Bogleheads.org

DRReaders wrote: ↑Thu Mar 23, 2023 3:45 pm I'm sure this has probably been asked or the information is available on BoA's small print somewhere, but when exactly is the threshold for the monthly average (for the 3-month average) calculated for Preferred Rewards. Is it:
1. Calculated on the 1st or last day of each month
2. A running total calculated each day
3. Some other way

Mostly on the fifth of each month. However, as I recall sometimes new customers (new to BoA, as well as ME) get calculated on rolling basis.

Thanks, both. Retired@50 - I do pay 1% to both planners. I've never really considered that cost as part of my "expenses" for the year, as it is never something I pay out proactively, but makes sense to do so. Appreciate the context on how this group typically approaches money management. In your case, for example, 1% of $1M is more than you are ever going to have to pay in tax to be able to spend an additional $100k on lifestyle. You actually seem to have > $2M under management. I will also say that reducing income as much as possible isn't always the best long term strategy. I try to focus more on evening out income over time in order to optimize taxes in the long term. As such, an early retiree may do Roth conversions for incom...

What did you like about it? Seems like an awful lot of rules to me.

Spreadsheet, but we only update and rebalance twice a year.

Turbo Tax said I could, if that constitutes enough authority for you.

My quick calc is that $1.2 million (ish) is in pre-tax money...so depending on how much you take out that 1.2 is not 1.2. Cut at least 20% or more off that...you do not have enough to retire. He's not going to be paying 20% in taxes. Homer, I missed one thing as pointed out by others: at his age, he cannot take funds out of those tax deferred accounts without a penalty. Do you think he will be taxed more or less? Am I too high or two low? Replace with "needs to do some planning to access funds in tax deferred without a penalty." OP can easily stay within the current 12% bracket, with a much lower effective rate using a Roth conversion ladder. If they choose SEPP, they could lower the tax bill even more by splitting the difference...

My son first established a Roth IRA at TRowe sometime prior to 2016. In 2020, he requested TRowe transfer the entire amount (approx $10K) directly to Vanguard, thus creating a new Roth IRA account. In July of 2023 , the Vanguard Roth balance was about $12K. At that time, he withdrew $10K to help fund the purchase of his first home. Question: Does the IRS 5-year “no penalty--no tax” rule apply since the funds have always been Roth funds? Or, does the IRS only look at the date that the Vanguard account was established (2020) and apply the penalty and taxes? (Note that Vanguard issued a 1099-R taxable form on the withdrawn funds) I want in on the time machine! The important part of this equation is how much he contributed to Roth in the first...

1. What should I do with my 401k and $1.4M in cash after selling the stock if I decide to pull the trigger? What funds? You need to sell most (if not all) of that stock. Pretty much now. And put it in whatever combo of Total US Market, Total International Market, Total Bond Market, and cash you feel comfortable with (as long as at least 30% is in the stock market). I don't care that you got 80% of what you have by consistently taking the same risk that paid off. Good for you. Now, do you want to keep what you have? Because your $1.75m could be $400k the next time you turn around. Sell it. 2. Does it look like we have enough? Not quite enough to retire at 38, even once diversified. You already know that. The numbers are close. Almost. Nearl...

LaramieWind wrote: ↑Wed Mar 22, 2023 11:18 am I thought the responses would be more positive. Not factoring in home upgrades, how does my retirement look?

You got "it depends" to "oh, yeah, you are good." It doesn't get more positive than that around here.

If you want better responses, consider going through the case study format to give us more information.

You say expenses are "about $60k." How close is that? Over what timeframe have you been tracking? Does it include car replacement, roof replacement, and other things that are expensive but only happen every few years?

[snip...] It feels to me that I am really close to achieving what I need. A 3.4% withdrawal would give me the lower end of what we need to live comfortably and more than our current expenses. By retirement I don't mean that I am not going to do anything anymore and my wife can do consulting here and there. Eventually we will get SS and obviously not counting on this but potentially a decent inheritance. I don't need $4M-10M and I am not interested in that way of life and is not need to live a happy comfortable life. Tbh, I find this whole thread depressing (see my signature for context). But ... As others have pointed out, you're relying on a SWR that's computed for much shorter retirements. Your frugal lifestyle doesn't account for any me...

Charles Joseph wrote: ↑Tue Mar 21, 2023 9:08 pm

UpperNwGuy wrote: ↑Tue Mar 21, 2023 8:16 pm

Charles Joseph wrote: ↑Tue Mar 21, 2023 6:25 pm I prefer to just be left alone with my brokerage passwords. Thats...basically it.

That, and a good roast beef and swiss on a hard roll with lettuce, tomato and mayo.

Might I suggest adding some Dijon mustard? If not mustard, perhaps a few drop of a fiery hot sauce?

I cut my teeth on the Lower East Side of Manhattan. If I had asked for Dijon or hot sauce on my sandwich at the deli when I was a kid, Joey Meatloaf woulda come around from behind the counter given me a smack!

Besides, roast beef and swiss calls for horseradish.

You are certainly in a good position to leave this job and take some time to figure out your next steps. With kids that young, I would be thinking about going back to work eventually to build up a college fund. If you don't know what you are retiring to, you might also find that you want to spend more on entertainment or hobbies.

I would be freaked with mist in a single stock, no matter the employment situation.

But you certainly don't need to ruin your health sticking this job out or even worrying about finding a new one right away.

Marseille07 wrote: ↑Tue Mar 21, 2023 5:45 pm

JDave wrote: ↑Tue Mar 21, 2023 5:30 pm Emergency fund = cash you can access within 24 hours that you KNOW will be there, no matter what.

Which scenario do you have in mind that might test your 24-hour time limit? Even if I have to fly to Europe tonight, I don't think I need cash access as I simply charge my CC.

While I have some liquidity within 24 hours, I also have other safe assets that could be made available within 5~7 days.

If it is Friday night, that limits me to the last Costco refund sitting in my wallet.

A comfortable retirement is a function of portfolio, expenses and income from other sources, such as SS. You only gave us one of those variables.

jm1495 wrote: ↑Tue Mar 21, 2023 12:41 pm It's a nonqualified plan and isn't subject to the limit of a qualified plan.

This means you are paying tax in the discount at the time of purchase, rather than sale. Are you maxing out the company match, is that why you stop short of filling your 401k? Is there a reason you have decided that this is optimal?

I wouldn't be crazy about the holding period, but 12% return over the last 1.5 years is nothing to sneeze at.

Other than ibonds and short term obligations, I try to keep my taxable accounts 100% equities and rebalance as needed in tax deferred, for long term tax efficiency.

Does your partner's work offer domestic partner coverage? You would have to pay taxes on any subsidized amount, but it might be better than ACA.

retiredjg wrote: ↑Sat Mar 18, 2023 7:26 am

Valdeselad wrote: ↑Fri Mar 17, 2023 6:50 pm Am I overlooking anything? When the language says "withdraw" does that mean the same thing as in-plan conversion or in-service distribution?

Withdraw means "take out of the plan", so this means you can do an in-service (while working) distribution....i.e. roll/convert to Roth IRA, twice a year. That is one of the ways to do mega-backdoor Roth.

I do not see any wording that suggests you can do an in-plan Roth rollover (IRR).

While OP did not quote the in plan rollover section, the withdrawal section explicitly mentions them and the ability to withdrawal them at any time.

placeholder wrote: ↑Sat Mar 18, 2023 12:01 am

sailaway wrote: ↑Fri Mar 17, 2023 7:27 pm I would use the in plan conversion and maybe move that to an IRA once a year. This will minimize your taxes while maximizing flexibility. Great plan.

Just because they allow distribution of after tax doesn't necessarily mean they will allow it for converted amounts so it would be another thing to check.

The quoted text in OP specifically does allow this.

What did you do last year when they were even lower?

I would use the in plan conversion and maybe move that to an IRA once a year. This will minimize your taxes while maximizing flexibility. Great plan.

Just check on whether or not this interacts with your match in any way.

TheTimeLord wrote: ↑Thu Mar 16, 2023 12:34 pm What are retirees who "over saved" doing with funds in excess of their needs besides donating to kids and charities?

We are only semi retired because DH has decided he really wants to splurge on a big want: a new boat. And not just new to us.

secondcor521 wrote: ↑Wed Mar 15, 2023 4:34 pm They'll increase costs as long as they have a waiting list. Most places have waiting lists.

My Dad's place has increased costs every single year for the past 17 years. From 2022 to 2023 they went with 8.7% to mirror the SS increase. Not a very good rationale, but that's what they did.

Considering that SS is indexed to inflation, seems like a decent rationale to me.

I could be making this up, but I thought if it was over $5k, they had to roll it an IRA, rather than sending you a check, if you had not made your own election prior to the given deadline.

Thank you for your reply KlingKlang. The market will change my portfolio percentages more than I will and I am supposed to ignore the market right? No one ever said to ignore the market. The boglehead way is to be aware of the market, but not make ad hoc decisions based on where you think it will go from here. AKA, don't time the market. You should still run occasional calculations to determine if you are still at your target AA so that you can make adjustments. You need a plan. If Roth conversions are right for you, I would certainly stop pulling random amounts out of the IRA and just do the conversion, living off and paying taxes from taxable. For my own plan, the one exception can be any large outgoings that would risk pushing us into a...

You mention $18 in tax liability. Do you mean that after your with holdings have been credited, you still owe $18? With respect to Roth conversions, indeed, if your income is low, your Roth conversions will create tax at a low rate. Indeed, Medicare rates are based on income and their income limits are very low. They start by looking at the last 2 years of income but you can ask for a re-calculation when you're both retired. Things to look at that can be eye opening are both of your social security income when you're both receiving and your required RMDs. Plotting out a year by year adding of these numbers for DW and myself were very eye opening. While during working years, we all seem to focus on "times spending" numbers, as DW ...

Silk McCue wrote: ↑Wed Mar 15, 2023 12:57 pm You basically asked the same question in 2021 regarding funding your TSP and the answer was yes. There’s nothing new here as far as I can see.

viewtopic.php?p=6313552#p6313552

Cheers

Looks like their income has gone up, making it an even better option.

You mention $18 in tax liability. Do you mean that after your with holdings have been credited, you still owe $18? With respect to Roth conversions, indeed, if your income is low, your Roth conversions will create tax at a low rate. Indeed, Medicare rates are based on income and their income limits are very low. They start by looking at the last 2 years of income but you can ask for a re-calculation when you're both retired. Things to look at that can be eye opening are both of your social security income when you're both receiving and your required RMDs. Plotting out a year by year adding of these numbers for DW and myself were very eye opening. While during working years, we all seem to focus on "times spending" numbers, as DW ...

cowdogman wrote: ↑Wed Mar 15, 2023 10:48 am

muel87 wrote: ↑Wed Mar 15, 2023 10:41 am

cowdogman wrote: ↑Wed Mar 15, 2023 9:52 am That's because employer match money cannot be contributed to a Roth account--so there can never be employer-match money in a Roth account in a 401(k).

FYI, employer-match money can now be Roth. But the employer has to opt-in to that.

Source? Employer's can match employee contributions to Roth, but the match is pre tax and goes into a trad 401(k) account. Has that changed?

About a month ago, with Secure 2.0. The employer has tas to add this option to the plan, though, so I doubt there is anyone doing this just yet. Existing plans are amended in a schedule.

100k invested in an equity index ETF sounds fine to me. But I'm confused because you brought up liquidity. It doesn't work like that. You have to take risk if you want to beat the returns of safe investments. You can sell equities for whatever they happen to be worth, but it could be less than you paid no matter how long you wait. Especially in real terms. I would rather hold off on putting in money into an etf compounding at like 3-5% (adjust for inflation) and have all my funds tied up. instead, id rather have my cash not tied up in slow growing long term investments for right now so i can take more risk in investing in my business or for further businesses down the road. I say liquid bc it makes sense in my head but what I mean is just ...

I am pretty sure the one year rule only applies to her getting half of your benefit while alive. Once you are married, she will be eligible for the widow benefit, without a waiting period.

Do you have or plan to have children or other dependents? We never had anything more than the employer offered insurance, but we also never shared a mortgage.

Does the current solo 401k have a Roth option? Is that also at Vanguard?

worthit wrote: ↑Tue Mar 14, 2023 9:26 am Thanks all for responding.

My employe (mega corp) does allow after-tax contributions and they are ACP tested as far as I understand. So not worried even if it fails on a rare occasion. I will get my funds back.

8301 wrote: ↑Mon Mar 13, 2023 11:40 pm Correct. I also try to fill $73,500 within 1% of my base salary.

What do you mean by within 1% of your base salary? Can you clarify please?

Thanks.

Have you looked into how this may affect the matching at your employer? Also, some plans require you to stop contribute for a period after any rollover, so double check on that, as well.

Jack FFR1846 wrote: ↑Tue Mar 14, 2023 9:57 am You mention $18 in tax liability. Do you mean that after your with holdings have been credited, you still owe $18?

Please check this. Tax liability is the total of federal taxes withheld plus any additional owed at filing (or minus any refund). Taxes owed and refunds just mean that withholdings weren't dialed in perfectly, which is hard to do anyway.

Does your husband have a Roth option at work? If not, then conversions are likely a moot point, as few plans allow you to make withdrawals while still employed. If so, it might be a better option to switch to Roth contributions, rather than doing conversions while employed. Not really much of a difference, but the contributions would be more straightforward.

If you are doing the over 50 catch up, do you have any idea what your income will be in retirement? Roth only makes sense if you expect your retirement income bracket to be higher than your current one. With the current tax brackets set to expire in a few years, it would be reasonable to expect similar income to result in a higher tax bracket.

It sounds like you bought too much house and now have a high mortgage and big utility bill. Probably not categories you are actually willing to address. Like others, I am also rather surprised in the car categories. That is a lot of car and a lot of gas and a lot of maintenance. Could you downsize a car until you have jump-started the savings? That is not easy to accomplish these days, but if one of the cars is fairly new you might be able to. Vacation budget you don't have to give up vacations, just rethink them. The cellphone budget looks ridiculous to me, but it is also peanuts in the grand scheme. I also thought the gift category seemed high, but I value charity, so tough call to criticize when you combine them. Considering your student...

blueberrypi wrote: ↑Mon Mar 13, 2023 9:48 am We scrapped plans for a destination wedding to put more down on our house and are doing a small ceremony locally instead with half as many guests. Aside from the cost savings the reduced stress of not coordinating a wedding long distance is paying dividends in my quality of life!

The stress was even more motivating than the money for me to have a wedding that was just us and our parents.

I regard weddings as wasteful. I feel very strongly about this. We got married in the judge’s chambers in front of five people. Saved the money for a honeymoon in England. For many people the wedding is the highlight of their marriage. It’s all downhill from there. We’re still married after 48 successful years. Amen brother…it only cost $3.00 for DW and I to marry 34 year ago. We spent a few hundred on a rental minivan big enough to drive us and all four of our parents around, about $50 a head for a brunch cruise for the six of us and maybe $10 each for museum tickets next door to the cruise dock. DH spent more renting a nice vest than I spent on my whole outfit, total on clothes was probably about $200. My brothers and one of DH's sisters...

I rollover the bad to mediocre and leave sit the good ones.

Honestly, at this point, one year's decision isn't likely to make or break. But if the person helping you plan thinks you will be in an even higher bracket in just a couple of years, then they are probably right about not adding to tax deferred.

Use the mega backdoor Roth. You will still be accumulating in taxable, just tax sheltering some of the growth.

Does your spouse have a workplace plan available? Would they be comfortable deferring as much as the plan allows from each paycheck? We did this for awhile even when we still had separate accounts. DH took over all the joint bills and once I went through my savings, transferred money to me whenever I asked to cover my cc and student loan. Now we have a joint checking and I am the chief financial officer.

We are planning the following: 100% Paid books/tuition for 2-years of Community College, living at home. 100% Paid books/tuition for in-state University, living at home. Anything else? They are responsible for it (i.e., room and board if they want 4-years away). If your kids have something specific they want to study, make sure you understand any difference in getting into that program as an incoming student vs a transfer. It is generally easier to get into a school as a transfer, but some programs are easier to get into as a first year. One way to split the difference is to use CLEP, AP or dual enrollment, or even the local community college to get credits while still in high school. Then you have enough credits to graduate in 2-3 years, ...

mega317 wrote: ↑Sun Mar 12, 2023 12:01 am My hydro flasks still have solid ice after a full day in a hot car.
If you’re talking coolers, any crappy cooler will stay cold for 1 day. The nice ones could go several days.

I think any double walled container will do. So nice to come back from a hike and still have cool water in the bottle!

Can you clear up the salary? As written, it looks like you will have a higher salary in retirement than now. But based on your questions and expecting a very modest pension, it seems like you expect your salary to increase steadily until retirement?

Do any of your workplace plans offer Roth options?

You say $40k is six months expenses, but if that is so, you should be living off one salary and saving the other. I would not actually do that, but I would be saving more in retirement accounts. I would not worry about keeping Roth vs traditional equal or balanced. I would focus on what seems right each year. There is no 14% bracket, but with salary totalling in the low $200s, you are probably in the 22% bracket, although your effective rate might be 14%. That is a tough one for making decisions. However, in this case, your savings seem pretty low, with less than one year's salary each in savings in your early 40s. I would seriously be considering tax deferred, since you have a long ways to go to worry about high tax brackets in retirement....

Was that from the retirement income menu or the 1099R summary menu?

Have you entered everything correctly from the 1099R, including the J code (double checking as that was your original question) and the "taxable not determined"?

Have you considered having a roommate? This could allow you to split the difference on the down payment and still meet your savings goals until your salary increases.

SVB itself has been shut down, but certain funds will be available at it's replacement as if Monday. How smoothly this will go for payroll is anyone's guess at this point and will depend somewhat on how large payroll is for your company.

The only reason this matters at all is that you have slightly less that you can remove penalty free before 59.5.

Some admins track the difference between what was contributed and what was distributed and will apply the loss to the following year's calculations. There is some debate over whether or not this is proper, but if your admin does this, your 1099R won't show a taxable portion until you have $5k in gains, so it could end up offsetting future gains, similar to a carryover loss. The difference is, you cannot record it as a carryover, only the accounting habits of your plan can make that decision.