over all of her employer plans into an IRA. Some 403b...
by Bob's not my name
Mon Aug 01, 2016 2:43 pm
Forum: Investing - Help with Personal Investments
Topic: Advice for a new investor: modest inheritance
Replies: 8
Views: 907

Re: Advice for a new investor: modest inheritance

I should have noted that PA taxes 401k contributions but not withdrawals, so your state tax isn't really relevant and I should have left it out.
by Bob's not my name
Mon Aug 01, 2016 9:56 am
Forum: Investing - Help with Personal Investments
Topic: Advice for a new investor: modest inheritance
Replies: 8
Views: 907

Re: Advice for a new investor: modest inheritance

Check your eligibility for education tax credits, particularly the American Opportunity Tax Credit, which is set to expire after 2017 but has been extended a couple of times. Eligibility phases out for MAGI $160,000-180,000, not inflation-adjusted. Your AGI is at the bottom of page 1 of your 1040. I...
by Bob's not my name
Mon Aug 01, 2016 5:05 am
Forum: Investing - Help with Personal Investments
Topic: Inactive employer 401k question
Replies: 12
Views: 873

Re: Inactive employer 401k question

Watty, we have 401k accounts from two past employers and one from a current employer. Should we consolidate these into one three-fund account? Not necessarily. There may be reasons to keep them separate. For example, if you are using the term "401k" loosely to include, say, a 403b account...
by Bob's not my name
Wed Jul 27, 2016 5:20 pm
Forum: Investing - Help with Personal Investments
Topic: No 401k for 5 months
Replies: 13
Views: 1488

Re: No 401k for 5 months

$1,000 credit phased out over $20,000 of income: 1,000/20,000 = 5% 5% + nominal 25% = 30% If you think it's nuts that the 30% bracket is below the 28% bracket, consider the effect of the AOTC phaseout on a family in the 25% bracket with two kids in college in one calendar year. Their marginal rate i...
by Bob's not my name
Wed Jul 27, 2016 2:00 pm
Forum: Investing - Help with Personal Investments
Topic: No 401k for 5 months
Replies: 13
Views: 1488

Re: No 401k for 5 months

You have a good grip on your numbers. I'll just say again that it may not make any difference whether your deductible 401k/TIRA contributions are for 2016 or 2017 if you aren't maxing out all that space -- you will likely be avoiding a 30% marginal rate in either case. So the increment of tax you pa...
by Bob's not my name
Wed Jul 27, 2016 3:42 am
Forum: Investing - Help with Personal Investments
Topic: No 401k for 5 months
Replies: 13
Views: 1488

Re: No 401k for 5 months

You're in the phantom 30% tax bracket due to the child tax credit phaseout, which is based on AGI. You are not eligible for deductible TIRA contributions but your non-working spouse is -- you're way, way under the phaseout for spousal TIRA deductions. So you could switch her from Roth to TIRA, and m...
by Bob's not my name
Wed Jul 20, 2016 3:11 am
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ help funding 401k with taxable acct

Exactly. If your gains are under 3% then the gain on a $10,000 sale would be under $300, on which you would pay under $50 in tax (federal + state).

You won't hit the one-year mark this calendar year?
by Bob's not my name
Tue Jul 19, 2016 7:03 pm
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ help funding 401k with taxable acct

Did you inherit the assets or buy them with inherited cash? If the former, did you receive them from a trust that has held them for some years, or did you inherit direct from the deceased? These factors will determine whether you have any significant gains and whether they are long or short. Also, y...
by Bob's not my name
Fri Jul 15, 2016 3:09 am
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ Can I be more tax advantageous?

Since, I depend on my monthly income besides the 5k im currently contributing to my 401k would it be easiest to sell 13K at the beginning of each year and deposit in our savings and just pull each month as we need it? (hopefully if I get a raise or something changes and we can save more a month I c...
by Bob's not my name
Fri Jul 15, 2016 3:04 am
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ Can I be more tax advantageous?

2. For the 401k, I'm an hourly employee, my income can vary but usually just slightly at the end of the year. So do I just calculate the percentage that gets me closest to maxing out my 401k and change it to that and then towards the end of the year keep a close watch to be sure it doesn't go over ...
by Bob's not my name
Fri Jul 15, 2016 2:55 am
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ Can I be more tax advantageous?

1. I haven't made our 2016 Roth contributions yet or taken the RMD from the inherited IRA. So, should I go ahead and take the RMD and then sell 11,000 minus the RMD from the taxable account and fund the Roths for this year? Yes, that's a fine approach. I'm not sure whether you should sweat the tax ...
by Bob's not my name
Tue Jul 12, 2016 3:24 am
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ Can I be more tax advantageous?

Almost your entire portfolio is essentially an emergency fund since it's almost entirely liquid. You have the right idea drawing from the inherited IRA and taxable account to max your tax-advantaged savings (two Roth IRAs and your 401k). I think liquidating taxable account assets to the extent poss...
by Bob's not my name
Mon Jul 11, 2016 6:19 pm
Forum: Investing - Help with Personal Investments
Topic: Strategy for conversion of $1.8 million IRA
Replies: 77
Views: 8235

Re: Strategy for conversion of $1.8 million IRA

WildBill wrote:if and only if your objective is minimizing taxes in a given year
The objective is to avoid paying 30% federal income tax on IRA conversions or withdrawals at any time.
by Bob's not my name
Mon Jul 11, 2016 5:52 pm
Forum: Investing - Help with Personal Investments
Topic: Strategy for conversion of $1.8 million IRA
Replies: 77
Views: 8235

Re: Strategy for conversion of $1.8 million IRA

There are other instances of displacement effects in the tax code, for example the ACA taxes.
by Bob's not my name
Mon Jul 11, 2016 5:43 pm
Forum: Investing - Help with Personal Investments
Topic: Strategy for conversion of $1.8 million IRA
Replies: 77
Views: 8235

Re: Strategy for conversion of $1.8 million IRA

^Any earned or conversion income that pushes any 0% LTCG/QDI into the place where those LTCG/QDI will be taxed at 15% is effectively increasing taxes at a 30% marginal rate and not a 15% marginal rate. livesoft's comment refers to those taking SS. No, it doesn't. I'm not sure how to explain it bett...
by Bob's not my name
Mon Jul 11, 2016 8:56 am
Forum: Investing - Help with Personal Investments
Topic: Portfolio review/ help funding 401k with taxable acct
Replies: 22
Views: 1851

Re: Portfolio review/ Can I be more tax advantageous?

Almost your entire portfolio is essentially an emergency fund since it's almost entirely liquid. You have the right idea drawing from the inherited IRA and taxable account to max your tax-advantaged savings (two Roth IRAs and your 401k). I think liquidating taxable account assets to the extent possi...
by Bob's not my name
Sun Jul 10, 2016 7:51 pm
Forum: Investing - Help with Personal Investments
Topic: Chances of <15% marginal income tax in retirement
Replies: 18
Views: 2622

Re: Chances of <15% marginal income tax in retirement

Georgia is one of two(I think) states where you can deduct IRA contributions while you are working but not pay taxes on IRA withdraws when you are 65. (That is within income limits and it actually partially starts a 62) There are far more than two, actually. I looked at this a few years ago, but my...
by Bob's not my name
Sun Jul 10, 2016 3:45 pm
Forum: Investing - Help with Personal Investments
Topic: Aggresively paying student loans vs saving for retirment
Replies: 34
Views: 2411

Re: Aggresively paying student loans vs saving for retirment

Each month I deposit $458 into my Roth IRA and $458 into my wife's. Now I am going to stop these automatic deposits and save the $916 per month until I can reach the account minimums ($2500 for Vanguard) for buying new funds for the Trad IRAs. Does this make sense? I don't think it does. First, you...
by Bob's not my name
Sun Jul 10, 2016 3:39 pm
Forum: Investing - Help with Personal Investments
Topic: Aggresively paying student loans vs saving for retirment
Replies: 34
Views: 2411

Re: Aggresively paying student loans vs saving for retirment

Are you aware that contributions to the traditional IRA are probably not tax deductible if you have a 401k at work? If you are making non-deductible contributions, you should be making them to a Roth ITA not a tIRA. If you are over the income limit for the Roth, then do a backdoor Roth. There is no...

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