Bogleheads.org

986racer

If your income is too high, you can not declare your children as dependents, and then gift them appreciated stock. Let them sell the stock and the use either LLC or AOTC to offset the capital gains. I would love to be wrong about this, but I was planning to use this approach previously, and I'm fai...

986racer

If your income is too high, you can not declare your children as dependents, and then gift them appreciated stock. Let them sell the stock and the use either LLC or AOTC to offset the capital gains. I would love to be wrong about this, but I was planning to use this approach previously, and I'm fai...

986racer

In terms of funding accounts, I go with this... 1. Fund all 401k and IRA accounts fully (basically retirement accounts) 2. Fund "some" in taxable (more on this later) 3. Fund 529s. The sooner you can do this, the better as the only advantage of 529 is tax free growth and therefore you need...

986racer

I went through this analysis a few months ago : https://www.bogleheads.org/forum/viewtopic.php?f=2&t=301835 Basically, if you are looking to gift stock to your offspring and then have them sell with no tax liability, you want to find a stock that has doubled. This will provide 15K of gains on a ...

986racer

Living Off Your Money: The Modern Mechanics of Investing During Retirement with Stock and Bonds

And also the Early Retirement Now web series

986racer

You do know that if you pay at least $4K of tuition, and if she is a dependent, that you are eligible for a $2500 tax credit (American Opportunity Credit). This for 4 years if undergrad. This only works if the AGI of the parents is below a specific dollar amount as explained in IRS Publication 970 ...

986racer

This whole “skin in the game” seems to be nonsense when it’s applied to high achieving kids. Perhaps it makes sense for B/C students, but not for kids who get into selective colleges on their academic achievements. Basically agree... I also think you need to know your child on whether "skin in...

986racer

Second, if they qualify as your dependents (you provide more than half of their support), then they don't get to claim the AOTC. Only you can claim it, and if your income phases you out, you are out of luck. This is wrong as well, unfortunately. Dependent can claim AOTC (if parent does not claim th...

986racer

My teenage daughters are eligible for the 600/week pandemic unemployment. I'm guessing that unemployment shows up as unearned income. They are of the age that they fall under the kiddie tax rules. Does this mean that the 600/week payments will be taxed at my tax rates? If so, won't almost teenager w...

986racer

Other things in my circumstance.... I also have level term, sufficient enough to not need the whole life should I decide to drop it. The original thought around getting whole life was for an extra bucket of funds for the kids college education so that I didn't overfund the 529s. The rationalization ...

986racer

I was about to post an almost exactly similar question to this today myself. I have a similar scenario except about 1/3 of the cash value split between my wife and me. I'm about 8 years in and am trying to decide whether just to surrender the entire amount and pay down the mortgage (3.625%) or conti...

986racer

I got Eero last year and only 2 complaints

1) Poor timing on my part. About 2 months after I bought it, Amazon had it 50% off on Prime Day
2) No DNS for local hostnames. I'd love to give local computers a personalized name

Other than, it's been great.

986racer

By definition the 4% SWR was predicated on 95 percent success..... The definition I use has a 100% success rate. That's why it is called the safe withdrawal rate and not the mostly safe withdrawal rate. ERN and McClung both show that the exact method of how you pull money out, rebalance, and perfor...

986racer

By definition the 4% SWR was predicated on 95 percent success..... The definition I use has a 100% success rate. That's why it is called the safe withdrawal rate and not the mostly safe withdrawal rate. ERN and McClung both show that the exact method of how you pull money out, rebalance, and perfor...

986racer

Rates were low in the past but they were coupled with low pe ratios. Now we have super low rates and high pe ratios. This is correct and incorrect. You may be thinking of the late 40s and early 50s where bond rates were very low, but CAPE was also low, so stocks did pretty well even when bonds were...

986racer

If so, it looks like I'll need to refile taxes for this year (grrr... I hear that is not fun to do with TurboTax) Having just amended my 2019 return with TurboTax for a similar reason (my daughter was listed as a dependent when she should not have been, which screwed up her ability to file her own ...

986racer

Just use the edit function in the section on dependents and delete her. That's what I ended up having to do. As near as I can tell though, there isn't a way to have one set of dependents for the federal return and a different set for the state returns. It's a bit annoying as it means I need to save...

986racer

One more question... As expected, removing the dependents from my federal return did not change the amounts on my return. However, it did seem to adjust my figures on my NY/NJ returns. Do I need to keep the dependents the same between the federal return and the state returns? If so, it seems like I...

986racer

One more question... As expected, removing the dependents from my federal return did not change the amounts on my return. However, it did seem to adjust my figures on my NY/NJ returns. Do I need to keep the dependents the same between the federal return and the state returns? If so, it seems like I ...

986racer

Yes, I understand that for her return, she has to check the box that says she can be listed as a dependent. However, I want her to also be able to check the box that she actually isn't listed as a dependent. I'm just trying to figure out the mechanics of how to not list her as a dependent. It sounds...

986racer

This is my first year of not wanting to declare someone who could normally be declared a dependent. How do I do this in TurboTax? (or more importantly in the 1040) In TurboTax, do I just not list that person as a family member? Or, is there some other box I should check so that I list her as a poten...

986racer

You may want to consider the risk of overfunding the account. At current cost of attendance increase rates, college education will cost approximately double what it is now. At roughly an 8% historical investment return rate, your investment will quadruple in that time. You should be able to figure w...

986racer

A student can't claim the AOTC if they are your dependent. Wouldn't the student also need enough earned income to cover > 50% of their support to avoid being classified as a dependent? One other thing I forgot to mention. The 50% support test that you mention is what is needed to keep the student f...

986racer

A student can't claim the AOTC if they are your dependent. Wouldn't the student also need enough earned income to cover > 50% of their support to avoid being classified as a dependent? Yes, a student can’t claim the AOTC if you claim them as a dependent. However, there is a distinction between bein...

986racer

It’s important to remember that a 529 isn’t some magical investment vehicle. Instead, it is a vehicle that allows for tax free growth and tax free distributions provided that you use the investment for educational purposes. The flip side is that if you make distributions for non-educational expenses...

986racer

I include it

986racer

I'm working on the 2019 taxes for DD (who became a college freshman in August 2019) and I'm starting to plan for 2020. Can someone help verify the numbers here? The 2019 calculations that I did approximately match with what turbo tax is showing (not sure why it doesn't exactly match, but I think it ...

986racer

We generally just want to know how a taxable account can be expected to provide more tax savings than a 529 account. It might be more worthwhile to calculate the tax savings that a 529 provides and the assess the risk of having too much there as any excess gets taxed at marginal rates along with a ...

986racer

I am wondering how much budget in 529 is a good amount if u want to fund your child's undergraduate education debt free? I haven't seen this mentioned yet, so you may want to read up on the American Opportunity Credit to see if it will apply to you (for one, there are MAGI limits in order to claim ...

986racer

I’ve written a rudimentary MC simulator (no mean reversion though) and ran with two types of ways of simulating returns. 1. Take actual inflation and returns from previous years and then randomly pick data from real years. E.g., a return from year 1 might be the 1929 return and then the return from ...

986racer

Called Empower and confirmed what others said. I can rollover directly to Roth. Their website is inaccurate

986racer

I’m doing this all through Fidelity, so the rollover should not be an issue.

Agreed that this is a pain. I’ll get in touch with the 401k folks to make sure it is really necessary

986racer

I’m in the camp that says this doesn’t actually save you anything. The listing contract is with the seller and the commission comes from that. If the broker isn’t dropping the rate, then 6% comes off the sale and the sellers will be in the same spot. Maybe you can convince the selling agent to give ...

986racer

Thanks all for the replies! I'm in a situation where I (and my spouse) had after-tax money anyhow in my traditional IRAs. As such, this year, we set up a solo-401k for her (and a spousal one for me) to move the pre-tax money to the 401k and the after-tax money into Roth IRA. Having this go through ...

986racer

Thanks all for the replies! I'm in a situation where I (and my spouse) had after-tax money anyhow in my traditional IRAs. As such, this year, we set up a solo-401k for her (and a spousal one for me) to move the pre-tax money to the 401k and the after-tax money into Roth IRA. Having this go through a...

986racer

Not at all. I agree you should be careful and maybe do some more research with your 401k provider. After tax 401k can absolutely be rolled directly into a Roth IRA. That’s what most of us are doing when we say we have a Megabackdoor Roth. The rest of us are converting directly into Roth 401k within...

986racer

FYI, my plan doesn’t let you convert from after-tax 401k contributions directly to a Roth IRA. The contribution has to go to a traditional IRA. It then can be converted to a Roth IRA from there (via the back door IRA process) I mention this because it wasn’t obvious to me that you couldn’t go strai...

986racer

I’m in the same situation. Next time I get a car, I’ll probably take the cash back deal instead.

I.e., when I got the loan, I had a choice of getting an extra $1000 (might have been $1500) off the car or to get the 0% loan. Next time I’ll take the cash

986racer

FYI, my plan doesn’t let you convert from after-tax 401k contributions directly to a Roth IRA. The contribution has to go to a traditional IRA. It then can be converted to a Roth IRA from there (via the back door IRA process) I mention this because it wasn’t obvious to me that you couldn’t go straig...

986racer

Link to book: https://www.amazon.com/Living-Off-Your- ... ff+&sr=8-1

986racer

I highly recommend Living Off Your Money by Michael McClung. He covers all this stuff and a lot more. The first three chapters are available free on Amazon.

Pay attention to the Prime Harvest methodology

986racer

Other expenses that will start showing up:
Activities (dance, soccer, gymnastics, football, baseball,?etc)
Summer camp
Before/After school care
Technology (computer, phone, tablet)
Saving for college

These might not be as expensive as day care, but they Will eat up quite a bit of that money

986racer

My general rule of thumb is that it runs at about twice inflation. I’ve been planning for 4% per year increase of costs (including fees, room and board) and the projections have been within a few hundred dollars of the actual cost. I see no evidence that this is slowing or will slow. Yes, logic dict...

986racer

I’d go after the home equity before touching 401k

The 8% you are quoting on loans sound like Parent Plus loans. Generally you should be able to find better terms than that. I’m getting inundated with private loan offers for my DD

986racer

+1 on buying used. My understanding is that these depreciate heavily and quickly.

986racer

Thanks for all of the replies... I'm still quite a few years away from retirement so this is more of a thought experiment for me currently. However, it did get me thinking of how much would be "fair" to charge even though I know that I personally wouldn't pay someone to be a FA for me. I l...

986racer

My wife sometimes suggests that when I retire that I should become a FA because I’m so knowledgeable and passionate about the topic. I generally brush that off but it got me thinking about what would a fair rate be. I know that I would never pay an advisor a 1-2% AUM rate plus whatever commissions c...

986racer

Per 'The Millionaire Next Door' author, Thomas Stanley, your net worth should be at least equal to your age divided by 10 and multiplied by your annual income. TravelforFun Hmm, so if I take a job at Walmart right before retirement, I’ll only need 20000 * 65 / 10 = 130000. I love formulas based on ...

986racer

I’d highly suggest picking up “Living Off Your Money” by Michael McClung. He covers all of this and more.

986racer

Per 'The Millionaire Next Door' author, Thomas Stanley, your net worth should be at least equal to your age divided by 10 and multiplied by your annual income. TravelforFun Hmm, so if I take a job at Walmart right before retirement, I’ll only need 20000 * 65 / 10 = 130000. I love formulas based on ...

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