Search found 1365 matches

by airahcaz
Sat Feb 18, 2017 10:19 am
Forum: Personal Finance (Not Investing)
Topic: 401K loan vs HELOC
Replies: 1
Views: 138

401K loan vs HELOC

Debating this with a friend who took a 401K loan.

Should he use HELOC (4.63% with max 10 year term) to pay off the 401K loan?
by airahcaz
Tue Feb 14, 2017 11:56 pm
Forum: Personal Finance (Not Investing)
Topic: After tax contribution withdrawal
Replies: 11
Views: 458

Re: After tax contribution withdrawal

No, that quote only refers to when you get to distribute the actual Roth rollover. When doing a Roth rollover from the after tax sub account to the Roth IRA, you have mostly contributions and a small amount of earnings, if any. Those earnings are taxable when you roll them into the Roth. These earn...
by airahcaz
Tue Feb 14, 2017 10:55 pm
Forum: Personal Finance (Not Investing)
Topic: After tax contribution withdrawal
Replies: 11
Views: 458

Re: After tax contribution withdrawal

You can withdraw 1,000, but it will not be THAT particular 1,000. If you withdraw 1,000 it will come from your balance of 10,000 in regular Roth contributions. That works fine for you because that entire 10,000 can come out tax and penalty free. After the 10,000 comes out, if you need another 1,000...
by airahcaz
Tue Feb 14, 2017 3:30 pm
Forum: Personal Finance (Not Investing)
Topic: After tax contribution withdrawal
Replies: 11
Views: 458

Re: After tax contribution withdrawal

Hmm, this was the part that confused me: The rollover is treated as a conversion so would only come out after all regular Roth contributions and older conversions. If the particular Roth rollover is distributed from the Roth IRA before 5 years and under 59.5, the taxable portion of the rollover (the...
by airahcaz
Tue Feb 14, 2017 3:21 pm
Forum: Investing - Theory, News & General
Topic: Withdraw after-tax from 401K
Replies: 6
Views: 396

Re: Withdraw after-tax from 401K

Earl Lemongrab wrote:
airahcaz wrote:This would be immediate so no earnings.

What is the purpose? Did you make contributions and decide against it, or is the Mega Backdoor?


Both, but really the former.
by airahcaz
Tue Feb 14, 2017 2:37 pm
Forum: Investing - Theory, News & General
Topic: Withdraw after-tax from 401K
Replies: 6
Views: 396

Re: Withdraw after-tax from 401K

Perhaps. If the plan uses separate accounting, then it can (but is not required to) allow withdrawing the after-tax contributions with the caveat that a proportional share of taxable earnings must be withdrawn as well. The basis can be either rolled over to a Roth IRA (see Mega Backdoor Roth) or ju...
by airahcaz
Tue Feb 14, 2017 2:26 pm
Forum: Personal Finance (Not Investing)
Topic: After tax contribution withdrawal
Replies: 11
Views: 458

Re: After tax contribution withdrawal

Non Roth after tax contributions can usually be withdrawn while still working. Any earnings on them must also be withdrawn and the earnings are subject to tax and penalty. If a direct rollover to a Roth IRA had been done, the Roth IRA ordering rules determine how much is taxable or subject to penal...
by airahcaz
Tue Feb 14, 2017 2:15 pm
Forum: Personal Finance (Not Investing)
Topic: After tax contribution withdrawal
Replies: 11
Views: 458

Re: After tax contribution withdrawal

Non Roth after tax contributions can usually be withdrawn while still working. Any earnings on them must also be withdrawn and the earnings are subject to tax and penalty. If a direct rollover to a Roth IRA had been done, the Roth IRA ordering rules determine how much is taxable or subject to penal...
by airahcaz
Tue Feb 14, 2017 11:18 am
Forum: Investing - Theory, News & General
Topic: Withdraw after-tax from 401K
Replies: 6
Views: 396

Withdraw after-tax from 401K

After maxing out pre-tax 401K contributions, our plan allows for after-tax contributions.

Can one reverse an after-tax contribution, assumedly by taking a withdrawal, without penalty and complicating tax reporting?
by airahcaz
Tue Feb 14, 2017 8:23 am
Forum: Personal Finance (Not Investing)
Topic: After tax contribution withdrawal
Replies: 11
Views: 458

After tax contribution withdrawal

Can after tax contributions to traditional 401K be withdrawn without penalty if required? What if it was rolled over from 401K to a Roth IRA and one wishes to withdraw the after tax contributions?

(All presumed before retirement)
by airahcaz
Sat Jan 28, 2017 7:52 am
Forum: Personal Finance (Not Investing)
Topic: 529 gift limits
Replies: 5
Views: 495

Re: 529 gift limits

Why would a grandparent opening a 529 in his own name with a grandchild as beneficiary, be subject to the $14,000 annual gift tax exclusion limit? Meaning it's his own funds in just a different account type and the contributions have not and will not go to the beneficiary till the grandchild is rea...
by airahcaz
Fri Jan 27, 2017 11:53 pm
Forum: Personal Finance (Not Investing)
Topic: 529 gift limits
Replies: 5
Views: 495

529 gift limits

Why would a grandparent opening a 529 in his own name with a grandchild as beneficiary, be subject to the $14,000 annual gift tax exclusion limit? Meaning it's his own funds in just a different account type and the contributions have not and will not go to the beneficiary till the grandchild is read...
by airahcaz
Thu Jan 12, 2017 7:08 pm
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 401
Views: 123362

Re: The Mega Backdoor Roth IRA

If one is contributing pre-tax to the $18K limit, does this necessarily have to be met before the after-tax contributions can commence? No. You may contribute both types simultaneously. Thank you for both replied. Any disadvantage in doing it simultaneously other than having barely any paycheck left?
by airahcaz
Thu Jan 12, 2017 6:52 pm
Forum: Personal Finance (Not Investing)
Topic: Clarification needed on Mega backdoor Roth
Replies: 17
Views: 2440

Re: Clarification needed on Mega backdoor Roth

This thread has helped me much. I got worried with the 2014 IRS guidance as almost all 401K plans do not allow in service withdrawals of pre-tax dollars. Further, most plans definitely hold the pre-tax separate from after-tax and allow solely the in-service withdrawals of after-tax dollars to Roth. ...
by airahcaz
Thu Jan 12, 2017 6:21 pm
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 401
Views: 123362

Re: The Mega Backdoor Roth IRA

Has something changed in the past couple years? Just read a post that referenced this from the IRS website: "Can I roll over just the after-tax amounts in my retirement plan to a Roth IRA and leave the remainder in the plan? No, you can’t take a distribution of only the after-tax amounts and le...
by airahcaz
Thu Jan 12, 2017 6:05 pm
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 401
Views: 123362

Re: The Mega Backdoor Roth IRA

If one is contributing pre-tax to the $18K limit, does this necessarily have to be met before the after-tax contributions can commence?
by airahcaz
Thu Jan 12, 2017 11:10 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

It is entirely possible I'm using the wrong word. Not sure why "one definitely doesn't want to do that" cause it seems to me that is exactly what you want to do - make it as if it never happened. However, if you feel the "excess contribution" approach is right, that is what you ...
by airahcaz
Thu Jan 12, 2017 10:33 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

I know from an earlier post that that is what they told you. I'm just not sure it is correct. I did a search on "excess contribution" and all the answers had something to do with being ineligible. You were certainly eligible to make the contribution so I'm wondering if they have misunders...
by airahcaz
Thu Jan 12, 2017 9:25 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

After rechsracterizetion, the process is an Excess Contribution which returns the original $5500 + any gains or losses, and that is what it is called at Fidelity. It is not a withdrawal.
by airahcaz
Mon Jan 09, 2017 7:13 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

If you cannot deduct the TIRA contribution, you will have 8606 basis to track, but it's not that hard. Nonetheless, if that gets to be too much of a hassle for you as you get older you can always stop filing the 8606 and pay tax on 100% of your distributions. Another reason to retain the conversion...
by airahcaz
Sat Jan 07, 2017 7:34 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

Yes, or around 91% if you did not include the 5500 distribution in the 55,500 value. Of course, this calculation does not produce the tax, only the taxable income on which to figure the tax. Right, so my basic comparison is $1100 vs. $4950 in taxable income, is this the right comparison? Yes, if yo...
by airahcaz
Sat Jan 07, 2017 7:59 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

... cause this still won't work if I rolled it over to a tIRA, it has to be an employer plan, correct? Correct. Paraphrasing what retiredjg said, can you confirm this is what happened: In 2016, you made a non-deductible contribution to the Rollover IRA instead of your regular IRA. The Rollover IRA ...
by airahcaz
Fri Jan 06, 2017 11:18 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

Alan S. wrote:Yes, or around 91% if you did not include the 5500 distribution in the 55,500 value. Of course, this calculation does not produce the tax, only the taxable income on which to figure the tax.



Right, so my basic comparison is $1100 vs. $4950 in taxable income, is this the right comparison?
by airahcaz
Fri Jan 06, 2017 9:40 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

Right, if you did not convert into a new Roth account, the earnings calculation must be based on the overall gain or loss of the Roth that did receive your conversion. Therefore, you have 1100 of tax free earnings to be recharacterized and then withdrawn, still quite impressive but not as good as 1...
by airahcaz
Fri Jan 06, 2017 8:27 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

If you converted 5500 in 2016 and you indicate that this has about doubled since then, you probably should not recharacterize. Even if the 5500 conversion ends up mostly taxable, the effective tax rate you are paying on the doubled conversion assets is HALF your marginal rate even though the actual...
by airahcaz
Fri Jan 06, 2017 5:52 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

This is how it looks to me. 1) The deadline to recharacterize your 2015 Roth conversion has passed (October 2016). Since you did not pro-rate your 2015 conversion with the Rollover IRA, your 2015 taxes are incorrect and need to be amended. Depending on the relative size of your Rollover iRA compare...
by airahcaz
Fri Jan 06, 2017 4:56 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

I guess I should have asked….How much is in the Rollover IRA? <$60K How much are your non-deductible contributions? Confused here, cause you mean the non deductible contributions that would have gone into the separate tIRA and then into the Roth? And your tax bracket? Need to look this up Since you...
by airahcaz
Fri Jan 06, 2017 4:15 pm
Forum: Investing - Theory, News & General
Topic: Liquidate retirement account with significant loss
Replies: 8
Views: 1126

Re: Liquidate retirement account with significant loss

One can claim a significant loss in an IRA (or even a 529 plan) under some circumstances. The loss would go on Schedule A as a Misc. deduction subject to the 2% of AGI floor which is a difficult criteria. http://www.fairmark.com/rothira/losses.htm We claimed losses in 529 plans with this itemized d...
by airahcaz
Fri Jan 06, 2017 4:13 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

There are two parallel threads going. Please pick one. Fidelity was wrong or there is a misunderstanding. If the rollover IRA existed on 12/31/2015 and you did a back door in 2015, your 2015 taxes are wrong because you did not prorate the conversion. Sorry, let us continue on the other. To answer E...
by airahcaz
Fri Jan 06, 2017 4:08 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

It would be helpful to have some actual numbers. How much $ is in your tIRA? How much of that comes from non-deductible contributions? I'm assuming $5,500 from 2015 and $5500 from 2016. What is your tax bracket? Sorry, hope I answered this in my recent reply, but there is always 0 in the tIRA, afte...
by airahcaz
Fri Jan 06, 2017 4:03 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

1. Leave the conversion as it is. 2. Calculate your total non-deductible contributions for all past years. This should be reported on line 14 of Form 8606 each year as your non-deductible contributions accumulate each year. This shows 0 for me, as I only had 401K, empty tIRA solely used for Backdoo...
by airahcaz
Fri Jan 06, 2017 2:12 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

Ok, I can kick off the undo, the reporting of these 4 transactions is required, correct? Even though it "undos", tax documents are triggered and so each need to be reported vs. the alternative which is like it never happened? I worry that this complexity will raise a red flag and if I'm b...
by airahcaz
Fri Jan 06, 2017 2:09 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

Ok, I can kick off the undo, the reporting of these 4 transactions is required, correct? Even though it "undos", tax documents are triggered and so each need to be reported vs. the alternative which is like it never happened? I worry that this complexity will raise a red flag and if I'm b...
by airahcaz
Fri Jan 06, 2017 1:35 pm
Forum: Investing - Theory, News & General
Topic: Liquidate retirement account with significant loss
Replies: 8
Views: 1126

Re: Liquidate retirement account with significant loss

The only time it could make sense is if the value of the account was below the basis. The basis is the total of non-deductible contributions. Generally you should not have that many non-deductible contributions to begin with. Using even numbers for example sake, say one contributed pretax $10K annu...
by airahcaz
Fri Jan 06, 2017 1:13 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already. You can still recharacterize a 2016 Roth conversion, and effectively "undo" it. Or you can simply pay income taxes on (most of) the $5500 conversion ...
by airahcaz
Fri Jan 06, 2017 12:55 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already. You can still recharacterize a 2016 Roth conversion, and effectively "undo" it. Or you can simply pay income taxes on (most of) the $5500 conversion ...
by airahcaz
Fri Jan 06, 2017 12:07 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

my quoting is not great: One of the first things you should do is find out (or tell us if you already know) if you could (and would) roll the pretax money back to a 401(k) or similar employer plan. This would make cleanup easier and more profitable Fidelity will only allow me to roll it back to my t...
by airahcaz
Fri Jan 06, 2017 12:02 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

Hi - think I made a mistake and need some help please. For years, have had a separate (pass-through) Traditional IRA for the sole purpose of utilizing the Backdoor Roth IRA, and thus is kept at $0 before and after the conversion annually, never having a taxable event, cause I didn't have any other ...
by airahcaz
Fri Jan 06, 2017 11:32 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Re: Backdoor Roth IRA Recharacterization

... being ineligible to make a traditional IRA contribution from the start, so the $5500 cannot remain there... Anyone with income who is less than 70.5 years old can contribute to tIRA. What you cannot do if you make too much money is deduct that contribution from your taxable income. You can actu...
by airahcaz
Fri Jan 06, 2017 11:29 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

I think you can re-characterize it. I would not re-characterize back to tIRA because that will leave $5,500 basis in your IRA and that is something you would have to deal with eventually. I would undo the contribution all together - as if you never did the conversion to Roth or the original contrib...
by airahcaz
Fri Jan 06, 2017 11:01 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

I think you can re-characterize it. I would not re-characterize back to tIRA because that will leave $5,500 basis in your IRA and that is something you would have to deal with eventually. I would undo the contribution all together - as if you never did the conversion to Roth or the original contrib...
by airahcaz
Fri Jan 06, 2017 10:53 am
Forum: Investing - Help with Personal Investments
Topic: (Backdoor) Roth conversion/recharacterization, separate Roth acount
Replies: 7
Views: 671

Re: (Backdoor) Roth conversion/recharacterization, separate Roth acount

Another possible benefit is withdrawing the original contribution reduced by negative earnings and re contributing the full amount. If you have converted, you first need to recharacterize the conversion back to the TIRA, then request a return of the original contribution now reduced by investment l...
by airahcaz
Fri Jan 06, 2017 10:46 am
Forum: Investing - Theory, News & General
Topic: Liquidate retirement account with significant loss
Replies: 8
Views: 1126

Liquidate retirement account with significant loss

Starting a new thread based on something I read in a post here.

Say a Traditional IRA suffered a devastating loss, say 50% or more, would it be worth liquidating from a tax perspective? Namely, one should owe taxes on contributions but is this offset by the significant losses?
by airahcaz
Fri Jan 06, 2017 10:03 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1094

Backdoor Roth IRA Recharacterization

Hi - think I made a mistake and need some help please. For years, have had a separate (pass-through) Traditional IRA for the sole purpose of utilizing the Backdoor Roth IRA, and thus is kept at $0 before and after the conversion annually, never having a taxable event, cause I didn't have any other T...
by airahcaz
Fri Jan 06, 2017 9:53 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already. You need to amend your 1040 and pay the extra tax. Per discussion below you will also need to either fill out an 8606 for the first time or fix the one you fil...
by airahcaz
Fri Jan 06, 2017 9:25 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already.
by airahcaz
Fri Jan 06, 2017 9:21 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

If you have a rollover IRA, you should not use the back door at all. Whatever is in tIRA, Rollover IRA, SEP IRA or SIMPLE IRA in your name at the end of the year will be pro-rated with the Roth conversion step of your back door procedure. You don't want that. You could see if you can roll your roll...
by airahcaz
Fri Jan 06, 2017 8:41 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Re: Backdoor Roth through Rollover IRA

If you have a rollover IRA, you should not use the back door at all. Whatever is in tIRA, Rollover IRA, SEP IRA or SIMPLE IRA in your name at the end of the year will be pro-rated with the Roth conversion step of your back door procedure. You don't want that. You could see if you can roll your roll...
by airahcaz
Fri Jan 06, 2017 8:08 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1088

Backdoor Roth through Rollover IRA

Hi - in order to execute the Backdoor Roth IRA, I'd contribute to an empty Traditional IRA ($5500), and then execute the conversion to an existing Roth IRA. The Traditional IRA goes back to $0 and remains empty for a year. I may have to close the Traditional IRA however, per my compliance department...
by airahcaz
Tue Nov 29, 2016 10:30 am
Forum: Investing - Theory, News & General
Topic: Oil ETF?
Replies: 14
Views: 1859

Re: Oil ETF?

UWTI and DWTI. Triple leverage. Long and short. Go big or go home. Actually, don't invest in Oil ETFs at all. They're really a poor investment. I prefer to gamble at the casino. They serve you drinks and comp your room after you lose everything. Fun flashing lights too. That being said, losing mone...

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