Bogleheads.org

so ... if someone is going to be contributing enough to max out tax deferred accounts + make additional taxable equities purchases ... contributions to tax deferred accounts should only be made to the extent that bond space is needed??

thanks for all the replies ... if it's as simple (in most cases) as LTG rates being lower than deferred ordinary income rates, why would anyone use tax deferred space for equities?

question for the forum: all new deposits to my 401k automatically go to a target date fund. i also have a taxable account for retirement. i keep the taxable account all equities, and convert pieces of the target fund to bonds as necessary to balance my taxable equities and achieve my desired ratio. i believed i was following boglehead advice by keeping bonds in tax deferred space when possible, thus avoiding taxes on the interest they produce. a friend recently told me that i should do the opposite, as the greatest long term gains (and thus capital gains) will be in equities, so the benefit would be greater to use tax deferred space for equities (or in this case, a target fund) rather than waste a portion of it on bonds ..... who is correct??

one final bump - no takers?

bump for Monday morning.

and a follow up question: I think the 457 will also have a Roth option - wouldn't it make more sense to keep the 401k as a traditional pre-tax account, and make the 457 the Roth instead, since I'll likely have to start taking money out of the 457 sooner (and less of the account will be subject to taxes at that time)?

Thanks!

After changing jobs, I will be switching from filing as a single person S-Corp to W-2 employment, and I'm wondering if I should change how I've been setting aside money for retirement. Background - My wife and I are about 40, and both work. Combined W-2 income will be approaching 1M. In our 401k accounts we have about 800k (combined), plus another 500k that's a mix of Roths and a taxable account specifically set aside for retirement. Allocation is either target funds or 80/20 3-fund portfolio. We have 2 kids (4 + 7), and we've been contributing 12k/yr for each since birth - combined 529 balance is about 170k. There's another 300k that is a mix of an emergency fund and random accounts that I'm not counting towards retirement. We're 7 years i...

thanks for your reply! does anyone have specific experience with some of the questions i posed?

I'm thinking of switching from Verizon to US Mobile for their unlimited data, which would still cost less than my current Verizon plans. Has anyone made this switch and had a positive experience? I've never changed cellphone carriers since starting with Verizon 20 years ago, and am slightly nervous about the online-only support offered by US mobile. A few questions for the group: -I have 2 numbers with Verizon on a family plan - does that make it more complicated to "port" the numbers to US Mobile? Does the master number have to be ported first? -After signing up with US mobile and porting the numbers, do I then have to separately cancel my account with Verizon? -I have Fios and a landline, billed separately - different account, n...

bump for anyone familiar with the credit ding aspect of a loan modification?

also- anyone with one of these offers ever called the lender back, to try to negotiate the rate even lower?

thanks. no truth to getting a hit to your credit score with a loan modification?

I received an unsolicited offer for a loan modification from my lender - which I believe makes sense for my situation, but wanted to see if the forum agrees? Background: I'm 6 years into a 30 year / $1 million mortgage @ 3.625%. For the past few years, I've been pre-paying principle so the mortgage will be repaid in year 20 (I plan to continue doing this). I've looked into refinancing before, but because it's still a jumbo loan, the rates aren't as low as they would be otherwise. I would still come out ahead if I refinanced to a 15 yr, but I'd prefer to keep the financial flexibility of the longer repayment schedule, if for some reason financial circumstances changes. I've decided its worth it to me to pass up that savings, and keep the opt...

I am in a similar boat as the OP. I have a high yield savings account for any money I need for 1-5 years, and treat my taxable as an account as a medium term 5-15 year savings, and my retirement as a 20-30 year savings. I get it that it inst the most 'tax efficient to hold bonds in a taxable account, especially when it is earmarked for retirement funds, but for your case (and mine), I think it makes sense. For the record, my taxable AA is now, 85-15 and getting 5% more conservative per year, with AGG as my bond fund. I figure, anything I need within the next 5 years will come from the bonds, and anything I need in 10-15 years will be liquidated into the bond fund slowly as the years go on Just curious why you chose a 85/15 AA for money you...

Blue456 wrote: ↑Mon Nov 25, 2019 6:12 pm
Check out the thread below. I decided to invest mine in vanguard intermediate treasuries. Others recommend short term bonds.

sorry ... which thread below??

ruralavalon wrote: ↑Mon Nov 25, 2019 2:29 pm
You have not stated a purpose for this money.

I basically did .... "it could be for a home renovation, a car, or something I haven't thought of in the future". Essentially, some sort of large, discretionary spending that I'm not counting towards what I "need" to save for retirement. If the lack of a time horizon is an issue for advice, let's say approximately 5 years. Thoughts?

after a little more reading i'm leaning towards vwitx for the bond component (vs vteax). still soliciting opinions for what to set the AA at? thank you ..

would a 50/50 AA seem reasonable to most for this purpose? or would some advocate an even more conservative AA?

thoughts about Vanguard Tax-Managed Balanced Fund (VTMFX) for what i have in mind? it seems like Vanguard Tax-Exempt Bond Index Fund (VTEBX), combined with an equities % of my choice, would have been perfect -but is no longer available

thoughts?

livesoft wrote: ↑Sun Nov 17, 2019 2:33 pm

jsa307 wrote: ↑Sun Nov 17, 2019 2:30 pmAlso- just wondering if it's acceptable to have VNYTX/VNYUX as the only bond funds for the bucket, given the longer term of the bonds? Thoughts?

It would depend on what else is going on in your portfolio, wouldn't it? For instance, suppose my tax-deferred 401(k) of $4 million was 100% Vanguard Total US Bond Market Index and I had $50,000 of VNYTX/VNYUX in my taxable account, then in that case I wouldn't worry about it.

I know the advice here is not to do "buckets" (i.e. it's all one portfolio), but I'm choosing to look at this bucket of surplus cash is a closed system

retired@50 wrote: ↑Sun Nov 17, 2019 12:59 pm VNYTX if you can commit $3,000 or VNYUX if you want to commit $50,000 or greater.
The percentage of your asset allocation is up to you.
Regards,

Yes I realize, ultimately, the AA is up to me ... but I'd like the forum's opinion, based on the goal of the money in the bucket ..

Also- just wondering if it's acceptable to have VNYTX/VNYUX as the only bond funds for the bucket, given the longer term of the bonds? Thoughts?

thanks!

I'm accumulating extra cash each month, beyond what I've allocated as savings for retirement. I'd like to start using a taxable account specifically for this bucket, but unsure what the right bond fund is (and what the AA should be). The money isn't earmarked for anything in particular; it could be for a home renovation, a car, or something I haven't thought of in the future. No specific time horizon. I'd like to be more aggressive than a MM account, and it won't "ruin" any plans if there is a decrease in value. I'm a New York state resident in the 37% federal/6.85% state tax brackets ... any suggestions for which bond fund to use in taxable? And thoughts for AA, given the circumstances ... 50/50? 40/60?

Thanks!

for example, my first thought was to start parking the extra dollars in something like wellington or wellesley - but i know those funds are frowned upon for taxable accounts, around here. alternatively, something like Vanguard Tax-Managed Balanced Fund?

my wife and i are both young physicans who are a handful of years out of residency. we are meeting our savings goals for both retirement (tax deferred and taxable accounts) and education (529's). up until now, all "extra" money has been put towards paying off low interest student loans and filling out our emergency fund. we are now done with those obligations, and i'm wondering how to treat the excess dollars going forwards? it's money that we don't currently have a plan for, but isn't needed to meet savings goals; maybe we will use it to buy a new house, remodel our current house, purchase a luxury item, etc etc ... essentially any not strictly necessary personal expense, sometime in either the near or distant future. should i be...

got it. works out now. thank you!

sorry, tried to make it clear, but i guess it wasn't. see the form i filled out below. i thought i would be paying taxes on the 6769.13 i moved from a deductible ira to a non-deductible ira. i already paid taxes on the rest (excepting the small amount of interest). i didn't think there would be any pro-rata implications because by the end of the calender year, there wasn't any residual balance in any ira except the roth .... help?

i KNOW i'm filling out form 8606 incorrectly, but even after some googling i can't figure out what i'm doing wrong. can a knowledgable boglehead help? details for 2017: already had 5500 in basis from a 2016 non-deductible ira contribution made in calendar year 2017 contributed another 5500 for a 2017 non-deductible ira in calendar year 2017. both converted to a roth in 2017. accrued 2.39 of interest in ira above prior to conversion to roth. also converted 6769.13 from an old deductible ira to a roth in 2017 calendar year. ira was originally in a CD at Citi, and was transferred to an existing vanguard ira account. the 1099-R from citi calls it a distribution. accumulated 1.23 of interest at vanguard prior to conversion to roth. can anyone he...

aqan wrote: ↑Fri Oct 27, 2017 5:00 am Dang.. my CHET (CT) plan is bronze... should i be concerned? Just started last year.
BTW what do you guys think about out of state 529? Worth venturing into?

I had a somewhat related post on here about a month ago ... what was suggested: take the 10k CT tax deduction, then at the beginning of each following year, rollover the funds into an out of state 529 with lower ER's. I haven't completed a rollover yet,but there should not be an issue as CT is not one of the states that recapture the tax deduction if you move the money out of state (some do recapture) ...

my thread for reference: viewtopic.php?f=1&t=228414&p=3547022#p3547022

following up, it seems like this scenario sets up nicely for avalpert's suggestion. i called the plan administration hotline, and no residency is needed to claim the tax benefit, just filing a Connecticut tax return. furthermore, there is no tax deduction recapture or other penalty for rolling over to another state. so i think i will indeed contribute $10,000 to CT, and then each January roll it back to new york. thanks everyone ..

I don't know the details of the CT deduction so you should verify if it applies to non-resident. Another thing to look at is if they recapture the deduction if/when you roll funds from the CT plan to another one - what I do (when I make 529 contribution) is make contributions to the MD plan in December (avoiding the annual account fee), take the deduction and roll the funds into my preferred UT plan. Other than that you might want to run the numbers in your preferred tax software to make sure the impact is what you believe it is. from the website, "A Rollover is not taxable for Connecticut income tax purposes", so it doesn't appear that they recapture ... so avalpert, you may be onto something- thanks! you execute the rollover as...

interesting point Raabe34-

I just looked and the plan document says "Connecticut tax benefits related to the Direct Plan are available only to Connecticut taxpayers". I believe i thus still qualify, even as a non-resident

thanks mp123 - maybe i'm not understanding the expense ratio and tax aspect correctly, but i think it's a little more complicated: CT will be double the price of NY, fee-wise. For an investment of $10,000/year, in the initial year, that would be $30 vs $15. But as I continue to invest and the growth compounds, while the expenses will always be double in Connecticut (as a ratio compared to new york), the actual fee number will keep getting bigger and bigger. For example, using an investment calculator and assuming 5% return, in year 18 when the child is ready for college, the balance of the 529 will be about $350,000. the expenses of the 2 plans in year 18 would be $1050 vs $525, or a net difference of $525. Now our effective tax rate in CT ...

Hi, I wanted to ask for help in thinking through a slightly different 529 scenario. My wife and I are both physicians who live in New York- but I while I work in New York, she works in Connecticut so we pay taxes in both states. Our first child is almost three, and we've been contributing to the New York 529 since birth (I didn't even look into other options, as New York has one of the best 529 plans out there). We contribute $10,000/yr to get the maximum state tax deduction, which also seems like a decent amount in terms of well-funding, but not grossly over-funding, her 529. Everything goes into the aggressive age-based target fund, which now has an ER of .15 We just had our second child, and was about to open a New York 529 for him, but ...

thanks for the help! just doing a little more reading- if all of the bond component for this "portfolio" will be in taxable space, i'm in the top bracket, and i live in a state with a vanguard muni fund (i do)- would a combination of Vanguard Intermediate Term Tax Exempt (VWITX), Vanguard Limited Term Muni Tax-Exempt (VMLTX), and Vanguard New York Long-Term Tax-Exempt (VNYTX) be most advisible?
adds in the limited term fund to protect against rate changes and the NY muni fund to get more of a state tax savings?

retiredjg wrote:In my opinion, the Vanguard Intermediate Term Tax Exempt bond fund (VWITX) is appropriate.

Please remember that many people do not "read" or "speak" ticker.

top bracket, so VWITX makes sense for the bond component? If you want to treat this as it's own portfolio, I think that is a reasonable path to take. Others will just lump it all together. That works too. If you keep it separate, decide what stock to bond ratio you want to start with. Using the "3 fund" approach, you would buy Total Stock, Total International, and the bond choice depends on your tax bracket....which we don't know. Lower tax brackets should use Total Bond (or a substitute) and higher brackets should use tax-exempt (up to half state tax-exempt). If you are in the 25% bracket, it's a toss up. I think I'd use half and half. Others say use the Total Bond. As the wedding age draws near, I'd increase the bond allocation....

if I want to treat the account as its own portfolio though, what about pairing VTSMX (or even VTWSX) with VWITX?

that would be similar to the tax managed balanced fund that was suggested earlier, except I can dail in my preferred allocation - correct?

Thanks for the replies thus far. Yes of course its not really a "wedding fund", so much as it is just saving something extra for our children. I might use it for their weddings, though, if appropriate when the time comes. Otherwise it will just be something we'll gift to them at some point Addressing a few of the replies, Bligh- yes 529 and other retirement planning is accounted for. Sport- After looking up the tax managed balanced fund, it seems to be on the right track (i.e. a single self contained fund for a taxable account), but perhaps a bit conservative for something on a 25 to 30 yr horizon (it says theres a 50/50 equities/bond split). Are there funds with similar objectives, but slightly more aggressive allocations? JJface...

I have 2 small daughters, and I've been putting aside about $500/mo for their weddings in the distant future. I know the boglehead advice would be to treat it all as one portfolio with my other investments, but I prefer to keep it as its own separate account. Essentially its a retirement account with a 25-30 year window. Given that it's in taxable space, I know people don't recommend target date, lifestrategy, or even wellington funds- but it seems like something like that would work for what I have in mind .. suggestions??
Thank you!

After searching through the archives, I see there are quite a few threads about American Funds and their charges. I was hoping for more clarification, as I still couldn't figure out a few of the fee deatils.. A few years ago, before discovering this site, a financial adviser directed about $40,000 in a Roth IRA to various American Funds, split evenly between ANWPX, AGTHX, AMECX, AIVSX Questions: 1) The stated sales load is about 5.5%. This is a one time upfront fee, taken out of the initial investment, correct? Or do I continue to pay it when cash dividends and long term capital gains distributions are credited back into my account (and then subsequently reinvested)? 2) The only additional fee that I see subtracted from my account is a year...

got it- thanks!

Alto Astral wrote:

jsa307 wrote:ok, so it seems like you can go further back than the "last year" tab, at least. thanks!

would still love to hear from any one who knows for sure..

I got 10 years worth transactions back till Dec 2007

but the website didnt open until 2009, per google?

ok, so it seems like you can go further back than the "last year" tab, at least. thanks!

would still love to hear from any one who knows for sure..

I've been looking for a program to categorize and track expenses - as much as I want to like Quicken, I just can't. I would like to use Personal Capital for this purpose, but does anyone know how long the transaction history is saved (hopefully indefinitely)? The search menu offers the following options: 30 days/90 days/6 months/this year/last year. Does anyone know if transactions older than 2 years are still retained in the history?

Thanks!

no conversions in 2016 - all will be in 2017, completed by dec 31. so i don't believe there will be any pro-rata issues, correct?

got it. thank you!

i'll be transferring the 1 ira from a money market account at citi to vanguard - i dont know the exact conversion details, as it hasnt happened yet and i haven't done this before. it may very well be an "indirect" rollover. however since the other 4 conversions i mentioned would all be direct (ira -> roth ira, within the same vanguard account), based on what you describe it still wouldnt be a problem because i would only have 1 indirect conversion - correct?

thanks for the help!

bump for any help - thanks!

Sorry to change the topic slightly, but it's related: - my wife and i already made separate post-tax tIRA contributions for 2016 in the calendar year of 2017. these are awaiting conversion to a roth ira - my wife and i will make post-tax t-ira contributions for 2017, but can't do so for a number of months for cash flow reasons. these will then be converted to roth ira's - i have an old pre-tax ira, currently in a cd, coming due at the end of the month. upon maturation, i plan to convert to a roth ira. i was planning to convert these to roth ira's one at a time- that's 3 ira -> roth ira conversions for me, and 2 for my wife in the calendar year 2017. a friend suggested that you can only do one of these such conversions per year - thus i woul...

Thanks for the feedback everyone. As someone who is already a little hesitant to ditch the target funds and take control myself , i think i'd prefer to get as close as possible to the 3 fund portfolio - rather than just a rough approximation or "close enough". kevin had suggested an 80/20 split with the s&p 500/russell 2000 funds to approximate total US stock market, and an 80/20 split with the EAFE/vanguard emerging markets fund to approximate total international. i'd use the State Street Bond Market Index Fund to approximate the total bond market. (thanks for the help kevin!) Do others also think that this split seems like a fair/very close representation of the 3 fund portfolio? i wanted to get the style boxes for the stat...

bump for any more feedback, regarding how close my proposed allocation is to truly approximating the total US stock/total international/total bond ..

thanks!

Thanks for the feedback everyone. As someone who is already a little hesitant to ditch the target funds and take control myself , i think i'd prefer to get as close as possible to the 3 fund portfolio - rather than just a rough approximation or "close enough". kevin had suggested an 80/20 split with the s&p 500/russell 2000 funds to approximate total US stock market, and an 80/20 split with the EAFE/vanguard emerging markets fund to approximate total international. i'd use the State Street Bond Market Index Fund to approximate the total bond market. (thanks for the help kevin!) Do others also think that this split seems like a fair/very close representation of the 3 fund portfolio? i wanted to get the style boxes for the state...

As expected, you have some really excellent fund choices. There's very little lacking in terms of building blocks to get close to a 3-fund model. Here are the ones I'd use or consider using: State Street Bond Market Index Fund ER .05 State Street S&P 500 Index Fund ER .02 State Street S&P 400 Index Fund ER .05 State Street Russell 2000 Index Fund ER .15 State Street MSCI EAFE Index Fund ER .04 With two or three of the US stocks funds you can approximate total US stocks, and the EAFE fund gets you developed markets, so you're just missing emerging markets, which you could pick up in another account. This is an excellent plan. We've seen many that are far worse. Kevin Thanks for the advice- I'm interested in how to combine these fund...

As expected, you have some really excellent fund choices. There's very little lacking in terms of building blocks to get close to a 3-fund model. Here are the ones I'd use or consider using: State Street Bond Market Index Fund ER .05 State Street S&P 500 Index Fund ER .02 State Street S&P 400 Index Fund ER .05 State Street Russell 2000 Index Fund ER .15 State Street MSCI EAFE Index Fund ER .04 With two or three of the US stocks funds you can approximate total US stocks, and the EAFE fund gets you developed markets, so you're just missing emerging markets, which you could pick up in another account. This is an excellent plan. We've seen many that are far worse. Kevin Thanks for the advice- I'm interested in how to combine these fund...