Bogleheads.org

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.

Homeby5 wrote: ↑Sat Mar 11, 2023 1:23 pm

JoeJohnson wrote: ↑Sat Mar 11, 2023 11:46 am The 1099 sounds correct. Code J

You'll have to tell Tax Act that you have basis in Roth contributions on Form 8606, Part III. I'm not familiar with TaxAct, but have done similar in TurboTax and HR Block

https://www.taxact.com/support/21802/20 ... in-program

Yeah...turbo Tax ask me the pertinent info, ask me how much money I contributed before 2022 and other stuff and doesn't penalize me. It figures it out that I simply withdrew my contributions but Tax Act doesn't. At least, I don't see it. Maybe I am missing something? Just trying to save $30 using Tax Act instead of Turbo Tax.
Thanks

Did you read through the link above? Where did you get stuck in those step by step directions?

Left my job a couple years ago at age 57 and rolled over my Roth 403b (TransAmerican account) into an existing Fidelity Roth IRA that was open for more than 5 years. I have the detailed paperwork from my Roth 403B showing the amount and dates of my original contributions that were already taxed. Ok...I am under 59 1/2 and I made an early distribution from this Roth IRA that I rolled my 403b money into. I did not exceed my already taxed original contribution amount so I shouldn't be taxed for the distribution. I also shouldn't be penalized for an early distribution because I withdrew the Roth 403B and rolled the entire amount into a Roth IRA that was open for more than 5 years and again...it didn't exceed my original contributions. I'm usin...

I very much understood the kids wanting their Mom back in the manner you describe above. Depression, anxiety and burnout and make someone seem like a ghost to their loved ones.

I have a friend who is a mattress manufacturer. I would advise that you see if you can find one locally to you or in your state. It's a world of difference from the big brands and stands the test of time. We live on a boat, so for us it was this or make our own without really knowing what we were doing. We made three trips to the showroom, trying out different mattresses. We were replacing our mattress because DH was having shoulder and back pain, so he got to choose the main mattress (natural latex), and I chose the secondary mattress (firm memory foam). Honestly, the natural latex has been amazing. It has been several years (although we did not live onboard full time for a few years in the middle) and it still feels like new. The memory ...

arf1410 wrote: ↑Fri Mar 10, 2023 3:58 pm

Capricorn212 wrote: ↑Fri Mar 10, 2023 2:43 pm

celia wrote: ↑Fri Mar 10, 2023 2:06 pm 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.

did you mean to say the entire estate was about $500,000? your other bogelheads posts arent consistent with someone who will inherit $100 million+

On the other hand, if it was $500M, $250k might make sense for executor's fees...

I’ll just stick with the CCR and UCR. Worst case scenario even if I don’t track any spending the grocery stores and wholesale clubs falls to 2% which is what it would be anyways with the Costco Citi visa. And then the online shopping drops from 5.25 to 3% as well, correct,? Once you've reached the $2500 quarterly limit the CCR drops to 1.75% for everything with Platinum Honors. Thanks for chiming in Eno Deb. I may be mistaken, but doesn't it drop down to the category base (5.25 to 3%; 3.5 to 2%; 1.75 to 1%)? If not, then it does appear that I am going to have to be tracking categories/spending, which I really don't care to do personally. I am making my cheat-sheet Xls spreadsheet in anticipation of which card for what. I was simply going t...

Do you have a W2 job? I find it more convenient to adjust the W4 form than to deal with estimated taxes.

Check the websites. Some of those museums and galleries will be hosting bands or presentations. If it holds people, it may well be hosting something. The bigger concern is moving around. From where you are, you can walk to the Capitol, Lady Bird/ Town Lake and Zilker Park, so that is nice. There is a nice history museum near the capitol.

You can probably find some good music mid-afternoon or a conference topic of interest to you, if music isn't your thing.

Enjoy yourself, just know that it might take more patience than another time of year.

E trade supports Roth contributions, but last year stopped supporting mega backdoor Roth.

It sounds like this would put you right in the edge of the 4% guideline (excluding home equity). How do you feel about it from that perspective?

My in laws upsized in retirement. They are pretty happy with the decision. Probably regret not getting a bigger garage, but their eldest ended up buying a house with several acres not too far away, so they keep the show car there on it's trailer. Gave up wheel to wheel before the move.

I would either want an exit plan or a ground floor suite that I could age into.

One advantage to doing this before retirement is that you could choose to work a few more years if the renovation takes more than expected or the expenses change more than expected.

My parents are making some financial moves that are raising my eyebrows... Should I but out or speak up? They recently sold their home and retired with about 300,000 to live on. They are early 60's and *extremely* frugal. They aren't very savvy at investing (obviously, or they would have more money) but will literally skip meals to save a buck. So they thought they could downsize, get part time jobs and stretch it. My dad has VA benefits and a few classic cars to add approx 25k to their net worth. They did downsize into a small house, paid off, in rural GA. They moved into a "compound" of sorts that consists of a clump of all their old military friends all living in houses in the same neighborhood near a lake. All of them getting...

I don't think I can help you understand this concept if you cannot acknowledge that tax protected growth is worth something. Are you saying that tax protected growth is always worth more than balancing the tax burden? No. And I understand the concept of blending. But I'm trying to provide a simplified situation with an obvious answer to make a point. I am going to spend some more time thinking about how this works in the lower tax brackets though because the 0% capital gains bracket is awfully generous and there is little tax drag in a taxable account when you're in low brackets. A retirement in the 0% capital gains bracket, at least for singles, sounds pretty unpleasant to me. It also seems unusual for someone with so little in assets/ret...

They don't see it as a mess, so I am not at the "call a lawyer" stage. They vehemently defend the decision and insist Tina is a genius and super generous to them. Dad gave me this really bizarre talk a few weeks ago about how "he has the right to spend every last dime he made before he dies and nobody including his kids are entitled to it"... Seemed to me like a gigantic coping mechanism on his part, more so than malice towards me. Personally I cannot respect someone who leaves nothing for their children . But didn't have the guts to say that to my own father... alas... it is his money. What an odd attitude. Once a parent has successfully launched all of their children, why shouldn't they consider other benefactors, inc...

They don't see it as a mess, so I am not at the "call a lawyer" stage. They vehemently defend the decision and insist Tina is a genius and super generous to them. Dad gave me this really bizarre talk a few weeks ago about how "he has the right to spend every last dime he made before he dies and nobody including his kids are entitled to it"... Seemed to me like a gigantic coping mechanism on his part, more so than malice towards me. Personally I cannot respect someone who leaves nothing for their children . But didn't have the guts to say that to my own father... alas... it is his money. What an odd attitude. Once a parent has successfully launched all of their children, why shouldn't they consider other benefactors, inc...

I don't think I can help you understand this concept if you cannot acknowledge that tax protected growth is worth something. Are you saying that tax protected growth is always worth more than balancing the tax burden? No. And I understand the concept of blending. But I'm trying to provide a simplified situation with an obvious answer to make a point. I am going to spend some more time thinking about how this works in the lower tax brackets though because the 0% capital gains bracket is awfully generous and there is little tax drag in a taxable account when you're in low brackets. A retirement in the 0% capital gains bracket, at least for singles, sounds pretty unpleasant to me. It also seems unusual for someone with so little in assets/ret...