Search found 1978 matches

by ExitStageLeft
Thu Feb 18, 2021 2:51 pm
Forum: Personal Investments
Topic: Personal Investment Portfolio Huddle
Replies: 45
Views: 4889

Re: Personal Investment Portfolio Huddle

Welcome to the forum! I am a recent FERS retiree, as of this week. Not exactly FIRE at age 58, but it feels great nonetheless. Answers to your questions below: ... Questions : 1. I was inspired by the advice of Warren Buffett reported plan for his wife's finances upon his death, 90% stocks - 10% bonds. Do you recommend any other allocations or approaches? It's a good allocation for the start of your career. It's appropriate to increase your bond allocation as you get closer to retirement. 2. When you review this, what stands out the most? What is your first reaction? What concerns you? What is good? No red flags, but I would reconsider keeping bonds in taxable. 3. What are some questions you recommend I bring to my initial Vanguard Personal...
by ExitStageLeft
Tue Feb 02, 2021 3:34 pm
Forum: Personal Investments
Topic: Placement of Asset Allocation - T-IRA vs. Roth
Replies: 46
Views: 3609

Re: Placement of Asset Allocation - T-IRA vs. Roth

The topic the OP raised is not asset allocation, but asset location. Consider $10k invested evenly between a Roth IRA and a traditional IRA, that is $5,000 in each. Further, let's assume for simple math that the desired asset allocation is 50% stocks and 50% bonds. In a mirrored portfolio, each account would hold $2,500 in stocks and $2,500 in bonds. The earnings or losses would be identical between the accounts, and the growth in the traditional IRA would eventually be subject to income tax at the future marginal rate. If instead the Roth IRA holds only stocks and the traditional IRA holds only bonds then the earnings or losses would be quite different. If the stocks yield their expected return the growth in the Roth account will be substa...
by ExitStageLeft
Tue Feb 02, 2021 3:03 pm
Forum: Personal Investments
Topic: Is our 75/25 AA too conservative? FI at 50 with large CRE investment and decent pension and SS.
Replies: 12
Views: 2260

Re: Is our 75/25 AA too conservative? FI at 50 with large CRE investment and decent pension and SS.

My commercial real estate experience is nil, but with one asset forming such a large part of the portfolio I would contemplate black swan events that could throw a money wrench into your retirement plans. How would you cope if the tenant defaults or the facility is destroyed in a natural disaster? That's a lot of eggs to keep in one basket and I would want to make sure I had taken into account the impact of the basket being wiped out. Would you consider a different allocation in that event?
by ExitStageLeft
Tue Feb 02, 2021 2:44 pm
Forum: Personal Investments
Topic: Should I sell?
Replies: 7
Views: 678

Re: Should I sell?

7 years ago after graduating college I was gifted some shares of a MegaCap tech company by my parents to use towards a down payment on a house. These shares are currently worth 16% of my NW and would amount to somewhere around half of my down payment. I think I will be looking to buy in the next 2-3 years. The stock is very close to ATH's at the moment. Part of me thinks I should sell now, since the common wisdom is to not have money invested that you will need in the next few years. The other part of me is screaming that I am trying to time the market top and I shouldn't sell until I am ready to buy. Which side of me is right? It's never a bad thing to fix a prior mistake. If you are thinking of selling because you know that the stock wil...
by ExitStageLeft
Tue Feb 02, 2021 1:26 pm
Forum: Personal Investments
Topic: Placement of Asset Allocation - T-IRA vs. Roth
Replies: 46
Views: 3609

Re: Placement of Asset Allocation - T-IRA vs. Roth

I view it as having my tax-deferred be weighted towards the assets that have a lower expected return (i.e. bonds) and Roth accounts being weighted towards assets with the higher expected return. Over time, if the assets return as expected then the overall tax burden will be lower. The difference isn't huge, but adds up over the years due to the magic of compounding. The best way to satisfy yourself of that is to work up a spreadsheet that compares the growth and tax burden over the years you are invested. Keeping in mind that we remain invested while in retirement, that time frame could be 50+ years. The key is the difference in yield between the high expected return and the low expected return. If the return of stocks and bonds is the same...
by ExitStageLeft
Tue Feb 02, 2021 12:28 pm
Forum: Personal Investments
Topic: Recommendations for inheritance
Replies: 10
Views: 1860

Re: Recommendations for inheritance

If you have the ability to contribute to a 401 or other qualified retirement plan, a good strategy is to increase contributions to the maximum. Then spend down the windfall as needed to cover household expenses. That's probably what you intend, I just wanted to state it a little more explicitly. Max out the annual opportunity to contribute to tax-advantaged accounts. A mix of Roth and tax-deferred is usually best, but if you give us more info on your present portfolio and income we could offer more targeted advice.
by ExitStageLeft
Tue Feb 02, 2021 12:15 pm
Forum: Personal Investments
Topic: Asset Allocation Advice
Replies: 5
Views: 440

Re: Asset Allocation Advice

We're both 58 and contemplating cutting back to two days each in the next few years. We're both healthy and active. Between the two of us, we have: $2,100,000 in rollover IRAs and SIMPLES $125,00 in emergency cash house worth roughly $700,000 with $300,000 left on a mortgage (that produces roughly $20K/year) business just professionally valued at $1,000,000 (of course it's worth what the check says it's worth at the time of sale) business debts of roughly $150,000 from converting short term equipment loans to EIDL. Although I did play the individual stock game early on, for the bulk of our careers, we've just invested in Vanguard target 2025 (VTTVX). We have about $100K in cash. I'd planned on just adding it to VTTVX, but am now wondering ...
by ExitStageLeft
Mon Feb 01, 2021 10:54 am
Forum: Personal Investments
Topic: Help in how can I invest a settlement money!?
Replies: 22
Views: 2251

Re: Help in how can I invest a settlement money!?

Open Roth accounts for both your wife and yourself asap. Contribute $12K each (2020+2021), and do it every year afterwards (using settlement money). Given your current salary and number of people in your household, 401k is not that urgent. Thank you for your response, why 401k is not urgent right now due to my salary and number of people?. Could you explain this a little more?. Thank you in advance! Your salary is quite low. After deductions, you are in 10% tax brackets($19,751 to $80,250 for MFJ), so not much tax savings there. I think the distinction infotrader is making is between saving in tax-deferred (the 401k) versus saving in a Roth or taxable account. If you save in the 401k, that amount is taken off of your reported earnings and ...
by ExitStageLeft
Fri Jan 29, 2021 8:23 pm
Forum: Personal Investments
Topic: Help in how can I invest a settlement money!?
Replies: 22
Views: 2251

Re: Help in how can I invest a settlement money!?

… It's too late to add more money for 2020. Unlike IRAs (where you can contribute for a given year, up to April 15 the following year), 401K contributions go strictly by calendar year. I'll expand a little more on this, based on my understanding of 401k accounts. Keep in mind that every plan is different so check with your employer to be sure you understand the details of your plan. The 401k contribution is taken out of your wages each pay period and deposited into your account. You may be able to set it up to make the contribution as large as you can, but it usually cannot exceed a certain amount of each paycheck. If your employer matches your contribution, you may want to arrange it so your contribution is stretched out over the entire y...
by ExitStageLeft
Thu Jan 28, 2021 2:35 pm
Forum: Personal Investments
Topic: Help in how can I invest a settlement money!?
Replies: 22
Views: 2251

Re: Help in how can I invest a settlement money!?

Welcome to the forum! It's a new year and time for a new start. Here's what I would do in your shoes: 1) Increase my contribution in the 401k to the maximum the plan allows. That should be $19,500 unless your employer has some other limitation. 2) Contribute $6,500 in a Roth IRA for 2020, and $6,500 in a Roth IRA for 2021. 3) Do the same for your spouse, Roth IRA contributions for both years. 4) If spouse works and has a retirement plan, contribute as much as possible in that 401k. The money for the Roth IRA contributions comes from the settlement. The 401k contributions come from your take-home income so you'll have to offset that to cover your day-to-day expenses by spending down some of the settlement. The idea is to shift as much money ...
by ExitStageLeft
Thu Jan 28, 2021 2:09 pm
Forum: Personal Investments
Topic: Portfolio Review
Replies: 6
Views: 875

Re: Portfolio Review

Welcome to the forum! You're doing an awesome job and frankly you could do nothing to change your asset locations and be just fine. If you do want to convert to a three-fund portfolio you will likely trim a little off your current fund expense ratios. But the savings will be slight so don't do it based on the savings alone. If the simple target date funds work for you then there is no need to change. I see the growth of the taxable portion as being your primary focus. You have more than enough room in tax-deferred to keep all your bond allocation there, allowing you to keep your taxable as tax-efficient as possible. Just VTSAX and VTIAX or their equivalent from other fund families. With the amount you are saving every year, I agree that upp...
by ExitStageLeft
Thu Jan 14, 2021 11:14 am
Forum: Personal Investments
Topic: 2 years cash 8 years bonds for retirement
Replies: 13
Views: 1751

Re: 2 years cash 8 years bonds for retirement

Hello, Looking for a bogleheads podcast with Rick where the guest was sharing on having a 10 year conservative portfolio(2 years in cash and 8 years of bonds for spending) and keeping the remaining balance in index funds working hard. Could anyone direct me to this podcast, I can’t seem to remember which one it is. Made sense to me if most indexes don’t lose money over a 10 years period is as conservative as basic historical records would require. Please advise if you remember which podcast and who the guest was. Thank you. Welcome to the forum! Sorry I can't point you to the podcast but I wanted to check your work status. The advice is great for some in retirement or getting close. If you're still early in your career that's a very conser...
by ExitStageLeft
Thu Jan 14, 2021 11:12 am
Forum: Personal Investments
Topic: Help with Portfolio
Replies: 10
Views: 762

Re: Help with Portfolio

Just be sure to tilt to the sector that will do really well over the next year. You don't want to buy into the one that flounders.

Good guidance on sector performance here: https://topforeignstocks.com/wp-content ... Page-1.png

Sarcasm aside, you could stay in total market index funds and get all the growth. You won't miss out, but you also won't increase your risk.
by ExitStageLeft
Wed Jan 13, 2021 6:58 pm
Forum: Personal Investments
Topic: Three Fund Portfolio vs. Target Date Across Four Accounts
Replies: 15
Views: 1928

Re: Three Fund Portfolio vs. Target Date Across Four Accounts

Welcome to the forum! With a taxable account as part of your portfolio it makes sense to convert to a three-fund so that you can ensure your taxable holdings are as tax-efficient as you can. As to your options in the 401k, it would help us greatly of you can update your original post with the fund expense ratios. Some 401k plans have additional fees so we can't assume that what's available to you has the same ERs as the retail funds do. Why the large imbalance between Roth 401k and taxable contributions? I would be trying to max out the Roth 401k rather than saving so much in taxable. There can be plenty of reasons to build a strong taxable base in your portfolio but you're missing out on a lot of tax-free growth. Note that employer contrib...
by ExitStageLeft
Tue Jan 05, 2021 10:57 am
Forum: Personal Investments
Topic: I need help with a plan and I'm procrastinating
Replies: 3
Views: 480

Re: I need help with a plan and I'm procrastinating

Welcome to the forum! My condolences to your wife for her loss. The Bogleheads Wiki has a wealth of information, and I'll be the first to admit that it is a little overwhelming at times. But an excellent place to start is the introductory section at https://www.bogleheads.org/wiki/Getting_started There are several excellent videos linked under the Investment Philosophy section that are a wonderful way for you and your wife to acquaint yourselves with the Boglehead philosophy. Before sharing any additional information I suggest you consider contacting the forum admins and changing your user name. I encourage people to share some of their financial details on this site but the necessary precaution when doing so is to maintain some anonymity. ...
by ExitStageLeft
Wed Dec 30, 2020 7:34 pm
Forum: Personal Investments
Topic: Mom's Finances
Replies: 22
Views: 2676

Re: Mom's Finances

I would follow through on all the transfers or purchases of bond funds straight away. There's nothing to be gained by DCA when going from cash to bonds.

I would also look into what her taxes are going to be, particularly if the 8% return on the private investment comes as income rather than capital gains. If you'll be the one filing preparing those taxes it would be wise to plan ahead and get her taxable assets to be as tax-efficient as possible.
by ExitStageLeft
Wed Dec 30, 2020 7:12 pm
Forum: Personal Investments
Topic: Help Me Decide How and If To Retire Early
Replies: 24
Views: 4465

Re: Help Me Decide How and If To Retire Early

I see this is only your second post, so let me say "Welcome to the forum!" I'll echo other commenters that suggest you get a firmer grasp on your expenses, present and anticipated. Knowing just how much discretion you'll have with your planned $100k a year may make it easier to decide when to retire. I like the idea of having ten years worth of living expenses in bonds or cash. That works out to 40% of the portfolio for me. Depending on what the 401k target retirement funds have for an allocation glide path, that's about where you are too. Using the Vanguard target date funds as a model, I assume the 2025 fund has a 60/40 allocation whereas the 2035 fund has a 75/25 allocation. Grinding through the math yields a total asset alloca...
by ExitStageLeft
Tue Dec 29, 2020 1:25 pm
Forum: Personal Investments
Topic: selling off principal in retirement
Replies: 5
Views: 516

Re: selling off principal in retirement

Hello, I have a hypothetical question: if one retires at age 60 with e.g. 1 million invested in stocks, and sells enough stock every quarter to meet expenses, how does one deal with volatility? E.g. let's say your stock portfolio takes a nose-dive like in early 2020 (due to covid-19), and then you sell, and the stock portfolio recovers, wouldn't you be losing a greater amount of your stocks because you are selling to meet current expenses in a down market? How does one limit losses in this scenario? Welcome to the forum! The typical way to avoid selling at a significant loss is to sell beforehand and put the money in bonds. A common recommendation is to have ten years worth of expenses in bonds or other fixed-income assets, or cash. If you...
by ExitStageLeft
Mon Dec 28, 2020 4:44 pm
Forum: Personal Investments
Topic: AA shift - Retiree Asset allocation
Replies: 4
Views: 488

Re: AA shift - Retiree Asset allocation

My wife and I are looking to retire in a couple months and like the equity glide plan, aka the Kitces bond tent. Our ultimate allocation will be 75/25 but we're entering retirement at 60/40. We have pensions in addition to SS so are comfortable with that allocation.

You're a better man than I if you only monitor a couple times a year. You've got good discipline so I have no worries that you'll be fine.
by ExitStageLeft
Mon Dec 28, 2020 4:17 pm
Forum: Personal Investments
Topic: Portfolio Evaluation
Replies: 5
Views: 579

Re: Portfolio Evaluation

Welcome to the forum! My answers to your questions are in below below: … Questions: 1. Would it be wise to reallocate all bonds into his 401k instead of being splits between 401k's and Roth's? It would make rebalancing much easier, plus that allows most of my growth to be in tax free accounts (his and her Roth's) which sounds ideal. Yep. For both those reasons . 2. My company recently opened the Roth 401k option. I don't want to take the tax hit from converting the entire amount, and I don't know where our income or tax rates will be around retirement age (27 years from now). I want both tax-deferred and tax free accounts when that time comes to have options. I am leaning towards putting all my 401k contributions going forward into the Roth...
by ExitStageLeft
Mon Dec 28, 2020 2:53 pm
Forum: Personal Investments
Topic: Investment Planning - Thoughts/suggestions
Replies: 8
Views: 692

Re: Investment Planning - Thoughts/suggestions

… Thank you @Exitstageleft - Would you recommend a muni bond specifically? I looked at several of them and even Jack in his videos suggested that. However I am not sure which specific one to pick from Vanguard. - Thank you for this plan to simplify. I thought I was already simplified, but this is better and and we will be contributing to Roth also. I'm not an expert by any stretch, but I would prefer to buy an index bond fund in a tax-deferred account rather than hold muni bonds in taxable. The problem with having bonds in taxable when you have room in tax-deferred is that the tax-deferred is then filled with higher-yielding equities. So the growth on equities in tax-deferred will be taxed as income when ultimately withdrawn. The same grow...
by ExitStageLeft
Wed Dec 23, 2020 6:11 pm
Forum: Personal Investments
Topic: Portfolio Review and Help with Diversification
Replies: 6
Views: 580

Re: Portfolio Review and Help with Diversification

Welcome to the forum! You are actually very diversified by investing in total market index funds. You could further diversify by putting some of that in international index funds. You and your spouse have ridden out some market gyrations and if you're comfortable remaining 100% equities then you certainly can. You've got a large nest egg and if you continue working for five more years then you'll likely have more than enough to carry you through retirement. With the house value as a fall-back option, you have the means to get through just about any worst-case scenario. That is provided you don't succumb to the behavioral pitfalls that can severely undermine any investment plan. If we have a decade of zero real return in stocks, perhaps coup...
by ExitStageLeft
Wed Dec 23, 2020 5:41 pm
Forum: Personal Investments
Topic: Investment Planning - Thoughts/suggestions
Replies: 8
Views: 692

Re: Investment Planning - Thoughts/suggestions

You may want to consider divesting of the VBTLX in the taxable account. It returns most of its yield as income rather than capital gains. Granted when the return is low it doesn't amount to much income but if this is to held long-term you would lighten your tax load by making the taxable account more tax efficient. Municipal bonds are a good choice when you have to have bonds in taxable, but if you have room in your tax-deferred accounts the easiest thing to do is sell the bonds in taxable and buy them in the 401k. I'm assuming that you'll make Roth IRA contributions for you both in 2020. You could consolidate from the old 401k into the new, but you may want to hold off on doing that until you know what your new 401k fund expenses are. You ...
by ExitStageLeft
Wed Dec 23, 2020 4:48 pm
Forum: Personal Investments
Topic: Looking for 3-fund portfolio advice
Replies: 7
Views: 790

Re: Looking for 3-fund portfolio advice

Check your plan documents to see what the funds are charging you in expenses. Some 401k plans at smaller companies push the costs onto the employee investors, resulting in fee surcharges. If you're one of the lucky ones your cost is only the fund manager's expenses, ie the retail expenses for the funds.
by ExitStageLeft
Tue Dec 22, 2020 10:00 am
Forum: Personal Investments
Topic: Mid-Career Portfolio Check-up
Replies: 4
Views: 968

Re: Mid-Career Portfolio Check-up

Congratulations on being good savers and keeping your portfolio simple. I would do as noted above and make his traditional IRA disappear. Neither of you can claim a tax deduction for a traditional IRA contribution, so excess funds should be saved as Roth first and taxable second. If you are at all deep into the 24% federal income tax bracket then your income is close to or exceeds the cutoff for direct Roth IRA contributions. This leaves you the Backdoor Roth method, which is the only way to get funds into Roth IRAs. I would do it for both if funds are available, even prioritizing that over maxing the TSP contributions. Overall, you'll be fine continuing with your portfolio as it is. But you can make a few minor changes that will result in ...
by ExitStageLeft
Mon Dec 07, 2020 11:17 am
Forum: Personal Investments
Topic: Vanguard index vs TSP
Replies: 39
Views: 4481

Re: Vanguard index vs TSP

This is just a quick "thank you" to everyone for this discussion. I'm retiring next month and had not fully realized how cumbersome the process is with TSP if you want to do Roth conversions. Granted, my wife's 401k and 457b aren't any easier to access but the plan is to roll those over into her tIRA at Vanguard tout suite.
by ExitStageLeft
Mon Dec 07, 2020 10:57 am
Forum: Personal Investments
Topic: Portfolio Review - Retired and don't need withdrawals
Replies: 5
Views: 1148

Re: Portfolio Review - Retired and don't need withdrawals

Good luck assisting your wife's family. While it may go against most Bogleheads' way of thinking, doing nothing should be one of the options. At least to the extent that the immediate needs of the FIL are addressed.

Beyond that it seems good advice to consult a WA estate attorney. I would look into whether it makes sense to convert some of the tax-deferred assets to Roth. Even if it has not tax benefit to the in-laws, it could make a difference to the heirs. I would want to simplify the holdings to facilitate probate.
by ExitStageLeft
Mon Dec 07, 2020 10:46 am
Forum: Personal Investments
Topic: Got lump sum from pension, Traditional vs Roth IRA?
Replies: 7
Views: 596

Re: Got lump sum from pension, Traditional vs Roth IRA?

At the very least, consider delaying the Roth conversion until 2021 when you will be in a new tax year.
by ExitStageLeft
Mon Dec 07, 2020 10:37 am
Forum: Personal Investments
Topic: I feel like I could (afford to) retire now...
Replies: 33
Views: 5788

Re: I feel like I could (afford to) retire now...

Congratulations on your upcoming retirement! If you haven't availed yourself of it yet, check out the web site https://opensocialsecurity.com It has an option at the top of the page to input additional information, which allows you to compare the optimization using different mortality tables which may help in the decision process of when each of you should claim SS benefits. Another thing to look into is the future tax savings you will likely incur if you undertake Roth conversions over the next few years. DW and I are in a similar boat in that nearly all of our retirement savings is in tax-deferred with only a trivial amount in Roth IRAs. The years you are drawing off the taxable account means your AGI will be de minimus and that is an exc...
by ExitStageLeft
Mon Dec 07, 2020 10:05 am
Forum: Personal Investments
Topic: Any Downsides to Consolidate an Individual tIRA into a Government 457b Account
Replies: 6
Views: 319

Re: Any Downsides to Consolidate an Individual tIRA into a Government 457b Account

This table never seems to get old:

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Transferring a traditional IRA into the 457b will not actually be consolidating, as noted by the commenters above. It would make sense to do so if the funds and fees are comparable, in that you only have one custodian to deal with. But the funds rolled in do not gain the benefits of 457b contributions and must be tracked as a separate account (see IRS footnote 4).
by ExitStageLeft
Thu Dec 03, 2020 2:13 pm
Forum: Personal Investments
Topic: At what milestone did you feel secure?
Replies: 156
Views: 20712

Re: At what milestone did you feel secure?

Hit the two-comma club and felt really secure.
Started actually thinking about retirement and realized $1M isn't as much money as it used to be, felt insecure.
Found Bogleheads forum and found the light and wrote an IPS. Felt secure.
Saw the 2020 stock market plunge, felt insecure.
Stuck to IPS, rebalanced at bottom and now after the market rebound we are better than ever. Feeling secure.
Will retire in six weeks. I guess that means we're feeling secure?
by ExitStageLeft
Thu Dec 03, 2020 1:23 pm
Forum: Personal Investments
Topic: Another Portfolio Review as we begin withdrawal phase.
Replies: 5
Views: 931

Re: Another Portfolio Review as we begin withdrawal phase.

Thanks Exitstage, In your opinion, what % In Bonds in Asset Allocation or how many years of living expenses will you suggest a 65 yr old about to start retirement ? Dear wife and I are planning on retiring in January. I am 58 and she is 57. We are presently at 60% stocks and 40% bonds, but also have pensions and social security to look forward to. We are contemplating whether to be more conservative for our initial retirement, which would have us shifting to a 50/50 allocation. We would spend down bonds those first years, gradually moving towards our long-term allocation. We're still undecided on that but given our pensions we will probably settle on 70% stocks and 30% bonds. This concept is described as a "bond tent" and has bee...
by ExitStageLeft
Wed Dec 02, 2020 12:38 pm
Forum: Personal Investments
Topic: Another Portfolio Review as we begin withdrawal phase.
Replies: 5
Views: 931

Re: Another Portfolio Review as we begin withdrawal phase.

I don't think there's anything wrong with your plan at all. You've got the funds to carry through any rough market conditions and the wherewithal to keep to your investment plan in spite of market uncertainty. I would give some consideration to doing Roth conversions on some of the tax-deferred balance. For MFJ you don't hit the IRMAA premium increase until you bump up to appx $170k in gross income. So if your spending plan is well below that then you could move some of the tax-deferred into Roth IRAs. The major reason for doing so is to ensure that the tax-deferred balance stays low enough that when you turn 72 you aren't faced with substantial RMDs that kick you up to the next tax bracket. But there are other reasons to have Roth assets, ...
by ExitStageLeft
Tue Dec 01, 2020 2:00 pm
Forum: Personal Investments
Topic: Can I max out $19.5K pretax to both a 403b and TSP at the same time?
Replies: 12
Views: 1613

Re: Can I max out $19.5K pretax to both a 403b and TSP at the same time?

Spirit Rider wrote: Mon Nov 30, 2020 2:24 pm
ExitStageLeft wrote: Mon Nov 30, 2020 1:21 pm The Thrift Savings Plan is treated like a 401(a) plan.
The TSP is not treated like a 401a* plan. Employee elective deferrals are not allowed in a 401a plan. The TSP is a 401(k) Cash or deferred arrangement.

Getting back to the OP, both 403b and TSP deferrals are subject to the employee deferral limit (2020 = $19.5K).

The 457b contribution limit is equal to, but separate from the employee deferral limit.

*All 401 - Qualified pension, profit-sharing, and stock bonus plans including 401(k) plans, are subject to subsection 401(a) Requirements for qualification.
I am properly corrected, thank you.
by ExitStageLeft
Mon Nov 30, 2020 1:21 pm
Forum: Personal Investments
Topic: Can I max out $19.5K pretax to both a 403b and TSP at the same time?
Replies: 12
Views: 1613

Re: Can I max out $19.5K pretax to both a 403b and TSP at the same time?

The Thrift Savings Plan is treated like a 401(a) plan: https://www.law.cornell.edu/uscode/text/5/8440#

As noted above, the 457(b) annual $19,500 contribution limit is in addition to the elective contribution limit for the qualified plans identified above.

So an individual participating in both plans can contribute up to $39,000 this year, on top of whatever the employer contributes.

Edit to add: There are two types of 457(b) plan, governmental and not. The governmental 457(b) is an excellent option. Non-governmental plans are treated differently in that the assets are held by a private entity and are not protected from bankruptcy.
by ExitStageLeft
Mon Nov 30, 2020 1:01 pm
Forum: Personal Investments
Topic: Portfolio review for tax efficiency, please
Replies: 3
Views: 428

Re: Portfolio review for tax efficiency, please

I agree, it sounds to me like your concern has to do with what your future taxes will be, when you are both withdrawing from your tax-deferred accounts. When it comes to that stage, you will likely have three types of assets: tax-deferred (401k and traditional IRA), tax-free (Roth IRA), and taxable (brokerage accounts, savings accounts). Folks planning for retirement often plan to minimize taxes by utilizing all three types of accounts at key stages. Depending on the size of the nest-egg and how it is saved, you will likely have a lower tax rate in retirement than you have right now. If that is the case it makes sense to make use of the tax-deferred 401k, perhaps even increasing your annual contribution. The small details matter when doing ...
by ExitStageLeft
Mon Nov 30, 2020 12:45 pm
Forum: Personal Investments
Topic: Newbie investor - sanity check
Replies: 7
Views: 733

Re: Newbie investor - sanity check

Welcome to the forum!

As others have noted you are doing great. You can fine tune but at this stage getting free of debt and maintaining a high savings rate will serve you well.

You might be surprised at what is lurking in your 401k plans. If you update your post to show what is available you could get much better advice.

Actually I'll put in a plug for a proper posting using the format in the Asking Portfolio Questions thread. Knowing your location state and your marginal tax rate (Fed and state) will also be a great help.
by ExitStageLeft
Mon Nov 30, 2020 12:36 pm
Forum: Personal Investments
Topic: Does it make sense to purchase a SPIA. With my TIRA.
Replies: 36
Views: 3698

Re: Does it make sense to purchase a SPIA. With my TIRA.

I'm only 58 but will be retiring next year, so I'm giving topics like SPIA some consideration for the future. For our needs we don't see an SPIA until we are much older, perhaps approaching 80. An SPIA is great at simplifying the wealth management, but it comes with some risks. Depending on your need to leave an estate it could be a good choice. If you have a spouse or heirs, you may want to consider other options. The prevailing interest rate at the time of purchase will greatly affect the financial calculation. But if your interest is for simplicity or for longevity insurance then it may still make sense even with rates presently low. If your primary interest is out of concern for RMD complexity, you would probably be better served by acq...
by ExitStageLeft
Fri Nov 27, 2020 5:33 pm
Forum: Personal Investments
Topic: IRA/401K Contribution Limits
Replies: 8
Views: 703

Re: IRA/401K Contribution Limits

That is correct, both qualified retirement accounts (401k, 403b, etc) and individual retirement arrangements are limited to earned income if it is lower than the respective account contribution limit.

Edit to add: There isn't a prohibition on saving the same earned income in both types of account. One could in theory contribute to a Roth 401k with after-tax dollars and also contribute to a Roth IRA. The issue is if the 401k contribution is tax-deferred then the income itself is deferred, thus reducing the amount of income earned that year.
by ExitStageLeft
Mon Nov 23, 2020 1:50 pm
Forum: Personal Investments
Topic: Does portfolio optimization work?
Replies: 16
Views: 2209

Re: Does portfolio optimization work?

There is no denying the allure of tools such as Portfolio Visualizer and Portfolio Charts.

But you already know the answer, I suspect. Nobody knows nothing. You can optimize your portfolio in hindsight, but what does it tell you about small cap value in Q1 or Q2? Will international outperform US total market or no? Will the gold bugs be proven right, or are we in for something worse that the great depression?

I don't think the exercise will actually help, despite our inclination to believe it does.
by ExitStageLeft
Mon Nov 23, 2020 11:45 am
Forum: Personal Investments
Topic: Portfolio Check and Roth/Trad TSP Question - New Questions!
Replies: 38
Views: 4186

Re: Portfolio Check and Roth/Trad 401k Question

First off, awesome job having your financial life together at age 30. I was still spending like a drunken sailor at that age. The decision of traditional versus Roth savings is an easy one when your tax situation places you at either of the extremes. But there is a broad valley between those extremes, and in that no-man's land it becomes all but impossible to discern the best choice. The most important thing is to keep saving and keep refining your inputs to see whether you should adapt your retirement saving tax strategy. If you are a FERS employee and will be retiring with a FERS pension there is a very good chance that your marginal tax rate will be higher in retirement than it is now. But there's a lot of time to pass before that happen...
by ExitStageLeft
Tue Nov 17, 2020 1:41 pm
Forum: Personal Investments
Topic: 4 year portfolio check
Replies: 10
Views: 1305

Re: 4 year portfolio check

Welcome back. I would definitely simplify. The elegance of the three-fund portfolio is that it uses total market funds, so you don't have to worry whether you are picking the right sector fund. You get the total market return without the worry. It would help if you can post what the fees are in your 401k. Some plans have expenses much higher than the retail funds you have in taxable and the Roth IRA. If the fees are the same then I would give the portfolio a thorough cleansing. The only impediment is capital gains tax, so it could take a while to make the switch. I would strive for a portfolio that is easy to manage, with at least 25% of assets in bonds or other fixed income. Your 401k plan might have some other options beyond what you pres...
by ExitStageLeft
Thu Nov 05, 2020 12:59 pm
Forum: Personal Investments
Topic: Retirement Planning - Advice Sought
Replies: 4
Views: 819

Re: Retirement Planning - Advice Sought

There are plenty of Boglehead forum posters that have taken annuities such as yours. Assuming comparable return versus lump sum, the reasons to do it would be to reduce risk and hedge against outliving your money. The arguments against are the financial stability of the company and the erosion from inflation.

Many folks recommend buying SPIAs as you approach later retirement, say age 80 perhaps. Especially if there is a spouse. If there is a period of low rates, that makes SPIAs much less appealing.
by ExitStageLeft
Wed Nov 04, 2020 1:02 pm
Forum: Personal Investments
Topic: How to get more money into retirement accounts
Replies: 28
Views: 3714

Re: How to get more money into retirement accounts

Here are the things that seem obvious to me, in no particular otder:

Bump up emergency fund by 3 months worth of expenses. Keep it in a money market account or high yield savings account.
His 2020 Roth IRA - $6k
Her 2020 Roth IRA - $6k
His 2021 Roth IRA - $6k
Her 2021 Roth IRA - $6k
Increase 401k contribution at work. Spend down the remaining cash as needed to cover monthly expenses.

At your income and saving level you should look into the Saver's Credit, if you aren't already taking advantage of it.
by ExitStageLeft
Wed Nov 04, 2020 12:20 pm
Forum: Personal Investments
Topic: Received $10K gift. Should I open an taxable account?
Replies: 23
Views: 2244

Re: Received $10K gift. Should I open an taxable account?

Like many others, my workplace 401k is affordable and easy to manage. I know that for other folks their workplace plans are expensive and cumbersome. It may be that your work 401k falls into that category, which explains your reticence to contribute to the 401k.

What are the funds available in your 401k and how are the fees? That could influence the decision as to where to put the money. I agree with the others that if you have Roth space available you should use it before opening a taxable account.
by ExitStageLeft
Thu Oct 29, 2020 6:44 pm
Forum: Personal Investments
Topic: 457 - Leave it or convert it to IRA?
Replies: 14
Views: 1163

Re: 457 - Leave it or convert it to IRA?

wwtraveler wrote: Thu Oct 29, 2020 6:27 pm
I’m just seeing if there’s a real obvious answer of definitely do one or the other.
Definitely do one or the other! :D

I think the fact that your retirement horizon is pretty far off argues for rolling it into an IRA. One reason not to do that is if you are using the backdoor Roth method for saving in a Roth IRA.

Should the day come when you need to use these funds, you would have to pay a 10% penalty if making an unqualified withdrawal from an IRA. If that day is less than ten years away it makes sense to leave it with the existing custodian. If that day is more than ten years away then you will end up paying less in tax penalty than you will in paying custodial fees.
by ExitStageLeft
Fri Oct 23, 2020 1:39 pm
Forum: Personal Investments
Topic: Roth IRA Contributions
Replies: 6
Views: 753

Re: Roth IRA Contributions

Do read the link on tax-efficient fund placement. The idea is to reduce your overall taxes, both now and in the future. Your Roth IRA has the advantage of having all growth be tax-free, so it makes sense to fill it up with funds that have the highest anticipated return. That's also why the bonds should go in tax-deferred. Since growth will be taxed, you want to favor the funds with the lower anticipated return.

And welcome to the forum!
by ExitStageLeft
Fri Oct 23, 2020 1:33 pm
Forum: Personal Investments
Topic: Newbie Investing / Three Fund Portfolio Qs
Replies: 3
Views: 660

Re: Newbie Investing / Three Fund Portfolio Qs

Welcome to the forum! I think the biggest thing you can do now to affect your future wealth at retirement is to start saving in an IRA. You've taken the right course in my view to make all your 401k contributions tax-deferred. You should counter-balance that with a Roth IRA. Depending on your income level you may need to do the backdoor Roth method, but as long as you don't have a pre-existing traditional IRA it is relatively straightforward. To answer your detailed questions: 1) Put the cash in a Roth IRA. Use the backdoor Roth method if your adjusted gross income is over $124k. 2) ??? 3) Profit! Whatever is convenient. There is little substantive difference between the major index funds, although there are minute differences that are impo...
by ExitStageLeft
Fri Oct 02, 2020 6:25 pm
Forum: Personal Investments
Topic: Review My Portfolio
Replies: 12
Views: 1511

Re: Review My Portfolio

It may be worth exploring the possibility of a solo 401k for the side business, assuming you have no employees. That could allow you to save some of your earnings in your own 401k instead of the employer's.

With a low cost provider like Fidelity you could have access to a broad range of mutual funds with very affordable expense ratios.
by ExitStageLeft
Thu Oct 01, 2020 1:35 pm
Forum: Personal Investments
Topic: retirement in 6 months--need a plan!
Replies: 2
Views: 986

Re: retirement in 6 months--need a plan!

Congratulations and welcome to the forum! With retirement assets of $600k and an annual withdrawal of just over 1% you should be well positioned for your retirement. As you shift into retirement you'll want to maintain a firm grasp on your annual expenses. Also consider delaying social security until age 70 to provide greater benefit to your surviving spouse. See http://opensocialsecurity.com to analyze your best options. You'll be having to take RMDs from the 401a when you reach age 72. Do some estimating of future income and taxes to see if the RMDs might end up kicking you into a higher tax bracket. One way to mitigate that is to do Roth conversions in the years before taking Social Security. I would roll over the 401a to a discount brok...