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Is it a foregone conclusion to take Social Security at 62 or something you would want to do more analysis about?

It sounds like you are saying that you will effectively be paid the exact same amount no matter which option you choose. If you opt out of the 401k they will add the amount you could have received as a match to your salary. So yes taxes are an obvious consideration. Not knowing anything else about your situation I would recommend doing whatever gives you the best chance to diversify the taxability of your retirement nest egg. I would look at what other strategies might come into play. If you will be over the earning limit for Roth and they offer a Roth option and you want to add to your Roth balance. If they don't offer Roth and you want to do backdoor Roth then having a 401k to roll a traditional IRA into is a useful thing but only if the...

placeholder wrote: ↑Fri Mar 24, 2023 8:43 pm

CRC_Volunteer wrote: ↑Fri Mar 24, 2023 8:28 pm

Brianmcg321 wrote: ↑Fri Mar 24, 2023 8:14 pm I don't get the title. Index funds are mutual funds.

You can have actively managed mutual funds.

Yes but it's like saying "beef vs. meat".

Index funds and mutual funds due seem in the broader financial media as imprecise terms for index mutual fund and actively-managed mutual fund. It comes up on the Reddit /r/bogleheads a lot also from new posters, obviously hopelessly confused ones. Even financial media will sometimes talk about the shift from "mutual funds" to ETFs as if it's coupled to abandoning an actively-managed strategy.

At least with Fidelity (non-Youth Account) and T. Rowe Price (who put their pdf applications online w/o signing in so it is possible to answer questions like this without going through an account opening wizard) it appears you have to be 18 even to be a co-owner. T. Rowe says "All owners must be 18 or older except for custodial accounts." even for a mutual fund account. Its been years since I had to deal with this in operations. You have to be 18 to sign any account document, agree to split your assets in any way shape or fashion. I have no idea how this could work. Well, if the other owner is also the minor's parent and co-signer. But I only experienced this with a bank account, not mutual fund or brokerage. Could there be addit...

Both of my teenagers have Fidelity Youth Accounts. This is their individually owned brokerage and banking account that comes with a no fee ATM card. As parent I can see their balances and activity but they do all the transactions themselves. They mostly use it for banking but they can also buy mutual funds and ETF's through it. As far as taxes go, the income is taxable to the child (same would be the case for UTMA under your custodial control). They need to file a return with over $1,100 investment income, but you can do it for them. The OP here apparently wants the tax reporting to go to the parent's SSN. With a bank account, this is (or was for me, pre-Patriot Act) possible--where the account is jointly owned and the secondary owner is a...

Whether it's a good investment aside, it would be better to hold ESPP shares rather than RSU shares. With RSU shares, the cost basis should always be FMV as of the date of vesting. With ESPP shares, if the stock moved in the correct direction between each of the grant date, the purchase date, and the sale date, some portion of the discount might be reclassified as capital gain rather than ordinary income in a qualifying disposition. In addition even in a disqualifying disposition it seems that the discount on ESPP shares that gets reported as ordinary income is exempt from Social Security, Medicare, and Net Investment Income tax.

nisiprius wrote: ↑Thu Mar 16, 2023 3:32 pm So in this case, one thing they could do is to temporarily raise the insurance limit to some high enough number--$10 million?--to cover small-to-medium business accounts. Or even "all deposits." But only temporarily.

It's been done before: https://archive.fdic.gov/view/fdic/3913

user5027 wrote: ↑Thu Mar 16, 2023 8:04 am I've not read all the replies.

We made a deal with our son and daughter. They took the subsidized loans and if they finished school, mom and dad would pay off the loans. If they didn't finish school they had to pay off the loans.

Were you using a 529? Until recently 529s could not be used tax-free for student debt repayment, and now it's a lifetime limit of $10,000.

So to the extent it's about principle and not a family's limited ability to save for college, "skin in the game" has to be weighed against both parents and child paying extra unnecessary taxes by not taking maximum advantage of things like 529s.

blimp wrote: ↑Thu Mar 16, 2023 12:07 am I tried multiple years to use both Turbo Tax and EY TaxChat, and Turbo Tax just didn't work. It may something to do with my specific organization. I would have paid a five figure amount extra if I just used Turbo Tax. Administration recommended we seek out an accountant with specific knowledge our our K1, so maybe I am trapped.

What kind of K-1 is it? There are multiple forms that have a K-1 associated

Guess they view it as inevitable that you aren't 100% T-bills and you're going to have other investment needs while you're there?

It depends whether you are talking about brokered CDs or direct CDs. If you have a brokerage account IRA, you could buy brokered CDs in it and the bank issuing them presumably doesn't know or care that it is an IRA. With direct CDs, you're opening a new IRA with the bank that unlike a brokerage account, can hold nothing but CDs. The bank is both the CD issuer and IRA custodian and could conceivably offer special rates that differ depending on whether or not it is an IRA. With a direct CD the bank might offer you early withdrawal penalty-free RMDs, for example, since if that CD is your only IRA, you would otherwise have no way to make one (if the RMD is bigger than the interest).

RetiredAL wrote: ↑Wed Mar 15, 2023 9:49 am It's certainly a grey area, but the banks seem to understand. Many have buried in their terms of use, that if you give someone your logon access, it's as if you made the transaction.

How are you dealing with two-factor? Informal password sharing like this is, partly, exactly what it's designed to frustrate.

To better understand 1116 you have to think in reverse of normal terms. The form is trying to make sure you don't get credited back more foreign tax than the US tax you paid on the same income. Did you mean "The form is trying to make sure you don't get credited back more foreign tax than the US tax you paid on the foreign income"? I am using HR block premium (online) and the tax software calculates a foreign tax credit of zero. I don't understand why my foreign tax credit is 0. For 2022 I held an international stock fund at Vanguard. The stocks in the international fund earned $5k in dividends, and foreign tax withheld was $400 of those dividends. My effective federal tax rate is 24% and my marginal federal tax rate is 35%. By s...

When you buy a Savings Bond, it comes with the feature that at any time, you can ask the government to buy it back from you and give you the principal plus accumulated interest. This is a valuable feature because it doesn't matter if interest rates have surged in the meantime and depressed the value of old marketable bonds. Graham even mentioned them for this reason in The Intelligent Investor ; as the bond landscape existed back in the early 1970s, he didn't think the individual investor needed to own any other kind of bond. The interest is credited monthly and you get credit for the entire interest no matter what the day of the month is. So it's always good to buy a Savings Bond on the last business day of the month and redeem them on the...

trustquestioner wrote: ↑Mon Mar 13, 2023 4:57 pm It’s emotionally satisfying for people of all political persuasions to view events of the day as validating their pre-determined narratives (they’re broke because they’re woke or it’s all rigged for the rich, respectively), but the less scintillating truth is that bank regulators have done a fantastic job managing this so far, preventing bank runs while zeroing out shareholders.

For every complex problem there is an answer that is clear, simple, and wrong

The concept of holding mutual funds inside a brokerage account was bolted on after the fact as the "mutual fund supermarket." They require special processing to handle things like breakpoints on the commission or dividend reinvestment election. alex_686 can say more.

This means that each brokerage and mutual fund complex needs to set things up for those funds to be handled by that particular brokerage. Yahoo! Finance has a "purchase info" tab on mutual funds that, to an unknown degree of accuracy, lists what brokerages can hold them. For example for JHBSX it lists Schwab but not Vanguard.

What happens to CDs purchased through a brokerage but held at one of the failed banks? If the CD amount is under the $250k FDIC limit, is there anything that should be done immediately, or should I just assume this will be paid out at maturity (near the end of the calendar year)? I read (possibly even in this thread) that FDIC insurance applies just like any other account, but brokered CDs are a little more complicated for them to figure out than the close-on-Friday-reopen-on-Monday uninterrupted process that the FDIC strives for. In particular, each broker who deals in the bank's brokered CDs appears as one giant customer on the bank's books, and while the beneficial owners are covered, the brokers all have to supply their customer lists ...

Just trying to understand, novice here. How does buying low interest long dated treasuries cause this problem - they always knew what interest they were getting and what time frame. Some combination of long term interest rates going up more than the expected, causing those bonds to drop more in value than they expected (take a look at five year performance chart for BND for example) or their depositors withdrew more money than they expected, causing them to need to sell longer-term assets than they had hoped. Unlike marketable bonds, buying a Savings Bond comes with a guarantee that the government will buy it back from you at its original value+interest regardless of the movement of interest rates and how competitive its rate is now, and i...

goodenyou wrote: ↑Mon Mar 13, 2023 10:32 am Got it. If the funds go down, and the ERs stay the same, does the revenue go down?

It would, but I think perspective is important in that SVB going to zero is still well within the normal day-to-day fluctuations of the value of the market.

Checking accounts were already (temporarily) given unlimited FDIC insurance once before, in 2011 and 2012: https://www.fdic.gov/consumers/consumer ... pdate.html

When you break the CD, can't they just issue you a cashier's check for the balance made out to the trust, then you deposit it at the new bank? You might not even need a checking account at either bank in that case.

HornedToad wrote: ↑Sat Mar 11, 2023 10:11 pm However many owners the account has today. If just you then A. If joint owners then $500k. Potential future owners thru beneficiaries are not owners today

No, check EDIE. POD is put in the "revocable trust" category

Some good ideas here for sure...I actually talked with the bank president and of course a good bank is going to say we are sound...I get that...I think we can move a few things around there and get most of it insured to be safe. About 250k is just our emergency account and the other 500 K or so is actually a part of out investment planning,,,we keep a small percentage in cash in a ladder of CDs so we can rename so of that and get em covered. Our farm business and Chase business accounts are a little tougher to move much but we can work on that as well. Auto business will be a little harder to move around but we will talk with Chase about it. Thanks for your thoughts. Is there a website that actually check a banks ratings? There is this, an...

an_asker wrote: ↑Sat Mar 11, 2023 7:32 pm

leviathan wrote: ↑Fri Mar 10, 2023 2:37 pm I am wondering what will happen to share (stock SIVB) holder of SVB. It's one of S&P 500 companies.

I would assume you would kiss it goodbye.

S&P 500 will essentially be S&P499 for a short while!

Actually, looks like SVB Financial is already kicked out of the S&P 500 to be replaced by Insulet next Wednesday

Roku filed an 8-K in which it informed investors that “approximately $487 million” or 26% of its cash and cash equivalents balance (~$1.962B), is deposited with SVB. Seems reckless to me Why is it reckless for a company to use a 40+ year old bank to hold a quarter of it's cash? Here on bogleheads, and I think in the personal finance world more generally, it's considered a bit of a blunder to go over the FDIC insurance limit for personal accounts. So why should businesses be any different? It's obviously been pointed out that it isn't scalable to spread accounts across multiple banks, but there are alternatives such as "lockbox" service that alex_686 pointed out, as well as using a money market fund or direct holdings of treasury ...

I didn't know before all this that it was so common for businesses to just disregard FDIC insurance and the insurance limit and store many millions in a plain old bank account. Is the issue that their cash reserves are so massive that there is nothing they can do (even given things like CDARS or whatever is analogous for checking) so they just look the other way? And I thought a lot of corporate treasurers swept all but immediate cash needs into money markets or similar instruments. Pretty much any company above some minimum size is going to have payroll totals that exceed the FDIC limit. It would be utterly impractical for them to divide their payroll into $250,000 size units. Having said that, the plan for SVB does seem to have expected ...

Keep in mind potential overlap if you buy a brokered CD with a bank that you also bank with directly. Also if any of your brokerage accounts has one of those FDIC insured programs where it spreads your balance among multiple banks, beware of overlap with your brokered CDs there too

It doesn’t matter that much what you (or us) think. The decision is up to the three of you. If you’ve received your share of the undisputed estate and it is over $250k (meaning the estate was over a million plus $250k), personally I would just call it a day. Life is too short to spend it on an extended lawsuit. The entire estate was, about $500 million - and maybe calling it a day, is really the best option and moving on. If this is an accurate amount, why quibble over $250K?? In the big picture, that’s not much $. I can't imagine it's an accurate amount. If it were, wouldn't the OP's focus be far into family office territory and other highly sophisticated planning of what to do with the inheritance, not fighting over 0.05% of the estate?

I didn't know before all this that it was so common for businesses to just disregard FDIC insurance and the insurance limit and store many millions in a plain old bank account. Is the issue that their cash reserves are so massive that there is nothing they can do (even given things like CDARS or whatever is analogous for checking) so they just look the other way? And I thought a lot of corporate treasurers swept all but immediate cash needs into money markets or similar instruments.

Another element to this is if you're participating in a fully paid securities lending program.

Legally you don't gain anything by holding a Savings Bond beyond the year of final maturity as the interest is reportable that year even if you fail to redeem the bond. See Publication 550. In practice you will not receive a 1099-INT, and if you comply by reporting the interest in the year of maturity and then redeem the bond later, you will receive a 1099-INT for that later year and will need to report it and make an offsetting negative entry to reflect that the interest was already reported in a previous year.

smectym wrote: ↑Fri Mar 10, 2023 1:10 am curmudgeon, yes this is an issue for many smaller/regional banks and (for now) to a lesser extent for the big boys. The deposit run is gathering steam, not just by big commercial depositors, but also hordes of “little guys” who’ve woken up to the potential for yield at greener pastures and are now moving their money. The bank run based on rate arbitrage then can accelerate whenever a whiff of negative news hits a specific name, and depositors decide discretion is the better part, and just pull their funds: “shoot first and ask questions later.”

Let’s see what happens; but I doubt SVB is purely idiosyncratic.

Are you basically describing the S&L crisis? Or not so much since banks sell their mortgages now?

Based on the use of the word "retire" perhaps you're eligible to do a catch-up 401(k) contribution, and if so did you already consider this in what the limit actually is?

Banks do fractional reserve banking. They don't carry enough cash on hand to immediately pay out if every accountholder wanted to withdraw all their money at the same time. This is normal and expected. When you hold shares "in street name" at a broker, particularly in a cash account, there's a one to one relationship between shares on your statement and shares that the broker owns on your behalf, and these shares are cordoned off from the broker's other activities. Of course, this doesn't say anything about the market value of your investments, a Bernie Madoff situation (extensively debated in another thread), or more complex situations where you owe the broker money on margin at the time it fails. Others will post in greater deta...

Yes, but who would be actively advocating that they couldn't stop the program until they got rid of existing paper? Shredders and incinerators get rid of paper just fine. The government should hire me as an efficiency consultant! Do you think these bonds were really all pre-printed, or is it just that they haven't changed the design series since the Tim Geithner days? Perhaps like banknotes they cannot change without an official process and security overhaul? Adding to your point is that when Series I paper bonds stopped being sold in banks, they also discontinued the sale of Series EE paper bonds, and apparently those EE ones did get shredded or are still stockpiled somewhere. I can't remember the source but I thought the Form 8888 progra...

I suspect it's a safe assumption that the fixed rate is going to be higher in May, and then you could wait until October and perhaps then gamble whether the rate will increase again in November, or go ahead and max out the $10,000 in annual space in October. Please tell us more about this suspicion. We don't know exactly how the Treasury sets the Series EE rate. But just as many suspect the Series I fixed rate is influenced by the five-year TIPS yield, I'm going to make an educated guess that the Series EE rate is influenced by the five-year Treasury yield. In fact, before 2005 when Series EE bonds had a variable rate instead of a fixed one, the rate was explicitly tied to either 85% or 90% (depending on the issue date) of the average five...

Someone jump in if I get the details wrong, but the interest rate was already set at the original auction. In the original auction the bond's interest rate was set to the closest 1/8% and then the price is adjusted so that the bond yields the correct amount from the auction. In a reopening, only the price can be adjusted, so the bond will sell at an increased premium or discount relative to the original auction. You have to account for this premium or discount in annual interest reporting as well as keeping track of the cost basis. The details are in pub 550 and I don't know them very well off-hand, but with "covered securities" much should be taken care of automatically by TreasuryDirect or your broker. For example, the 20-year b...

People buying EE bonds for their doubling effect 20 years later also expect that their equity investments will likely (hopefully!) experience growth greater than 100% over 20 years. Full stop. The end. Let's move on. If you're buying EE bonds in 2023, I'm curious to hear your thought process. Great replies so far (mostly). I haven't bought one since receiving one in childhood, but I just mention we get two more "bites at the apple" in 2023 as far as the EE fixed rate, currently 2.1%, as it will change in both May and November. The closer it gets to 3.5% the lower the "early withdrawal penalty" if you redeem before the 20-year mark. Also, just by shifting around a few months in 2023, you control what rate you will receiv...

Personally I prefer buying treasuries via my brokerage account and rarely use my Treasury Direct account (originally set up decades ago when I bought eight $100 bonds). It might have some advantages like for I-bonds but for treasuries I find it easier to use my brokerage. Can you explain more about it as to why you say it is easier? Can't speak for rich126 but in a brokerage account you can sell your bill early on the secondary market, if you want, and the interest it generates will be on the 1099 form with the rest of your taxable account, as opposed to having another 1099-INT to report on your tax return from TreasuryDirect. Plus, the bill will be funded from your settlement fund and the maturing proceeds will go there rather than needin...

If you are buying T-bills*, you put in the value you want at maturity (for you, $500 apparently). The auction determines what the discount is and TreasuryDirect will debit your bank account for the correct discounted value. As I've said before, the auction tomorrow will likely not have a yield and discount exactly identical to last week's value. That's why it is an auction. *This is the same as for any other kind of Treasury (notes or bonds) at Treasury Direct. Got it. So if put $500 to buy T-Bills, it will debit $490 (assuming some random rate) from my bank account and then at the end of 4 weeks, I will be credited $500 in my bank account. Is my assumption correct? It is, but the only reason IMO to buy them at TreasuryDirect rather than e...

Unfortunately this doesn't answer your question, but I'm curious what's in it for the employer for them to offer this benefit. Is there some tax advantage for them?

I believe it's all driven by the "Retirement Plan" checkbox on your W-2. It would be nice if the rule incorporated the number of months you did and didn't have a 401(k), or let you make a partial IRA contribution if your 401(k) contribution was less than the IRA limit, but unfortunately it doesn't work that way and conceivably $1 into the 401(k) could block your entire deductible traditional IRA contribution if you're over the income limit by too much.

bmelikia wrote: ↑Thu Mar 02, 2023 3:51 pm

Makefile wrote: ↑Thu Mar 02, 2023 3:06 pm

bmelikia wrote: ↑Thu Mar 02, 2023 2:50 pm 2) Regarding the coupon % for Treasury Notes
a) When the coupons are paid out. . .are those values swept into the current value of your Treasury Note holding? Or does Treasury Direct pay that rate out to you? (Ex: Does that money go to either your "Zero-Percent C of I" account or to your linked bank account depending on your setting?)

It is paid out, not reinvested, and you should be able to configure whether it goes to your bank or your C of I.

By chance do you know often those coupon payments are paid out? Once a year? Semi-annually? Quarterly?

Semiannually

Also cash advances do not receive a grace period.

bmelikia wrote: ↑Thu Mar 02, 2023 2:50 pm 2) Regarding the coupon % for Treasury Notes
a) When the coupons are paid out. . .are those values swept into the current value of your Treasury Note holding? Or does Treasury Direct pay that rate out to you? (Ex: Does that money go to either your "Zero-Percent C of I" account or to your linked bank account depending on your setting?)

It is paid out, not reinvested, and you should be able to configure whether it goes to your bank or your C of I.

Be aware that you cannot sell a Treasury security early using TreasuryDirect. You can only transfer it to a broker (and the process does not look streamlined--it is not ACATS) or wait until maturity.

jrbdmb wrote: ↑Tue Feb 21, 2023 2:18 pm Curious - where do you live that bank tellers are non-existent? I think there are at least five banks within a few minutes of me (suburban area) that I could use to get rid of excess cash.

My main bank still has tellers, but there are others that work the way OP has described and it's an increasing trend. It's called a "lean branch" and has a DMV-like atmosphere. There are a bunch of souped-up ATMs that can do more than a normal one via videoconferencing with a remote teller, and they don't accept or provide coins; everything is rounded to the nearest $1.

On the other hand, mutual funds have ongoing trading expenses which are not reflected in their expenses ratio. Everyday, every time someone buys and sells the mutual fund the fund has to wade out into the market and trades. Not true. Most funds hold a tiny slice of cash and that is what facilitates routine buying and selling. Every time you sell the fund doesn't sell. They're only forced to sell when lots of people are exiting the fund. I personally defer to alex_686 on this but my understanding was it's only true for actively-managed funds or very small index funds, not the big "Total" funds. For what it's worth the annual report for Vanguard PRIMECAP actually shows a line item for "cash" and it's about 0.17% of assets...

As long as she has the earned income to support the Roth contribution, it's ok to do it with gifted money. This is common advice around here for teenagers as well.

It's your choice how much involvement she should have in the account opening and funding process versus delegating it to you. A give a man to fish vs. teach a man to fish argument.

If the child wants to open a roth IRA at fidelity, the maximum he can contribute for last year in the box 1 wage minus the FICA, right? My understanding is that one can contribute up to the total of the gross wages, or the current year's Roth contribution limit, whichever is lower. I remember looking into this when my children had summer jobs during college and being surprised that amounts paid toward FICA could still be contributed to a Roth account. Why is it surprising? Since amounts paid for FICA and Medicare taxes are not deductible from income tax, from an income tax (and therefore Roth eligibility) perspective it makes no difference whether a portion of their earnings went toward FICA versus a cell phone, clothes, baseball cards or ...

You could do another conversion of the $2, or you could let it ride until next year and convert $7502 then. Either way, you're paying some tax, but only on the $2. There is no "cliff" or other dangerous aspect to this.