Search found 1305 matches

by Chip
Sat May 27, 2017 3:17 pm
Forum: Investing - Help with Personal Investments
Topic: More Roth conversions better to avoid 85% SS tax?
Replies: 2
Views: 293

Re: More Roth conversions better to avoid 85% SS tax?

If I understand correctly then if a single person goes $1 over $34,000 in "provisional income" (combination of 50% of SS benefits + MAGI + tax=exempt interest) then they experience a $3,150 increase in taxable income (35% of $9,000, because 85% of all the income over $25,000 is now taxabl...
by Chip
Fri May 26, 2017 4:51 am
Forum: Investing - Help with Personal Investments
Topic: Roth Conversions Post Retirement
Replies: 19
Views: 1686

Re: Roth Conversions Post Retirement

There is a spouse involved. As noted DW is similar age, and neither have any unusual health issues to plan around. While family history indicates I would survive her, for planning purposes I am assuming that I make it to at least 100 and that she survives me. I found this joint life mortality calcu...
by Chip
Thu May 25, 2017 3:33 pm
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

Yes, I included an explanatory note. And the IRS managed to ignore it. After almost exactly the same thing happened about 5 years ago, I was hoping they'd be less likely to contact me again (risk-reward); except, it costs them almost nothing to send out these CP2000, computer-generated when your Li...
by Chip
Thu May 25, 2017 4:40 am
Forum: Investing - Theory, News & General
Topic: Purchase Lot History accounting term needed
Replies: 7
Views: 394

Re: Purchase Lot History accounting term needed

The Fidelity Customer Rep help me navigate on my online account to the website location where the Cost Basis can be self-changed from Average Cost to Actual Cost: Yes, I was looking at that exact page when I wrote my previous message. But there isn't any live link for me to click on to change cost ...
by Chip
Wed May 24, 2017 3:58 pm
Forum: Investing - Theory, News & General
Topic: Purchase Lot History accounting term needed
Replies: 7
Views: 394

Re: Purchase Lot History accounting term needed

Fidelity may call specific identification "Actual Cost". At least it shows that term when I look at my account. So you might tell them: "I want my mutual fund cost basis tracking method changed from average cost to actual cost." And you do have to do it over the phone. No way to ...
by Chip
Wed May 24, 2017 1:17 pm
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

Chip, so helpful, thanks. [...] If my analysis is incorrect, please let me know :happy Very nice clarifications and summary, Miriam2. Great addition to the thread. I agree that the term distributions includes conversions. In addition to the instructions that you mentioned, I would note that Line 13...
by Chip
Wed May 24, 2017 7:20 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

retiredjg wrote:Looks like you stayed up all night playing with TT. :shock:


Just one of those early-rising retirees. :D
by Chip
Wed May 24, 2017 5:54 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

I just had a CP2000 for a related reason. I did a Roth conversion and completely recharacterized it (in the following year, the year I filed). Turbotax didn't include Form 8606 in my e-filed return, and my reading of the instructions tells me that Turbotax was correct (as it usually is). If a Form ...
by Chip
Wed May 24, 2017 5:46 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

I used desktop TT and followed the finance buff's tutorial for 2015 and 2016, lines 16-18 filled out correctly, but lines 6-12 blank. No IRS letter yet. Will this trigger a letter? Next year if use TT, manually enter lines 6-12? I don't think you have anything to worry about. Per Pub 590-B, Lines 6...
by Chip
Wed May 24, 2017 5:36 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

Sophi, I can't figure one thing out. If TT didn't do the conversion (lines 16 - 18), then how did lines 13 - 15 come out right? Seems like they would have been wrong if the conversion step got skipped. I think it's because 13-15 apply to all distributions, including conversions. If there is a 1099-...
by Chip
Wed May 24, 2017 3:59 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

I think I see the disconnect. I used Turbotax online, not Turbotax desktop. With online, you have to download the software in order to amend a return. The menu you reported in Turbotax desktop does not exist in Turbotax online. I was only able to report the nondeductible contribution, enter my IRA ...
by Chip
Tue May 23, 2017 5:45 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

Interestingly, the tax letter was for the 2015 return, not 2016. I just checked 2016, and lines 16-18 (Part II) of the 8606 are filled out correctly. Of course I can't specifically remember how I answered the questions in 2015, but I remember having a great deal of trouble reporting the backdoor Ro...
by Chip
Mon May 22, 2017 11:21 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

Almost every time the errors are operator error. That still leaves a big challenge for the developers to improve their interfaces ("interviews" for retail packages since you can't practically use the forms in most retail packages). Absolutely. It's nearly an impossible task to produce an ...
by Chip
Mon May 22, 2017 10:20 am
Forum: Investing - Theory, News & General
Topic: Need help with ER calculations
Replies: 3
Views: 246

Re: Need help with ER calculations

Take each portfolio allocation % and multiply it by the ER of that allocation. Then add them all up. That's your total portfolio ER. For the example you gave, you'll have 20% in a .25% ER fund 20% of .25% is .05%. Suppose the rest of your portfolio is in a fund with a .06% ER: 80% * .06% = .048%. Yo...
by Chip
Mon May 22, 2017 10:02 am
Forum: Personal Finance (Not Investing)
Topic: IRS tax letter triggered by Turbotax's 8606
Replies: 38
Views: 3888

Re: IRS tax letter triggered by Turbotax's 8606

I have done some more fiddling with TT 2016 trying to recreate this particular problem. I was able to do so by following the interview steps, but answering one question incorrectly when entering the 1099-R. The question was: What did you do with the money? Available answers are: 1. I moved the money...
by Chip
Mon May 22, 2017 8:13 am
Forum: Investing - Theory, News & General
Topic: Refinance Mortgage From 30 to 15 OR Invest?
Replies: 41
Views: 3171

Re: Refinance Mortgage From 30 to 15 OR Invest?

It doesn't sound like this is your home now. Will it be in the near future? In other words, why are you owning it? If you have lived in it 2 of the last 5 years, IIRC, you could sell it and not have to pay CGs on 500k gains. Also, since OP is in the military and overseas he may qualify for some exc...
by Chip
Mon May 22, 2017 7:36 am
Forum: Investing - Help with Personal Investments
Topic: Investing FOR Retirement vs Investing IN Retirement
Replies: 25
Views: 2300

Re: Investing FOR Retirement vs Investing IN Retirement

Spending dividends is rationally not different than selling assets for income used in retirement, taxes aside. Some don't sell assets and try to live off of dividends and interest. There is rationally no difference between the spending of capital gains vs. dividends, but some only spend the income ...
by Chip
Mon May 22, 2017 7:04 am
Forum: Investing - Help with Personal Investments
Topic: Investing FOR Retirement vs Investing IN Retirement
Replies: 25
Views: 2300

Re: Investing FOR Retirement vs Investing IN Retirement

Peter,

Do you plan on discussing investing for (and spending from) total return vs. income? We've seen quite a few discussions here where retirees want high current income from their investments because they don't want to sell anything.
by Chip
Mon May 22, 2017 6:06 am
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Re: Please check my SS spousal benefit calculations

I learned something new today by reading this thread. The claiming strategy as outlined by Chip seems to be optimal for married couples where one spouse's PIA is less than 1/2 of the other spouse's PIA. I haven't tried to model it, but I suspect the relative ages of the spouses has quite an impact ...
by Chip
Mon May 22, 2017 5:49 am
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Re: Please check my SS spousal benefit calculations

Chip- Have you seen the SS analyzer at Bedrock Capital? I think you would enjoy experimenting with it, you seem like a "numbers guy". I'm certain that it will confirm your proposed strategy as optimal (in terms of present values). http://www.bedrockcapital.com/ssanalyze/ Thanks for the po...
by Chip
Sun May 21, 2017 1:24 pm
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Re: Please check my SS spousal benefit calculations

I learned something new today by reading this thread. The claiming strategy as outlined by Chip seems to be optimal for married couples where one spouse's PIA is less than 1/2 of the other spouse's PIA. I haven't tried to model it, but I suspect the relative ages of the spouses has quite an impact ...
by Chip
Sun May 21, 2017 10:28 am
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Re: Please check my SS spousal benefit calculations

I like your proposed strategy, by the way. :thumbsup Thanks. It appears to have the highest total lifetime SS benefit if both survive up to age 87 for A. According to some mortality tables I found on Kitces' web site, there's only a 17% of both being alive when A is 87. After that age, if both are ...
by Chip
Sun May 21, 2017 8:53 am
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Re: Please check my SS spousal benefit calculations

B does not have a reduction in spousal benefit due to early entitlement, because there was no early entitlement to spousal benefits. Also, we subtract $800 here (rather than $667). The only time you subtract the monthly retirement benefit rather than PIA is if the monthly retirement benefit is grea...
by Chip
Sun May 21, 2017 8:00 am
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Re: Please check my SS spousal benefit calculations

I thought B's spousal benefit was 79.17% (.5 * 2200) = somewhat less than 880, perhaps 871? of which 667 is hers and 204 is from spouse Thanks for replying! I was calculating it the way you just did before reading some threads here (by Kevin M?) that said (paraphrasing) the 25/36%/month reduction i...
by Chip
Sun May 21, 2017 7:14 am
Forum: Personal Finance (Not Investing)
Topic: Please check my SS spousal benefit calculations
Replies: 12
Views: 963

Please check my SS spousal benefit calculations

I've read the wiki as well as many of the threads here on social security spousal benefits. I also own and have read Mike Piper's excellent book. I'd like to confirm that my understanding of spousal benefit calculations is correct. The situation: Spouse A: PIA 2,200; FRA 66; birthdate before 1/2/54 ...
by Chip
Sat May 20, 2017 3:49 pm
Forum: Personal Finance (Not Investing)
Topic: HELP - IRS Mail [Mismatch between taxpayer and reported info]
Replies: 11
Views: 927

Re: HELP - IRS Mail

If I wasn't so cheap I'd buy a copy of Turbotax just to see what the interview dialogs look like. So far, all these cases involve TT. Is it possible that they are the only software vendor who botched the interview this badly? I just went through a quick look at the interview process in 2016 TT. I u...
by Chip
Sat May 20, 2017 2:58 pm
Forum: Personal Finance (Not Investing)
Topic: Re-characterization of Roth contribution "opportunity" issue
Replies: 21
Views: 1390

Re: Re-characterization of Roth contribution "opportunity" issue

It is not obvious to me that the new custodian would know what the portion of the Roth money market transfer received was compared to the entire Roth at the original custodian. However, I have no knowledge about the details of how all of this actually works. Therefore, I seek information to allevia...
by Chip
Sat May 20, 2017 12:26 pm
Forum: Investing - Help with Personal Investments
Topic: IRS asking me to pay the tax on full Traditional to Roth Conversion : 1099-R
Replies: 20
Views: 1666

Re: IRS asking me to pay the tax on full Traditional to Roth Conversion : 1099-R

jebmke wrote:It would appear that the IRS match-o-matic has finished its run.


Nice. But I liked WOPR even more. :D
by Chip
Sat May 20, 2017 8:10 am
Forum: Personal Finance (Not Investing)
Topic: Re-characterization of Roth contribution "opportunity" issue
Replies: 21
Views: 1390

Re: Re-characterization of Roth contribution "opportunity" issue

Celia, as far as I can see the required 1099s would not prevent this transfer of custodian idea from working. The entire amount of the money market Roth could be re-characterized. I'm sure celia will be along shortly to show you in detail why what you suggest won't work (she's already given you the...
by Chip
Sat May 20, 2017 6:27 am
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

Reilyx wrote:Anyone who was curious the end of the saga:


Thanks for checking back in. Good luck, and don't be a stranger around here.
by Chip
Fri May 19, 2017 2:19 pm
Forum: Personal Consumer Issues
Topic: Neighbor draining onto / flooding my patio and yard daily - what can I do?
Replies: 59
Views: 4726

Re: Neighbor draining onto / flooding my patio and yard daily - what can I do?

I looked at the pictures. I think it's your problem, not his. My neighbors' yards drain into mine every time it rains, because my property is lower than theirs. I don't expect them to do anything at all. Dealing with the water is my problem. Your neighbor may be overwatering, but it is a free country.
by Chip
Fri May 19, 2017 2:05 pm
Forum: Personal Finance (Not Investing)
Topic: Re-characterization of Roth contribution "opportunity" issue
Replies: 21
Views: 1390

Re: Re-characterization of Roth contribution "opportunity" issue

Is there a way out of this that has a happy ending? Hi, and welcome. I'm afraid there's no way around what the company rep told you. IRS rules are quite clear. These rules are why almost everyone here recommends that each conversion be placed in an empty Roth account. But you don't have to recharac...
by Chip
Wed May 17, 2017 1:03 pm
Forum: Personal Consumer Issues
Topic: Solid salt in water softener
Replies: 14
Views: 1396

Re: Solid salt in water softener

I've broken through a salt bridge by taking a broom handle and a hammer and pounding the broom handle through the bridge in multiple places. Taking care not to damage anything in the process. :)

Since that experience I only add about 20# of salt at a time to the tank.
by Chip
Wed May 17, 2017 6:58 am
Forum: Investing - Help with Personal Investments
Topic: ROTH Conversion Goal
Replies: 13
Views: 766

Re: ROTH Conversion Goal

Should you strive to convert all of your tax deferred dollars to ROTH before you reach RMD's? For most people the answer is no. For those facing large RMDs, Roth conversions after retirement and prior to age 70.5 provide a way of smoothing income (and taxes) so that high marginal tax rates are avoi...
by Chip
Mon May 15, 2017 5:46 am
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

It looks like the problem is that Schwab only has the cost basis and even the purchase date from '06-'12. The unknown shares are just listed as April '13 which is the date we transferred accounts. I would guess that I need to track down the original purchase dates from the original broker in order ...
by Chip
Sun May 14, 2017 7:23 am
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

All bought under her name in the account starting in 2006. Dividends were reinvested until 2013 at which point we switched to Schwab and they sat in a money market until I noticed it and moved that money to her IRA. No additional shares have been bought since April '13. I came up with that number b...
by Chip
Sun May 14, 2017 4:51 am
Forum: Investing - Help with Personal Investments
Topic: Form 1116 Foreign Tax Credit Help
Replies: 11
Views: 1122

Re: Form 1116 Foreign Tax Credit Help

I am also having an issue with HR Block form 1116. Line 3e, I cannot see where they get that amount from? It is not my gross income or agi income? When I right click to jump to related forms, it says there are no related forms? Is there a deduction built in on line 3e? It's a confusing, specially c...
by Chip
Sun May 14, 2017 3:54 am
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

If I did it right, it is a loss. Cost basis of 32,638 with market value 31,172 If you're SURE about that, then you can sell immediately with no tax cost. And should sell. But calculating basis on shares that have been owned a long time can be tricky if there were stock splits and/or dividends reinv...
by Chip
Sat May 13, 2017 2:09 pm
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

Ahh, very good. Still relatively new to an adults understanding of taxes...thanks for the clarification. Definitely nowhere near that bracket then. Does that change your opinion or does my lack of understanding run deeper? If I don't have to pay taxes on the gains while still in the lower bracket i...
by Chip
Sat May 13, 2017 1:43 pm
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

You are absolutely correct that the 2016 25% bracket started at 75,301 of taxable income. I was talking about gross income, which is before you subtract your standard deduction of 12,600 and personal exemptions of 8,100. I understand completely about needing a decent place of refuge for both spouses...
by Chip
Sat May 13, 2017 1:12 pm
Forum: Investing - Help with Personal Investments
Topic: Questions to Start
Replies: 19
Views: 1073

Re: Questions to Start

Hi, and welcome! I don't think you have to move from Schwab unless you want to. You can adequately diversify there with their low cost funds. If you need something they don't have in their house funds, just buy some of an ETF (from Vanguard or elsewhere) every once in a while and don't worry about t...
by Chip
Thu May 11, 2017 8:21 am
Forum: Investing - Help with Personal Investments
Topic: Current 401K rollover options?
Replies: 19
Views: 783

Re: Current 401K rollover options?

Thanks. This was Fidelity rep's response: When you are transferring from the current employer's 401k to IRA, then you can take out $20k without any fee. The reminder of the funds (current 401k fund minus 20k) will only be transferred to Fidelity IRA. I was quite happy when he told me that. But now ...
by Chip
Mon May 08, 2017 4:30 am
Forum: Investing - Help with Personal Investments
Topic: Dividends & Taxes in (taxable account) Index Fund
Replies: 12
Views: 1495

Re: Dividends & Taxes in (taxable account) Index Fund

One can choose to respond this way or offer the helpful suggestion of purchasing in lax lots to accomplish the same thing but you elected to take the other path. I elected my method for various reasons involving ease of gifting and beneficiaries etc. I don't know about your 1099s but mine have a co...
by Chip
Sun May 07, 2017 4:11 pm
Forum: Investing - Help with Personal Investments
Topic: Dividends & Taxes in (taxable account) Index Fund
Replies: 12
Views: 1495

Re: Dividends & Taxes in (taxable account) Index Fund

My advice, choose an ETF over a mutual fund, as in general they will never throw off an unrealized capital gain. Secondly find a place that will let you establish separate account numbers verses lots for additional purchases as it makes things super clean (I did 500K at Fidelity this way vs Vanguar...
by Chip
Sun May 07, 2017 12:32 pm
Forum: Investing - Help with Personal Investments
Topic: Wife & Husband IRA/Roth IRA Limits?
Replies: 3
Views: 307

Re: Wife & Husband IRA/Roth IRA Limits?

MindfulInvestor wrote:Ah, ok. Sorry for the stupid question!


There aren't any dumb questions. And welcome to the forum!
by Chip
Sun May 07, 2017 10:23 am
Forum: Investing - Help with Personal Investments
Topic: Wife & Husband IRA/Roth IRA Limits?
Replies: 3
Views: 307

Re: Wife & Husband IRA/Roth IRA Limits?

She can contribute a total of 5500 to Roth and/or tIRA. Not 5500 to each. Since she's not covered by a retirement plan, her contribution may be deductible.

If you can still save more you can start a taxable investment account.
by Chip
Sun May 07, 2017 8:19 am
Forum: Investing - Help with Personal Investments
Topic: Really need some advice for a 401k rollover after forced retirement
Replies: 21
Views: 1306

Re: Really need some advice for a 401k rollover after forced retirement

Hello all and thank you in advance for any advice. I was just laid off at 59 years old but accepted a pretty decent early retirement package that allows me to start my pension now. The good news is that my $80k pension covers my monthly living expenses with $1000 to spare and in 3 years I can draw ...
by Chip
Sun May 07, 2017 8:03 am
Forum: Personal Finance (Not Investing)
Topic: Retired - How much can I afford to pay for house
Replies: 12
Views: 1688

Re: Retired - How much can I afford to pay for house

I don't think there's any question that you can afford 10% of the portfolio to buy a house, given the numbers you posted.

You will be drawing 21k (70-49) from what would be a 3.6m portfolio. Or a .6% withdrawal rate.

Go wild. Spend 11% on the house. :D
by Chip
Sun May 07, 2017 6:32 am
Forum: Investing - Help with Personal Investments
Topic: 3 Fund Portfolio with TSP help
Replies: 34
Views: 2787

Re: 3 Fund Portfolio with TSP help

Swansea wrote:If you compare F and G over a ten year span, F out performs outperformed G, but is more risky.


Fixed that for you. :D

I personally like the free lunch aspect of the G fund. If I had access to it I would put ALL of my fixed income allocation in it.

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