Search found 7319 matches

by Bob's not my name
Sat Aug 19, 2017 8:00 am
Forum: Investing - Help with Personal Investments
Topic: Introduction and a Question: IRA vs 401k Tax benefits
Replies: 13
Views: 1081

Re: Introduction and a Question: IRA vs 401k Tax benefits

You have it right, except that you use AGI and gross interchangeably. AGI is less than gross. The difference may make no difference in your case with respect to TIRA deductibility, but note that your AGI excludes your 401k and 403b contributions and any FSA or health, dental, or disability insurance...
by Bob's not my name
Wed Aug 16, 2017 7:32 pm
Forum: Investing - Help with Personal Investments
Topic: TSP Loan vs Credit union Loan
Replies: 24
Views: 1351

Re: TSP Loan vs Credit union Loan

They're essentially equivalent. Either way, your wallet pays back the principal and interest. You are correct that your TSP comes out about the same whether you borrow from it or not. So the outcomes for both your wallet and your TSP are roughly the same. I think you are overlooking the fact that yo...
by Bob's not my name
Sun Jul 02, 2017 7:02 pm
Forum: Personal Finance (Not Investing)
Topic: Student loan payoff vs emergency fund or continue investing
Replies: 20
Views: 1911

Re: Student loan payoff vs emergency fund or continue investing

Thesaints wrote:see repaying the loan as an investment with a guaranteed 5.5% return.
Investment income is subject to a number of taxes for an investor in this bracket. Therefore, repaying the loan is like an investment with a guaranteed 10% return.
by Bob's not my name
Tue Jun 27, 2017 4:06 am
Forum: Investing - Help with Personal Investments
Topic: ESPP Question [Employee Stock Purchase Plan]
Replies: 6
Views: 744

Re: ESPP Question [Employee Stock Purchase Plan]

Awesome. Sell immediately every quarter. The tax issue is a red herring. See thefinancebuff's column on ESPP.

15% discount = 17.6% gain at each sale

Investment period is on average 1.5 months.

Annualized gain is 267%.
by Bob's not my name
Sat May 06, 2017 7:07 pm
Forum: Personal Finance (Not Investing)
Topic: Wife getting PhD, how to fund? (student vs 401k loan vs home equity, etc)
Replies: 50
Views: 3735

Re: Wife getting PhD, how to fund? (student vs 401k loan vs home equity, etc)

Because it's post-graduate these would start accruing interest immediately Post-graduate is what you do after the PhD. Look into whether those fees qualify for the Lifetime Learning Credit and make sure your income is below the eligibility phaseout. Also consider how you can get the most credits --...
by Bob's not my name
Sat Apr 22, 2017 3:22 am
Forum: Personal Finance (Not Investing)
Topic: Skip ESPP? - 5% discount on fix date with holding period of 6 months
Replies: 37
Views: 2991

Re: Skip ESPP? - 5% discount on fix date with holding period of 6 months

For a $107,000 annual salary and a 15% of gross salary limit on contributions (both numbers are assumptions), the quarterly contribution is: $107,000 x 15% x 0.25 = $4,000 Assuming the stock is dead flat for the six month holding period, the quarterly profit is: (5/95) x $4,000 - $30 transfer fee = ...
by Bob's not my name
Thu Apr 20, 2017 11:44 am
Forum: Personal Finance (Not Investing)
Topic: Skip ESPP? - 5% discount on fix date with holding period of 6 months
Replies: 37
Views: 2991

Re: Skip ESPP? - 5% discount on fix date with holding period of 6 months

You should always sell immediately. tfb's article on ESPPs explains why.
by Bob's not my name
Wed Apr 19, 2017 3:28 pm
Forum: Personal Finance (Not Investing)
Topic: Skip ESPP? - 5% discount on fix date with holding period of 6 months
Replies: 37
Views: 2991

Re: Skip ESPP? - 5% discount on fix date with holding period of 6 months

Using the $107,000 salary/$4,000 ESPP per quarter example listed previously, another way to ask this question is: "Am I comfortable holding $8k worth of company stock for the duration of my employment, in exchange for $170/quarter of free money?" My company's stock tracks the S&P 500 ...
by Bob's not my name
Sun Apr 16, 2017 1:43 pm
Forum: Investing - Help with Personal Investments
Topic: Should I contribute to traditional IRA?
Replies: 14
Views: 1457

Re: Should I contribute to traditional IRA?

I did not say that. I said OP has only one TIRA. His wife's situation is unequal but separate. By which I meant that your wife has two TIRAs, one of which is pre-tax, and large. And that her situation has no effect on your conversion of your IRA to Roth. The I in IRA stands for individual; your IRA ...
by Bob's not my name
Sat Apr 15, 2017 6:42 am
Forum: Personal Finance (Not Investing)
Topic: Skip ESPP? - 5% discount on fix date with holding period of 6 months
Replies: 37
Views: 2991

Re: Skip ESPP? - 5% discount on fix date with holding period of 6 months

A program this stingy is hard to make a case for. Without a holding period, the 5.26% immediate return becomes about 50% annualized, because your payroll deductions are on average 1.5 months before purchase. The six-month holding period nixes that though, since your money is willy nilly invested for...
by Bob's not my name
Wed Apr 12, 2017 4:05 pm
Forum: Investing - Help with Personal Investments
Topic: Should I contribute to traditional IRA?
Replies: 14
Views: 1457

Re: Should I contribute to traditional IRA?

We presently have all at Vanguard: $7500 in my Traditional IRA $2800 in my wife's Traditional IRA $72400 in wife's rollover IRA rolled over from a previous 401k - - - - Hi rkhusky and Watty, could you please explain why I can't convert our pre-tax (rollover)/traditional IRAs to Roth? Is there somet...
by Bob's not my name
Tue Apr 11, 2017 8:10 am
Forum: Personal Finance (Not Investing)
Topic: FSA Dependent?
Replies: 10
Views: 708

Re: FSA Dependent?

Good point, so with the child tax credit phaseout and state tax it could exceed a 20% difference.
by Bob's not my name
Tue Apr 11, 2017 6:01 am
Forum: Investing - Help with Personal Investments
Topic: Should I contribute to traditional IRA?
Replies: 14
Views: 1457

Re: Should I contribute to traditional IRA?

$7500 in my Traditional IRA $2800 in my wife's Traditional IRA $72400 in wife's rollover IRA rolled over from a previous 401k Your $7,500 is all after-tax, right? You can convert it and your new after-tax TIRA contributions to a Roth IRA. The earnings on the existing TIRA will be taxed. As for your...
by Bob's not my name
Tue Apr 11, 2017 4:59 am
Forum: Personal Finance (Not Investing)
Topic: FSA Dependent?
Replies: 10
Views: 708

Re: FSA Dependent?

Well, if your marginal tax rate is only the 25% federal, then it's a 5% difference, or $150. But if you're in the child tax credit phaseout and have a state tax, then it would be maybe a 15% difference, or about $450. Price your hassle.
by Bob's not my name
Tue Mar 21, 2017 6:24 am
Forum: Investing - Help with Personal Investments
Topic: Maximizing Tax-Advantaged Savings when only working for part of the year
Replies: 16
Views: 958

Re: Maximizing Tax-Advantaged Savings when only working for part of the year

RedClay wrote:My income next year will put me in the 25% bracket.
At least 28%. State and local income tax? Perhaps AMT. For example, if you're in NYC, your combined marginal rate might be 43%.
by Bob's not my name
Tue Mar 14, 2017 1:49 pm
Forum: Investing - Help with Personal Investments
Topic: IRA and college savings advice needed
Replies: 38
Views: 1839

Re: IRA and college savings advice needed

You can withdraw from a TIRA penalty-free to pay for college, so a Roth IRA is not better for that reason. It is better because in the distant future when your kids are in college the tax code may still include education tax breaks with eligibility phaseouts that create huge marginal tax rates for ...
by Bob's not my name
Tue Mar 14, 2017 4:02 am
Forum: Investing - Help with Personal Investments
Topic: IRA and college savings advice needed
Replies: 38
Views: 1839

Re: IRA and college savings advice needed

You can withdraw from a TIRA penalty-free to pay for college, so a Roth IRA is not better for that reason. It is better because in the distant future when your kids are in college the tax code may still include education tax breaks with eligibility phaseouts that create huge marginal tax rates for t...
by Bob's not my name
Mon Mar 13, 2017 6:42 pm
Forum: Personal Finance (Not Investing)
Topic: Taxation of fellowship
Replies: 51
Views: 3617

Re: Taxation of fellowship

Bob's not my name, if you don't mind me asking, what did you end up doing with this situation? I'm running across this same situation this year with my daughter. She worked a National Science Foundation research project at a university in another state and the university sent a 1099-MISC with 4k in...
by Bob's not my name
Thu Mar 09, 2017 5:21 am
Forum: Personal Finance (Not Investing)
Topic: Am I eligible to deduct IRA contributions?
Replies: 3
Views: 425

Re: Am I eligible to deduct IRA contributions?

Total gross income will be between 180,000 to 210,000 My wife will also have a 401K at her work which she is starting soon . For 2016 IRA eligibility, the future does not matter. Your income in 2016 is all that matters. Your AGI is at the bottom of page 1 of form 1040. MAGI is a little different. I...
by Bob's not my name
Sat Feb 25, 2017 6:45 pm
Forum: Investing - Help with Personal Investments
Topic: Portfolio questions - wife starting new job
Replies: 9
Views: 997

Re: Portfolio questions - wife starting new job

I don't know your specific numbers, but it seems unlikely you could be in the 28% bracket and fully Roth-eligible. $153,100 threshold of 28% bracket + $8,100 personal exemptions + $30,000 itemized deductions given your mortgage ($16,000 interest), state tax (maybe $8,000), property tax (maybe $4,000...
by Bob's not my name
Mon Jan 30, 2017 8:54 am
Forum: Investing - Help with Personal Investments
Topic: The whole Roth vs. Traditional IRA
Replies: 56
Views: 9072

Re: The whole Roth vs. Traditional IRA

Another consideration is no RMDs, and if you plan on not spending it at all and leaving the money to your heirs. Early retirees have significant conversion opportunity. Late retirement years are a second opportunity. I managed the finances of an elderly widow and was able to convert all of her (rem...
by Bob's not my name
Sat Jan 28, 2017 4:22 pm
Forum: Investing - Help with Personal Investments
Topic: The whole Roth vs. Traditional IRA
Replies: 56
Views: 9072

Re: The whole Roth vs. Traditional IRA

most workers don't know how to include AGI-based taxes in their marginal rate calculation. Finally, most posters don't do the math right in comparing Roth and traditional contributions. It's important to consider that if your marginal rate (federal nominal + AGI-based taxes + state) is 33%, a $10,0...
by Bob's not my name
Sat Jan 28, 2017 12:51 pm
Forum: Investing - Help with Personal Investments
Topic: The whole Roth vs. Traditional IRA
Replies: 56
Views: 9072

Re: The whole Roth vs. Traditional IRA

This is a very old thread, and I didn't re-read it. More recent threads have pointed out that it's marginal rate in both situations, since you are always deciding on an increment. The central weakness of short (albeit correct) summations is that (1) most people know neither their current nor future ...
by Bob's not my name
Fri Jan 27, 2017 8:14 pm
Forum: Investing - Help with Personal Investments
Topic: Tax Deferred or After Tax Retirement Question
Replies: 14
Views: 1709

Re: Tax Deferred or After Tax Retirement Question

I doubt you're in the 25% bracket. It starts at $37,950 taxable income, which is about $48,350 AGI, which is probably over $50,000 gross income if you have any pre-tax health, dental, or disability insurance premiums or FSA/HSA contributions withheld from your pay. When you're comparing Roth and tra...
by Bob's not my name
Fri Jan 13, 2017 5:57 am
Forum: Investing - Help with Personal Investments
Topic: 403b contributions - Roth vs. Traditional
Replies: 22
Views: 1094

Re: 403b contributions - Roth vs. Traditional

In considering what you can afford to contribute and in using the term "evenly splitting" it appears you aren't considering the tax cost of Roth contributions. If you make about $135,000 after pre-tax insurance premiums and FSA contributions, you are in the 30% federal bracket. The 30% fed...
by Bob's not my name
Wed Dec 28, 2016 1:37 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

Putting possible credits aside for now, I think I'm starting to see the current priority picture: 1. Contribute minimum to 401K to get employer match. 2. Contribute as much as possible to Roth since there are no RMDs, and no tax on distributions. (For next year at least, if 0% tax rate, tax bracket...
by Bob's not my name
Wed Dec 28, 2016 1:34 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

OkanePlease wrote:Aside from this year's 401K contributions, health insurance package plus HSA contributions account for about $7,000.
Duh, I should have thought of that. Everybody always overlooks the significant effect of pre-tax insurance premiums, FSA/HSA, etc.
by Bob's not my name
Wed Dec 28, 2016 12:36 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

That would make her gross income $32,000, which is not equal to $10,000 + $16,000, so I'm still confused (maybe you're including the employer contribution in the $16,000?), but the 0% tax bracket argument still holds in any case. $20,800 of regular income fits in the 0% bracket, not including the ef...
by Bob's not my name
Wed Dec 28, 2016 11:51 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

401k max $24,000 + $10,000 + $20,000 divs = $54,000
by Bob's not my name
Wed Dec 28, 2016 9:06 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

3. determine what deduction you can use to lower your AGI (mortgage, tuition, etc) 5.if there are no financial aid to consider OP doesn't have a mortgage, and itemized and tuition deductions don't reduce AGI in any case. Financial aid, if available at all, typically takes gross income into account,...
by Bob's not my name
Wed Dec 28, 2016 6:29 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

And if you're going to attend school in multiple calendar years, be sure to pay tuition in multiple calendar years. For example, if Spring 2018 is your last semester, DO NOT pay your last tuition bill before 1/1/2018. Pay it on 1/1/2018 so you get a second Lifetime Learning Credit in 2018. If your s...
by Bob's not my name
Wed Dec 28, 2016 6:24 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Fund 401K or Roth in my new income scenario?
Replies: 16
Views: 1085

Re: Dilemma: Fund 401K or Roth in my new income scenario?

1. Husband going back to school, so no meaningful income in 2017 and maybe longer. 2. Wife maxing out her 401K contributions (putting her taxable income at under $10,000/year) 4. Taxable accounts have index funds currently yielding about $20,000 in dividends per year, mostly qualified dividends. no...
by Bob's not my name
Sun Nov 27, 2016 8:06 pm
Forum: Investing - Help with Personal Investments
Topic: Nearing Roth Contribution Limit - Check My Math?
Replies: 6
Views: 942

Re: Nearing Roth Contribution Limit - Check My Math?

LateStarter1975 wrote:Roth contributions begins to phase out after $183,000 for those MFJ.
$184,000
by Bob's not my name
Tue Nov 08, 2016 6:31 am
Forum: Investing - Help with Personal Investments
Topic: Confused about 401k vs Roth 401k vs Roth IRA
Replies: 13
Views: 1361

Re: Confused about 401k vs Roth 401k vs Roth IRA

The deadline for opening an individual 401(k) is December 31 of the first year for which you wish to make contributions. For a sole proprietor, contributions can be made up until the due date (including extensions) of your tax return for the year (i.e., April 15 of the following year, or October 15...
by Bob's not my name
Tue Nov 08, 2016 6:05 am
Forum: Investing - Help with Personal Investments
Topic: Confused about 401k vs Roth 401k vs Roth IRA
Replies: 13
Views: 1361

Re: Confused about 401k vs Roth 401k vs Roth IRA

Spouse: - Rollover IRA from previous company If we don't qualify, is it worth it to do backdoor? Your spouse's rollover IRA will be subject to the pro rata rule if he does a backdoor Roth IRA contribution. If you max both traditional 401k's, you should qualify for direct contributions to Roth IRAs ...
by Bob's not my name
Tue Nov 08, 2016 4:14 am
Forum: Investing - Help with Personal Investments
Topic: To Roth or not to Roth that is the question
Replies: 18
Views: 3558

Re: To Roth or not to Roth that is the question

In the 25% bracket, contributing $18,000 to a Roth 403b consumes $24,000 of gross income and throws $6,000 away to taxes. You could instead contribute $18,000 of gross income to a traditional 403b (none of which goes to taxes), with $6,000 of gross income left over. That $6,000 could be used for a $...
by Bob's not my name
Fri Oct 07, 2016 7:26 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2990

Re: Is my employer's stock purchase plan worth it?

It is earning interest. It's a weird vehicle, but your ESPP is like a 6-week CD. Every quarter you sell immediately for a 5.26% gain minus $15. Your money is invested for an average 1/8 year, so your annualized return is (1.0526^8) - 1 = 51% The $15 is significant because it's charged on every plan ...
by Bob's not my name
Fri Oct 07, 2016 3:34 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2990

Re: Is my employer's stock purchase plan worth it?

Is the plan period one year? Is the discount 5% off the market price at the end of the plan period? Is there a lookback provision? (Some plans offer 5% off the lesser of the market prices at the beginning and end of the plan period.) Can you sell immediately after purchase? If you can, you have a g...
by Bob's not my name
Thu Oct 06, 2016 6:35 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2990

Re: Is my employer's stock purchase plan worth it?

5/95 = 5.26%

(1.0526^2) - 1 = 10.8% annualized return

IF that's the deal, contribute the max and sell immediately.
by Bob's not my name
Thu Oct 06, 2016 5:27 am
Forum: Investing - Help with Personal Investments
Topic: Is my employer's stock purchase plan worth it?
Replies: 27
Views: 2990

Re: Is my employer's stock purchase plan worth it?

Is the plan period one year? Is the discount 5% off the market price at the end of the plan period? Is there a lookback provision? (Some plans offer 5% off the lesser of the market prices at the beginning and end of the plan period.) Can you sell immediately after purchase? If you can, you have a gu...
by Bob's not my name
Mon Aug 15, 2016 1:34 pm
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3167

Re: Parents over 80: End of life tax stragegies?

Good point that the tax headroom will drop when a joint filing becomes a single filing. Survivor gets full pension? Also, tax headroom may increase when one or both or the survivor are in assisted living, as celia has pointed out. 1) Removing as much IRA money as possible at 15%, passing on cash. C...
by Bob's not my name
Fri Aug 12, 2016 3:21 am
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3167

Re: Parents over 80: End of life tax strategies?

I'm thinking definitely don't touch the appreciated stocks, because of the "opposite of death tax" that basis step up provides. I'm not convinced this is a definite. If the stocks represent an inappropriate risk, that risk could be mitigated by selling, IF there is opportunity to sell at ...
by Bob's not my name
Fri Aug 12, 2016 3:14 am
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3167

Re: Parents over 80: End of life tax stragegies?

A little bit (few hundred) could I think even be put back into a Roth, as there is taxable rental income that could be offset. Only earned income qualifies for IRA contributions. In addition, Roth contributions do not "offset" taxable income. If your goal is to increase the Roth IRA(s), t...
by Bob's not my name
Thu Aug 11, 2016 5:32 am
Forum: Personal Finance (Not Investing)
Topic: Parents over 80: End of life tax strategies?
Replies: 16
Views: 3167

Re: Parents over 80: End of life tax stragegies?

celia wrote:7.5% of their AGI
10% starting 2017 -- the 7.5% threshold was changed by the ACA but extended to 2016 for 65-and-older taxpayers.
by Bob's not my name
Sun Aug 07, 2016 3:49 am
Forum: Investing - Theory, News & General
Topic: Dave Ramsey over simplifying Roth vs. Traditional IRA?
Replies: 52
Views: 6377

Re: Dave Ramsey over simplifying Roth vs. Traditional IRA?

MikeT, you had the math right from the beginning. It is a common error to do the math upside down and thus understate the tax cost of choosing Roth over Traditional. This common error is often denied by jumping into a "saturated case" argument in which all tax-advantaged space is filled. I...
by Bob's not my name
Thu Aug 04, 2016 6:25 pm
Forum: Investing - Help with Personal Investments
Topic: 403(b) to IRA - any issues to consider?
Replies: 11
Views: 1081

Re: 403(b) to IRA - any issues to consider?

A non spouse beneficiary of a 403b has the option to do a direct rollover to an inherited Roth as well as an inherited TIRA. A non spouse beneficiary of an IRA cannot currently convert to an inherited Roth IRA. Only in the "saturated" case, in which the beneficiary and spouse are maxing a...
by Bob's not my name
Thu Aug 04, 2016 5:55 am
Forum: Personal Finance (Not Investing)
Topic: 401k or Roth 401k?
Replies: 14
Views: 987

Re: 401k or Roth 401k?

If you are contributing only the 8%, that's $6,000 into a traditional 401k and $5,500 into a Roth IRA. The $5,500 contribution to the Roth consumes $7,333 of gross income, of which $1,833 is thrown away to taxes (25% federal, no state tax). So you are contributing $7,333 of gross income to Roth and ...
by Bob's not my name
Thu Aug 04, 2016 3:29 am
Forum: Investing - Help with Personal Investments
Topic: 403(b) to IRA - any issues to consider?
Replies: 11
Views: 1081

Re: 403(b) to IRA - any issues to consider?

Some states tax 403b and IRA distributions differently. For example, grabiner has pointed out that Maryland (which has a very high tax rate) exempts some employer plan distributions but not IRA distributions, so a Maryland taxpayer shouldn't roll over all of her employer plans into an IRA. Some 403b...