Bogleheads.org

You guys are so right about my bro. needing to get on the SS#, I will show this to him, thank you! And I could be wrong, but I'm pretty sure he said he did not yet have one. Anyway, I also appreciate the idea of a age-related fund - I was thinking the same. Thanks guys!

Hello Bogleheads, I would like to set up a 529 for my 12 yr old nephew but he doesn't live in the US, (Mexico), and he has a US Passport and is a citizen, but my brother hasn't gotten him an SS #. How can I do this? Also, any suggestions on investments for this account at this time? Thanks so much!

Sorry, I should have mentioned. His dad died in late 2022 and he will be coming into cash, not investments. I believe the question was answered: The inheritance won't be counted towards his 2023 income so in terms of his rolling his old 401K into a Roth, his income will be based on his 2023 net income plus the $15K conversion amount. One of you did raise confirm a good point that I had just assumed, that the 2023 roth can be paid for with inheritance money. Thank you all!

I was talking retirement strategy with a a new work colleague. He just started working with us, almost 90 days in and he'll be eligible for his 401K in the next couple weeks. We were talking about his ex-employer's 401K fund, (only $10-15K) and we were discussing the possibility of him maxing out his new 2023 401K and HSA this year as he's in his catchup years and hasn't saved a whole lot over the lat couple years. He makes somewhere between $70-85K, (salary + commission), and he doesn't pay rent. What I was suggesting, (but please correct me if I'm way off!!!), is, if he's taking a good $33,860 off of his income to put in pre-tax vehicles, might that put him in a favorable enough tax bracket to convert his tiny $15-+ 401K into a Roth for 2...

Bradley37 wrote: ↑Thu Jan 26, 2023 4:03 pm My employer uses WEX for HSA. There’s some Vanguard mutual funds in their line up. But they charged me $18/ quarter as administrative fee. Plus they have a non existent customer service. I transferred my investment portion to Fidelity. But i have to keep the account open since i’m doing a payroll deduction for contribution. Per Fidelity, any fees that WEX will charge me for the transfer will be reimburse by them. The money is in route to Fidelity. Today, it will be 7 business days since i initiated the transfer.

How long have you been in WEX and how many transfers have you done like this?

OuterBanks wrote: ↑Thu Jan 26, 2023 5:39 pm I have Wex and hate them. I refuse to invest anything with them because of the high investment expenses. Once a year all the cash gets rolled over to Fidelity.

So you keep it all liquid while at WEX, then at the end of the year do the transfer?

dukeblue219 wrote: ↑Tue Jan 24, 2023 7:45 am It was mentioned once, but I think it's worth repeating that you are not required to use the employer's HSA exclusively. The employer's contributions will go to WEX and you may or may not be able to roll them out periodically, as you noted.

You can choose to make additional payroll deductions into the WEX account, contribute directly to your own HSA elsewhere (potentially losing some SS tax benefits but still deducting from fed and state income), or with some employers you can specify your own payroll deductions to the external HSA.

And if I go the route of periodic rollovers into Fidelity, is there a time of year or times of year when I would do this in particular? Thank you!

atomicrc11 wrote: ↑Mon Jan 23, 2023 3:22 pm Had Wex previously and I transferred every six months to Fidelity. I had to have the HSA there as that is where the employer contributions went.

So happy to hear this, I didn't even realize this could be a possibility. Question then: did you keep the money pretty liquid while in WEX until moved over to Fidelity?

You can choose any custodian you like for your HSA. If you want to contribute via payroll deduction, you will likely be stuck with WEX. Even if you do go the payroll deduction route, you might want to roll over once a year to Fidelity for better investment options. Note that if you contribute to an HSA via payroll deduction, you dodge the FICA (social security and medicare) taxes on the amount contributed. You will lose out on that tax break if you contribute outside your employer's HSA provider. SS is 6.2% and is not an issue if you will be over the annual income limit. Medicare is 1.45%. So this brings up a new question: Are periodic rollovers allowed while still employed at current employer?? And if that's a YES, is this the same for 40...

Thanks all, this is super helpful. This may end up being me using WEX for now and moving it to Fidelity in the future. Thank you all!

Hello Bogleheads,

I recently started a new job and I have the opportunity to sign up for an HSA and I was all excited to do it with Fidelity, but another new employee signed up a week before me and she said it was going to be WEX, which I've never heard of before. My questions are: does anyone have experience with WEX and can you tell me what I may expect and what options I may have for investing, (Vanguard funds available???). Second question, does this WEX thing mean I'll have to use WEX or would I be allowed to have the HSA elsewhere, (kinda guessing that's a NO at this point.). Anyway, excited to hear your thoughts.

Silk,
You're absolutely right!!!! Thank you, I'm working on it. That's why I'm here. Thanks for your guidance.

Cheers!

I'm pretty sure someone told me already that I was not going to meet any safe harbor stuff, (I really have no idea what that even means).

K, so I'm ready to pay the estimated tax bill for this Roth conversion of $16,012.00 (rounded up) and Fidelity won't have a tax form available to me until 1/16, but it's due on 1/15. Being the type who only ever pays the simplest 1040 for April 15th on Turbo Tax each year, I have no idea how to pay this bill. Anyone, anyone?? Also, I'm doing the math at about $10K, (+/-) in employment + $16K in roth conversion so $16K, so $970 for the first $9700 and $756 for the rest = $1726 . Anyone with intel on this, I'd highly appreciate it! Oops oops wait, sorry, I meant $25K in 2019 ( $8676 income + $16012 conversion) income so bill is 10% of the first $9700 = $970 + $3K, ($2788 taxed at 12% = $335 so a tax bill of $1305. Yes?? And how do I send this...

To 02nz,
yes I did just mean $25K,

I think you meant 9K + 16K = 25K, not to add another 25K, right? If you made 9K from work, and also convert 16K to Roth, your income is 25K. Take out 12,200 for the standard deduction (assuming single), and you'll only pay fed income tax on the other 12,800. The first 9,700 of that will be taxed at 10%. The other $3,100 will be taxed at 12%. Overall "effective" tax rate is just over 5% - what a deal!

So then taxes should be around $1342 or so based on this $16K conversion - that's sweet! -yes, 'what a deal!' I had forgotten about that part where I would be taxed on 10% on the first $9700, that cutoff number for that bracket. Thank you!!!

Hi HomeStretch, thank you for your response, but I'm just wondering what you mean by this part?:

(top tax bracket for your ordinary TI).

Hi guys, So in a knick of time the ira conversion funds are finally available to convert to the Roth but as I was in the middle of the conversion, $16K, two questions came up that I need to know. I will be paying the taxes from savings, not from the funds. I am curious, if I only made $9K this year, am I allowed to convert a sum to the Roth that is greater than my total earned income for the year??? Second question, will my federal tax bracket for 2019 be based on the $9k, (just below $9k), which puts me in the 10% bracket or on the $9K + $16K + $25K so the 12% bracket??? And then, I think someone already mentioned, I am allowed to make new contributions to 2019's Roth??? Thank you so much, so sorry for being such a financial knucklehead! :...

Now that's the answer I hoped for!! Thanks so much Silk McCue

Update: As I still await the physical check from the 401K (Made out to Fidelity), I read somewhere, I think) that I am not allowed to contribute more to a Roth than I earned in that year - would this mean that I can not convert more to the Roth this year than I made? It looks like my income this year will only be $8,676 (amount of paychecks since Oct 15th when I finally got back to work). So can I only convert just less than that amount to this Roth this year? And then it looks like I'm paying 10% taxes on whatever amount I convert, no?? (Under $9k falls into the 10% bracket.)

Thank you!!!

@ MindBogler,

Why does it matter?

- It only matters in planning what my percentage will be. I sincerely hope it applies to every single check, not just the salary checks.

Cheers

As far as taxation, there is no way to make anyone happy so we go with the IRS bonus rate. I'm not quite sure what you mean by the IRS bonus rate?? Thanks everyone for those responses. I would ask my boss and will ask again soon, but he's super new to this and he doesn't know how it all works himself. I'd sure love for him to go with a provider like Vanguard or something. In terms of making sure you don't front load your contributions at the risk of leaving employer-match money on the table - yes I've read that and will act accordingly. I thought I also read that some providers will automatically cut off contributions if you've already maxed out for the year - ??? Anyway, I'll let ya all know as I learn more! Thank you!!! ( I very much hop...

Hello,
My new small employer is considering providing a 401K, possible with a match of some sort. This to start in 2020, I believe. So we are paid salary checks twice a month, 15th & 30th and then commission checks in a separate check. I'm wondering, as I plan for this, if I allot a percentage, say 15%, does this just apply to the salary checks or all pay across the board? Anyone with experience in this arena?

It is now over a week since we told you to get moving quickly on this due to timing issues for the end of the year. It is time for you to make a decision and act upon it.

Cheers

I have opened the rollover at Fidelity and I've filled out the paperwork for the plan administrator, but Nationwide, where the 401K currently resides, says that the plan administrator has to do the next step. I have a call into her and i have yet to hear back. If I don't hear by tomorrow, I will call my old place of employment and get them to act fast on my behalf.

Thanks everyone for the responses!!

Cheers

Hi all, one more thing regarding this 401K rollover occurred to me all of a sudden - employer vesting. Not sure if there was even a vesting contingency in my case), but I wonder why my old employer wants me to move on so badly??? If I take my money to another company, will I incur any vesting losses from the old match that I had by chance? Although, from what I read, it seems like vesting stops upon leaving a company as an employee, my balance is still only rising so I certainly haven't encountered any losses since then, I just wonder why all of a sudden, they want me to move away from their policy. Any thoughts on this?

Cool Silk McCue! Thank you I'll check that out!,

Cheers!

All of my funds at Nationwide are Vanguard with about $4500 between 2 DFA stocks, otherwise all Vanguard. I wanted to maybe just put the whole darn thing $10-$30K in one single Total Market ETF, but really dunno. Sounds like Fidelity mostly offers their ETFs and IShares, from what I saw at first glance.

Thank you lakpr, duly noted. I will make sure to pay the $1500 or whatever the number is by Jan 15th. One thing no one has answered, but I guess Fidelity can answer this for me is whether I need to (like today) convert my stock shares to cash over at Nationwide???

Wow great answers everybody - thank you so much!!

To answer questions and ask some more:
-401K is currently at Nationwide.
-I had opened a tiny Fidelity Roth a year ago, so I have that already. I'll go ahead and plan to do partial Roth and partial traditional, I suppose. ---In terms of paying the IRS NOW!! - Don't I have until April 14th 2020 to come up with that cash?
-Also, ok I will start the ball rolling TODAY??? I suppose I should go to my Nationwide account to move it all to a cash position as the initial step???

Sorry if I distracted from the question with the 'rant' about the former employee, my aim was just to establish if I'd be allowed to let it sit there and convert only part of it to a Roth. On that note, let's say that I decide to go ahead with the conversion because frankly I have no idea what my future holds and I would rather believe I will be in a higher bracket upon retirement, (inheritance included), I'm thinking - and here's the question - should I go to the 401K now to move my shares to cash to prepare for the transition - is this the first step? I have a Fidelity account, but I'm sorta thinking of going to Vanguard instead, haven't really decided. Shall I start this move asap?? And btw, Silk McCue, my income is different from previo...

+1 If your 2019 marginal tax rate(s) will be lower than your rate when funds are distributed in retirement, then it makes sense to convert. For the maximum benefit, pay the taxes on the conversion from money in a Taxable account rather than withholding taxes from the IRA amount converted. Why is this exactly? If I can only afford to have any taxes owed come from off the top of the 401 is that a taxable or problematic situation? Also, one more question: My former employee keeps hassling me to move my 401K away from them - I thought it was my choice to keep it there as long as I wanted?? I don't want to be [troublesome -- mod oldcomputerguy] about it if they want me gone I'll move, but I'm not exactly ready for a few months just yet. Also, i...

I've never heard of Pro-Rata, but I had a traditional super tiny IRA at Wisebanyon a few years ago, just enough to play around with a Robo account and I converted it to a Roth. We're talking like maybe $700 a couple years ago. So what I think I'm understanding is that this Pro-Rata won't be applicable in my case and so I can probably go ahead with the conversion.

Hello Bogleheads,

I'm really not sure how this works, but it occurred to me that because I didn't work at all this year until Oct 15th and I'm really only making about $20/hr + 5% commissions, (so far I'm looking at about $1000 in commissions - lets say I take in about $3000 this year in commissions, (although it's already taxed heavily when it gets to me on the paycheck). So the thought was, (since my previous company keeps asking me to move my 401K away), that because there's only about $32K in this 401K and my income this year will be quite tiny - does it make sense to take this onetime opportunity to convert it to a Roth?? Is this even a thing? Is this an option for me? Thanks in advance for the help!

Thank you!

Might be a stupid question, but does the IRS define calendar year as 1/1/19-12/31/19??

Hello Bogleheads,

I will be turning 50 at the very very tail end of 2019, does that mean that year 2019 allows for me to contribute the extra $6K? Or will that not really work for me until 2020? (Same with the Personal Roth account.)

2019
401K: $25K + Employer Match
Roth IRA: $7K

OR

2019

401K: $19K + Employer Match
Roth IRA: $6K

Wow ok, I guess you guys are right. I just figured i could do that one thing to get the snowball started and show her, but yes I see your point. Thanks all.

Hello Bogleheads,

My 40 yr old sis has an old tiny 401 rollover, (like less than $4K), and I think she also has a second one too, that I keep telling her I want to rollover elsewhere. It's currently in an Oppenheimer rollover Government Money Market Fund A earning very little. I told her I wanted to put it into a simple index fund at Fidelity or Schwab. I just wrote to you all a few days ago about my new Fidelity micro Roth account. My sis actually lives in SF, so I wonder if maybe Schwab over Fidelity, but in any event it will be me doing this all for her because she expresses zero interest, (hopefully that will change).

Thoughts?

Thanks all for the advice! I ended up splitting the $400 in half basically between FUSEX & FZROX, we'll see.

Would I buy the mutual fund with the total $400.02, or just an even $400?

Awesome, so with as little as $400, I can put that into either of those 2 funds? And why the fund you mentioned - because of the ER?

Hello, I just opened a Roth at Fidelity that I plan to start funding with anywhere from $100-$1000 a month, which I kicked off with my first $400. I planned to put this into a single index fund like a Large Blend 500, but I see I need $2500 minimum to start FUSEX. Is there another index you might recommend I start funding instead, or a different route for that matter?
Thoughts?

Thanks in advance!

Hi Alan S.

Thanks so much for that answer - perfect!. So I'll double
check but I think if that money is returned to the original account I was using to feed money to it then there is no fee.

Btw, from what I can tell, if I were to choose instead to roll this Roth into a VG Roth, ie, I think there's like a $75 transfer fee to move this money into anything but the original account I transferred the funds from.

If you have any other Roth accounts, the numbers you posted are only part of the story because all your Roth accounts are considered to be one combined account for tax purposes. You would have to determine your total Roth IRA basis for all accounts. If this is your ONLY Roth, then verify the amount you actually contributed to the account. If $330 and the account is now worth only 302, then you have a loss of 28 in your Roth and you could close the entire account without any tax or penalty. But you WOULD have to report the distribution on Form 8606. You would not want to leave 2 in the account if that could incur a small account fee. You would need to have at least 2% of your AGI plus at least 28 in misc itemized deductions of similar type ...

Hi guys, I have a teeny tiny Roth account with Wise Banyon, experimental in nature I suppose. Anyway, I have contributed $330 dollars to it, but I lost $30 when I stupidly funded it from the wrong account and the transaction bounced :oops: :oops: . Anyway, that leaves me with about $302 in my account currently. Not sure I'm psyched with WB and at a time when I am also trying to start an emergency fund, I'm wondering if I can pull, say $250-$300 from the account, (not sure what happens tax-wise if I close it???). I simply want to take the $300 or so , (seems like my earnings are only $2 so that's the money I cannot touch!!!) Is this all copacetic? Will their be any ramifications for pulling up to $300 out? **** FYI, this was not IRA rollover...

Hi avalpert,
Which DFA funds might you recommend?

Sorry David Jay, I'm only just seeing your response after I just added that last response.

So I just found another instance on this forum in which the same general question was asked by another Nationwide 401k guy and the bottom line is that the ER in the far right column is just that - the ER and the Net expense fee % in the left is Nationwide's cut - ouch!. So essentially adding the two gives me my fee to own that fund.

Actually that's the thing - the actual Expense Ratio is in the far right column and this Net Asset Fee % 1.10 number is in the far left column so that's why I was asking if anyone knew what that number meant. Net Asset Fee % is in the far left column and it's 1.10 for both funds and the default selection of American Funds for the employees who do nothing, then Gross Expense Ratio is listed in the far right column.

So does anyone know what this Net Asset Fee % is about?

This is just a question of curiosity really. I just noticed that my Nationwide 401K plan offers DFA funds. I've already invested in VG funds. So I'm curious, I see the expense ratios of each but two questions arise for me: A. What is the Net Asset Fee % , (which happens to be 1.10 for both the VG and the DFA funds)? B. If I am to move on and transfer out of Nationwide down the line, how would that work in moving my DFA funds to another company, ie Fidelity for example? Would I be paying some extra house fees or just the ERs. I'm reading that investing in DFA requires paying up for the privilege so to speak???? Anyway, just curious really- these kind of discussions further my education a bit so I am grateful for the answers! :sharebeer