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A 529?

PNWpilot wrote: ↑Mon Mar 20, 2023 12:55 pm We invest 15% of our monthly income to employer 401K and Roth IRA. We save an additional 15% towards a house-fund. Our house fund has grown to about $240k. Ideally, I'd like to use some (or all) of that money towards a home at some point, and then max out Roth/401K moving forward.

One thought I have that is not directly related to your specific question - I think you should stop saving in the house fund.

$240k should be plenty for a 20% (or more) down payment and moving costs in a MCOL area.

I would put more in the 401k(s) and Roth IRAs, to the extent you have room. If not, then move on to using tax-efficient index funds in a taxable brokerage account.

muel87 wrote: ↑Mon Mar 20, 2023 11:02 am

tashnewbie wrote: ↑Mon Mar 20, 2023 10:25 am She should have included an explanatory statement re the recharacterization with the 2021 form. See the Form 8606 instructions for more info: https://www.irs.gov/pub/irs-pdf/i8606.pdf

I just didnt have a statement attached. I need to file an amended return to attach a statement?

I'm not sure. I don't think an amendment is needed because the tax liability does not change. But I don't think you can just file the statement by itself. She could file the 8606 again along with the statement or perhaps attach the statement to the 2022 return. I would wait to see if other forum members have thoughts.

Conversions are recognized in the calendar year in which they are done, so if she converted in 2022, then that conversion would be reflected in 2022 Form 8606, not 2021 (even though the contribution associated with the converted money was for 2021). She would have needed to document the non-deductible contribution and recharacterization on 2021 Form 8606 filed in 2022. Her end-of-year 2021 IRA balance does not matter if she did not do any Roth conversions in 2021. Her end-of-year 2022 IRA balance, if any, matters because she did a Roth conversion in 2022. Thanks. She did the recharacterization in 2022 for the 2021 contributions, after it had losses. Her 2021 8606 (filed after the recharacterization) shows just the contribution (not includi...

My example is similar... In my wife's account, she made the 2021 contribution in 2021, and recharacterized and converted to Roth in early 2022 (with losses). 2021 8606 only shows $6k contribution on lines 1, 3, and 14. In my account, I did similar moves, only difference is my 2021 contributions were in early 2022 (in addition to the recharacterizations/conversions). 2021 8606 is same as my wife's. Im trying to determine if I need to amend them. Also, my tax preparer didnt include my wife's total IRA account value at end of year, although there were no conversions done in 2021, so maybe he didnt need to include that. For HeelaMonster's example, when you say "If you took no distributions and/or did not convert in 2022.... xyz would only...

Food/Supplements/Vitamins: $800 Utilities: $300 Home Repair/Maint.: $200 Dates and fun: $200 Gas: $250 Car Insurance: $200 Cell Phones: $100 Cleaning/Household Items: $100 Car Maint/Registration/Renewal: $100 These are your biggest non-rent categories. Some seem to be non-discretionary such as utilities and insurance. You could shop insurance to see if there's potential savings there. Cell phones can be easily trimmed with an MVNO. There's likely room to cut in the food category. Dates and fun could be cut completely or reduced. $100/month for cleaning and household supplies seems high, depending on what comprises supplies. $100/month for car maintenance, registration, renewal also seems high. What's the breakdown? What cars are you all dr...

I do not think there is any need to get fancy with the fund choices in the 401k.

Look to keep it simple. I recommend exploring something like the "3-fund portfolio" (you could make it 2 funds by eliminating bonds if you prefer): https://www.bogleheads.org/wiki/Three-fund_portfolio

Agree with others about market timing.

Sounds like you want something like a money market fund. Don't know which ones would be available at no cost at your brokerages.

Almost all of your portfolio success will boil down to a few things. How much you save and having a stock to bond ratio that you are comfortable with in the good times and bad times. The rest (which incidentally is what most of the conversation here on the forums is about) does not matter all that much. +1000 with emphasis added. That truly is the most important thing, especially early on in your investing journey. We on BH love to talk about the stuff that really at the end of the day is probably inconsequential. :D OP: I would focus on simplicity and making things easy for you to manage. That could mean using an L fund in his TSP and a target date fund (TDF) in her 403b. If you are going to use TDFs in the Roth IRAs, just use one. No nee...

I’d pick #3, assuming these are low cost options. Up to you whether you want to use just developed markets or also emerging markets.

Your portfolio is ~$120k and if you want 20% international stock, that’s about $24k.

In general it may be a good idea to realize losses in taxable, but I don’t know if $700 is worth the time and effort. May be good to see how it works if you’ve never done it before.

Imagine this question has been asked many times, but couldn't find much. Seems like a pretty simple feature for them to implement. Each month I contribute to my portfolio (7 different etfs, at 10-20% weightings). It is time consuming to do this each month. I wish I can just contribute to one thing and set the weightings and it does it for me (market order or set limit order at .02% below market or something). What is the solution to this basic issue? Cheers Rotate between the 7 things and only purchase one thing each month. Seems like this would work. Is there enough change in the market that each holding is off by enough from your target every month (most people set rebalancing triggers of +/-5% or 20% of a holding)? Otherwise, I think M1...

Please provide an approximate size of your total portfolio: low six figures Current gross income 142k Depending on how much is "low six figures," you may have about 1x your current income saved. By some metrics (Fidelity's, I think) the recommendation is to have 2x saved by age 35. I think you're in good shape and potentially have a long runway until retirement. But it may not be a bad tradeoff to temporarily reduce retirement savings so that you can save for a home purchase. If I were thinking about the decision, I would consider what the total purchase price is. You have not mentioned that, only that $400k is not enough to buy the house you want in your area. Are you in a LCOL, MCOL, HCOL, or VHCOL area? Unless you're in a H/VH...

I agree with you in that I would not use compensation in my budget beyond the baseline. Based on the area I want to buy and your feedback, there are not any homes that meet my needs and budget together. We’ll have to continue renting and saving until those numbers align. I don’t want to decrease my tax-advantaged contributions savings rate to speed up the purchase process as I will end up paying a high tax rate to have that cash available. I do not want to dissuade you from buying a house completely (I also do not want to say you should 100% buy a house right now). Buying a house is generally more of a non-financial decision but it does have financial implications, and one should feel comfortable that you can afford the total carrying cost...

KyleAAA wrote: ↑Thu Mar 16, 2023 10:53 am Are interest rates falling? I suspect the Fed isn't done raising yet.

I didn't know they are falling.

OP - why do you think they're falling?

Welcome to the forum. How'd you find your way here? It's always nice to hear people's stories. • $25,000 in credit card debt average approximately 21% a month in interest. • I just prepared my taxes and will owe $3,100 by mid-April. You're an intelligent and capable person, so you likely know what you need to do, but perhaps you just need others to validate what you already know? These liabilities seem like the top priorities to me. If you still have a good credit score and think you can manage a new credit card responsibly, I would look for a credit card with a 0% intro rate that you could pay the IRS bill with and then pay off the credit card balance before the promo rate period ends. You may also want to see if you can get a credit card ...

Current annual savings/investments 48k (max 401k + HSA + 2 Roth IRAs + remaining in taxable for down payment currently) Monthly fixed expenses Take home 2200: Rent 420: Car payment 110: Electric 75: Gas (utility) 100: Sewer/water/trash 25: Phones 55: Internet (total: 2985/mo) Looks like your current housing expenses are ~$2500/month and it looks like you save ~$6k/year into taxable. So back of the napkin math seems to indicate you would have ~$3k/month to devote to housing expenses, if you wanted to maintain your tax-advantaged account savings rate. You would have more buffer with the irregular income. Up to you whether you feel comfortable accounting for that when setting your baseline housing budget. I definitely would not do that. I wou...

Sounds like you're asking about STOCK index funds?

I agree that the risk profile between a stock index fund and a CD are vastly different. Which is appropriate for you depends on your personal risk tolerance, what the money is for and when you will need it.

Because these types of decisions should be made within the overall context of your investment portfolio and financial profile, not in isolation, you might want to consider posting a portfolio review in this suggested format: viewtopic.php?t=6212

Even if you decide not to post, it will likely be a helpful exercise to prepare the information for yourself.

Hello. I am new to this forum and investing. I have $15K to invest in a ROTH, I will take this money out in 10-15yrs from now. From what I have learned from this forum, I have come to the following portfolio: FSPGX 20% VQNPX 20% VTSAX 20% VTRIX 10% VTIAX 10% VQNPX 10% FTBFX 10% This is based on the "Core Fore" and I've expanded a little bit. I don't need this money, I'm hoping it can generate some amount for my future down payment on a home in the future. So I welcome any input and thank you for taking the time to read and hopefully expand my knowledge further. Welcome to the forum. I agree with user directly above me that you should include the fund names, not just the ticker symbol. Most users don't have these tickers memorized...

The issue I ran into is running out of desirable mutual fund options to use as a TLH partner. That happened quickly for me in 2022. I used VLCAX and then didn't have a viable option (VFIAX wasn't because of wash sale concerns). Why would you think that there would be a wash sale with either the large company fund or the total market with the sp500 fund? I don't and it was not my intention to imply that. I do not use S&P 500 funds as TLH partners because I have S&P 500 funds in my Roth IRA, HSA, and 403b. So that leaves me personally with large cap and total market mutual funds as options for TLH, if I want to stick to mutual funds (may not be an issue for some who do not use S&P 500 funds in other accounts). At Vanguard, I was ...

I actually find TLH at Vanguard to be slightly easier with mutual funds. It's one transaction ("exchange") that can be entered any time vs two ("sell" followed by "buy") which must be done during trading hours and there will likely be some straggling cents/dollars which bothers some people. I did both yesterday actually. "Exchanged" VTSAX for VLCAX, sold VGSH and bought SCHO. I agree that when you have mutual fund TLH partner options, using mutual funds to TLH is easier at Vanguard because you can just hit the "Exchange" button. The issue I ran into is running out of desirable mutual fund options to use as a TLH partner. That happened quickly for me in 2022. I used VLCAX and then didn't hav...

OP: My assumption is that you're asking whether it makes sense to contact Vanguard (can't do this on your own) to ask them to do a tax-free conversion of the mutual funds to their ETF counterparts. Then you would sell those ETFs at a loss and buy different ETFs (e.g., convert VTSAX to VTI, sell VTI, buy ITOT). I did this last year in an effort to make TLH easier. It accomplished my goal. I think using the ETFs is easier for TLH because there are more options (I couldn't use VFIAX because I used it in my Roth IRA and 403b). If you have enough mutual fund TLH partner options, you could stick with mutual funds. Either way works. I'm sure you already know this -- once you convert from mutual fund to ETF, you can never go back (without selling w...

The Tipswatch page has been updated since yesterday with this disclaimer: "Note, March 13: It has been 5 days since I wrote this article, and while I think it presents a reasonable theoretical way to look at the I Bond’s fixed rate, these predictions are totally shot, at least for now. The 10-year real yield is currently trading around 1.22%, down about 44 basis points in the last 5 days. So … in this troubling environment of bank bailouts, the Fed and markets are likely to change course. Yields leading up to the May 1 decision are likely to be very volatile. (But I think this all still makes a strong case for investing in inflation protection.) Read this article knowing that it is almost impossible to predict what the I Bond’s fixed ...

Parkinglotracer wrote: ↑Wed Mar 15, 2023 8:58 am Congrats on the money you have made.

OP has not made any money yet. See:

No i dont have 100k. I'm starting a business that I know will make 100k, and if it doesn't, one of the many in the future will.

Did you think ChatGPT would give you accurate information?

I would put more stock in trustworthy sources. Presumably you'd already done your research to understand what a limit order is.

Starfalls wrote: ↑Tue Mar 14, 2023 4:49 pm we cannot enroll in 2023 limited purpose FSA now. We will have to wait for the open enrollment in December to entroll for the the year 2024.

When does your kid start treatment? Could you delay it until January 2024?

I agree...BH is not the best place for this type of question. I am sure there are other forums (maybe Reddit?) that might be a better resource for this.

I also agree that you should not count your chickens before they hatch.

Keep your head down. Do well in school. Build your first business.

Read broadly about personal finance and advance your knowledge base. Check the BH wiki page for book recommendations.

Then once you have some money, come back here if you want investing advice.

Starfalls wrote: ↑Tue Mar 14, 2023 9:54 am It appear that my spouse can enroll into limited purpose FSA that can cover orthodontics treatment. Since it is a 15 month treatment, majority of the payment will happen this year. I am trying to see if we can push more expense of the treatment to 2024 to be eligible for reimbursement from limited purpose FSA.

Why wouldn't you just put money in the limited purpose FSA for 2023 and 2024?

These are your biggest expenses: Taxes: 3650 Housing: 3090 (mortgage/property tax) Childcare: 1450 Student loans 1200 Insurance: home/ auto (265), malpractice(225), life (60)550 Reducing these will have the biggest impact on your overall expenses. You can make headway with the rest, but if this stuff stays the same, you're not making much progress. For example, you should be able to cut the cell phone bill in half. There are a lot of MVNOs nowadays that have unlimited data plans for up to $25/month. Look for one that uses the same network of the carrier you have now (that means the service should be decent). I agree that you should get disability insurance ASAP. Search Google for forum posts where user BruDude responded. He's a subject matt...

Starfalls wrote: ↑Mon Mar 13, 2023 6:40 pm My spouse has enrolled in single health care plan and single HSA. Me and kids are covered by my employer's employee+ children option. Can I enroll into healthcare FSA? If not, what about limited purpose FSA ?

I don't follow the last paragraph of your post.

But to answer these general questions -

If your spouse has an HSA-eligible plan and makes contributions to an HSA, you are not eligible to enroll in a general purpose FSA. If you do, your spouse would not be eligible to contribute to the HSA. You could have a limited purpose FSA that covers vision and dental. That limited purpose FSA would not preclude her from making HSA contributions.

As others have said, your EF size ultimately comes down to what you're comfortable with. General recommendations seem to be 6-12 months of expenses. Sounds like 12 months is ~$158k for you. You currently have $133k outside of the taxable brokerage account. As someone else mentioned, as your brokerage account increases, you may feel you don't need as much cash. I agree with others that you probably should trim the checking account cash. Move it to a HYSA or MMF that earns more. Ensure the savings account is a HYSA with a decent yield (or move to a MMF). I also don't understand why you want a 1-month revolving CD ladder. Seems unnecessarily complicated. You can get fairly equivalent yields as CDs nowadays in things like HYSA and MMF. And if y...

This is a good place to start: https://www.bogleheads.org/wiki/Priorit ... nvestments

If you want more specific feedback, you should post more information in the “asking portfolio questions” format in the pinned forum post.

cchrissyy wrote: ↑Fri Mar 10, 2023 12:04 pm link for people who didn't hear about the bank failure
https://www.nytimes.com/2023/03/10/busi ... stock.html

Thanks for this information.

I know there is a portion of the crowd on these boards that's in the "never quit a job until you have your next job accepted" camp. I'm generally in that camp. But based upon your description, if I were your wife, I would want to make my exit immediately. You said you have a 12 month EF that would cover you if there is no income. I presume you earn income, so you would not have $0 coming in, so that EF should last even longer. - Should she talk to HR first before resigning? - Should we be looking into short term disability? Her mental health is in a really bad place. I don't know how that works if she's at the same time trying to look for a new job. We're not looking to bend any rules here. - If she resigns effectively immediatel...

ApeAttack wrote: ↑Fri Mar 10, 2023 11:44 am Banking scare?

I was going to ask the same thing. Haven't heard of one.

FYI, you would probably have $500k of FDIC insurance if your HYSA is a joint account ($250k/spouse).

I would probably just move any money >$500k (or $250k if you want to be uber-conservative) to another HYSA.

Thanks to everyone for the feedback! I feel better now about my plan to calculate the attributable income for 12/31/22, as if the recharacterization had occurred on that date. todthebod's quote from the form's instructions -- "Treat any recharacterized IRA contribution as though the amount of the contribution was originally contributed to the second IRA, not the first IRA." -- certainly seems to indicate that's a safe course of action, in the absence of any explicit instructions specific to this situation. And HeelaMonster, I'm grateful my lot is much simpler than yours! Form 6806 has almost done me in, too, and it's only been an hour or two for me.... :annoyed There are instructions in the Regs, but they were framed in the conte...

Yea but you're ignoring the two lines before that "If you received a distribution". So it's not about just making a partially deductible contribution, it's about making a partially deductible contribution AND taking a distribution. That's much more rare for people doing Backdoor Roth IRAs . But you're right that the software seems to default to that worksheet. I'm confused. I don't think I'm ignoring anything? A backdoor Roth REQUIRES a distribution. It's by definition part of the process. A conversion from a non-Roth IRA to a Roth IRA (conversion) by definition is a distribution. Look at the title of form 1099-R. A Trad. IRA distribution for the purposes of Line 7 of Form 8606 excludes Roth conversions which is what the second s...

I initially made a $3000 contribution. I noticed the mistake several days later, at which point it was worth $2,977.23. I recharacterized it (their language) and 4 days later it had dropped to $2,965.44. Then I made a Roth conversion. I have 2 1099-Rs. Makes sense that you'd have 2 1099-Rs. One for the Roth IRA (to reflect the recharacterized amount) and one for the Trad. IRA (to reflect the Roth conversion). 1st 1099-R (Roth): Box 7, " R - Recharacterized IRA contribution made for 2021 and recharacterized in 2022." Amount: $2,977.23 2nd 1099-R: (tIRA): Box 7, "2 - Early distribution, exception applies (under age 59½)." Amount: $6,965.51 - This includes the post-recharacterized conversion of $2,965.44, another $4000 of ...

muel87 wrote: ↑Thu Mar 09, 2023 9:01 pm Btw i did this same thing with 2 different brokerages. The 1099 from the other brokerage has both notes and the tax software (H&R block) wont let me enter that form either.

There's a lot going on here. Alan is more capable than I am to help you so I do not know if I will be of much assistance.

I just want to ask a few questions that should help clarify things:

1. Did you report the 2021 non-deductible Trad. IRA contribution on your 2021 tax return? This would have been reported on Form 8606.

2. Did you include an explanatory statement about the recharacterization with your 2021 tax return?

3. What do you mean you did the same thing with 2 different brokerages?

In my opinion, the fund expenses between the 2 plans is negligible, so that should not dictate your decision. Is the old 401k charging you any high administrative fees at this point? If so, that would weigh in favor of moving to the new 401k. If you really want to use a small cap growth fund, perhaps you should stay in the old 401k, because the new 401k does not have a good option. I would probably consolidate everything into the new 401k just for simplicity. I would use the cheap index funds for S&P 500, international stock, and bonds. I might use the small cap fund to approximate the total stock market, but I might omit it. You will be out of the market for up to a few weeks during transit. I would not move the old 401k into an IRA be...

Great comment above. I wanted to add that if your estimated income is correct, you will not be able to deduct a TIRA contribution. In that situation, it would not make sense to contribute to a TIRA. You should do all Roth IRA contributions instead. The MAGI limit for making direct Roth IRA contributions is $138k for 2023, I think. If you think you will be close to that limit, then you should not make any direct Roth IRA contributions either (or you can wait and fix the issue when you have further clarity on your MAGI). As I understand there are ways to recharacterize my contributions from traditional to Roth, but not the other way around, so I wouldn't be making non-deductible IRA contributes if I go over the deductibility limit. I imagine...

It's not clear to me whether you plan to use VTI and VXUS in the 401k via PCRA. I wouldn't if you're using VTI or VXUS in taxable. I was intending to use BND, VTI and VXUS in the PCRA pre-tax to for all rebalancing, and VTI in the post-tax (just trying to use as few funds as possible for simplicity). Can I just keep a single ETF in the brokerage for tax-loss harvesting? I also thought about using the 3-fund "base" 401K with 1-2 Vanguard ETFs in the rest of the portfolio, but one of the reasons I wanted to have the PCRA was to use VXUS over SWISX (I want emerging markets coverage). If you want to TLH, then having the identical fund in taxable that you use in other accounts makes that harder. This is particularly true for IRAs and ...

Check out this thread about the recent Bogleheads Live podcast about disability insurance. https://www.bogleheads.org/forum/viewtopic.php?t=397412 Also search on past forum threads. Look for posts by BruDude . Thank you! I coincidentally posted on another thread related to that podcast and received one reply so far. I have read lots of BruDude posts, they are full of gold nuggets, thanks. I was just kind of hoping there was an association of vetted / trusted brokers or something along those lines that I could look up, because it seems otherwise I just need to semi-randomly start calling brokers or looking at Google Maps reviews or something. At least I'm now armed with a better understanding of what to look for and how to evaluate LTD poli...

OP: DEFINITELY ensure you and your wife have adequate term life insurance and you have good own occupation long term disability insurance, if you don't already have it.

The impact to your family if you became disabled and unable to work at all or at your current level would be potentially life-altering. Mitigate the risk with adequate insurance.

No. The Roth IRA and HSA are both tax-advantaged accounts so there are no capital gains/losses in them so there can be no tax loss harvesting. To me it is really easy to use different funds in taxable than any of my tax-advantaged accounts so that TLH is less complicated. Is this what you mean? Should I remove the VXUS from the pre-tax 401K? Is the HSA fund the best choice? I don't intend to TLH but want to have the option of doing so if I ever change my mind. I also want to use as few funds as possible to keep things simple. No. I was suggesting something much simpler...just changing VTI to VOO in the Roth IRA. That's it. You could leave everything else the same. It's not clear to me whether you plan to use VTI and VXUS in the 401k via PC...

I agree with retiredjg that the sequence of reporting the contribution and conversion in tax software is probably not causing this issue.

Ultimately, each of us as the taxpayer needs to review our tax return including Form 8606 before we file.

OP, I recommend doing due diligence to understand what the form should look like for you each year, and if anything looks off, review and adjust your answers to the tax software's questions until the form looks the way it should.

I have a girlfriend and we live together with our son. She is absolutely zero help with the family finances. But that's a whole other topic. Choose your partners wisely, Gentlemen. This applies to everyone, not just men. :D Your fates are not inextricably intertwined except to the extent you have to raise your child. This is a personal finance forum, so I probably shouldn't venture into personal issues. :twisted: Also, I started late. Started saving the right way only a year or two ago. I started relatively late too (did not make a personal 401k contribution until 31 and didn't start maxing until 34) and I think have made good ground. I do not think 33 is late at all. You have done a great job so far at your income level. Keep it up! Your ...

You may be in the 0% long term capital gains tax bracket. The numbers listed in the chart you linked are for taxable income, but to get to taxable income, at a minimum, you have to deduct the standard deduction from your gross income. So if your gross income for 2023 is ~$44k, then your taxable income at most would be ~$31k. 2) Leave the SWISX and SWTSX in the Schwab brokerage alone. Selling them to buy VTI/VXUS (to make the brokerage 2-funds only) would incur $1,546.59 long-term capital gains taxes ($10,311.27 x 15%). Salary for this year was calculated to verify whether taxes applied: $55,016/52 weeks in the year = $1,058 weekly x 44 weeks worked = $46,552 annual income for 2023, which exceeds the $44,625 threshold for the 0% rate https:...

2) Leave the SWISX and SWTSX in the Schwab brokerage alone. Selling them to buy VTI/VXUS (to make the brokerage 2-funds only) would incur $1,546.59 long-term capital gains taxes ($10,311.27 x 15%). Salary for this year was calculated to verify whether taxes applied: $55,016/52 weeks in the year = $1,058 weekly x 44 weeks worked = $46,552 annual income for 2023, which exceeds the $44,625 threshold for the 0% rate https://www.investopedia.com/terms/c/capital_gains_tax.asp#toc-capital-gains-tax-rates-for-2022-and-2023; You may be in the 0% long term capital gains tax bracket. The numbers listed in the chart you linked are for taxable income, but to get to taxable income, at a minimum, you have to deduct the standard deduction from your gross ...

ddg656 wrote: ↑Tue Mar 07, 2023 2:36 pm Can't look at his statements as he lives 10 hours away.

Does he not have access to an online account? He should be able to login and view and download the statements.

Welcome to the forum!

VINIX (S&P 500 index fund) is very similar to VTSAX. The returns of both funds have been basically identical or very close since the advent of total stock market funds. No guarantee that will continue in the future, but I suspect it will because the S&P 500 represents >80% of the US stock market cap.

So you could just use VINIX if you wanted. Or you can do the mix you have with 3 funds. Or you could just use VINIX and the small cap fund in an 85:15 ratio. I don't think you can go wrong with any of these approaches. The first might be more convenient and easier to manage. I would make my decision based on personal preference.