Bogleheads.org

gatorking wrote: ↑Sat Feb 04, 2023 7:13 am Is the child a US citizen? Would he still be considered resident of any US state?

Yes, he is a US citizen and resident of a US state.

Thanks for the responses so far. I agree that there is significant selection bias where many of the children come from families of diplomats or executives of multi-national corporations. Welcome additional insights or resources where I can dig further into the specifics. Thanks.

RandomGuy

Bogleheads,

Can anyone comment on possible impacts to college admissions for a child attending an international schools overseas for high school? I've hear that these students are generally in demand due to "international" status, but I've been unable to find anything to back that up. I may have a chance to move overseas and am gathering data on how that would impact my oldest child who is due to graduate in that time. I'd welcome recommendations for more appropriate forums or resources with further information on these topics. Thanks.

RandomGuy

Klangfool,

Here are the numbers:

Balances
Retirement Savings - $1.1M (Note: I'll continue to contribute >$30k/yr until 2030 retirement)
529 Plans - $205k (No plan for additional contributions)
Taxable - $60k (Note: I'll add an additional $40k before withdrawals start)

Expenses
Education expenses - $365k across 2024-2030
Retirement expenses - $130k/yr - $86k/yr from pension = $44k/yr from portfolio

RandomGuy

All

I appreciate all the replies. If I can summarize, it seems like the consensus is that this may or may not be mental accounting, but whatever the conclusion, it is not adversely affecting my ability to reach my goals.

After thinking about it, I’d argue that the separate portfolio approach makes it more likely that I will reach the goals. We have more margin in reaching our retirement goals. The education goal will be closer. Increasing volatility by increasing AA in these accounts to 75/25 likely increases likelihood of falling short before I can access the retirement accounts.

Thanks

RandomGuy

Bogleheads, I know I am using mental accounting. I'm struggling to see significant downside. I have the below financial goals. - Fund my children's education from 2024-2030 - Fund my and my spouses retirement beginning in 2030 My AA for each goal is: - Education: 60/40 dropping to 50/50 next year - Retirement: 85/15 (Aggressive due to significant pension beginning in 2030) I hold funds to cover these goals in the following accounts: - TSP (retirement, accessible in 2030) - Roth IRAs (retirement, contributions accessible now, earnings accessible in retirement) - HSA (retirement, planning to wait until 65) - Taxable (education, VTSAX) - 529 Plans (education, Vanguard LifeStrategy Conservative and Moderate Growth) My mental accounting is that ...

I can confirm that HSA bank charges a $25 administration fee for removal of excess contributions.

RandomGuy

Makefile,

Great advice. Thank you.

RandomGuy

Bogleheads,

I mistakenly increased by HSA contribution amount one pay period too early in late 2022 to meet the higher 2023 limits. This resulted in me increasing my contribution amount for my last 2022 contribution. Consequently, I contributed $7303 to the HSA in 2022. The funds are still in my cash account. Appreciate advice on how I can rectify this situation. Thanks.

RandomGuy

Lakpr

Great point. I think I am going to do exactly as you have suggested. I had planned to start using VT and VTWAX instead of holding international and domestic separately in tax-advantaged accounts anyway. This is probably the right time to make that move and I can use VTSAX and VTIAX in taxable from here on out.

RandomGuy

Lakpr,

No I'm not sure, but given that the savings is on the order of $105 (15% tax bracket) even if it is a wash sale and the lack of clarity on whether HSA accounts are included, I think I'm willing to take that risk. I'll probably wait until past the 31 day window to sell the rest of the taxable shares just to be sure.

RandomGuy

You can do the following: 1) Sell the VTI in your HSA and buy something else. May be VOO. 2) Wait one business day. Next business day, SELL everything that is bought in taxable within the last 30 days, REGARDLESS of whether they carry unrealized gains or losses. 3) Wait one more business day, then sell everything that has a loss. Through steps 1 and 2, you get rid of the currently existing "replacement shares" that the tax loss sale seeks to attach the basis to. If those replacement shares were in HSA, the loss would be permanently disallowed, so getting rid of the HSA shares is the first order of business. Then do the same in taxable account, get rid of potential replacement shares in the taxable account. Finally, realize the lo...

All, Here is my situation. I'd appreciate your guidance on how to handle with respect to a potential wash sale. 11/21/2022 - I purchased 16 shares of VTI in my HSA I hold VTSAX in my taxable account and have a need to sell approximately $12.4k to fund a car purchase this week. My total balance in VTSAX in taxable is $47.2k with most lots carrying a loss. I have $5.5k with gains totaling $265 and another $6.9k with losses totaling $700. The remaining shares have higher losses. My intent was to TLH all the shares with a loss on 12/22/2022, but I now need to access some of the shares with losses prior to the end of the 31 day window for a wash sale. My question is whether my disallowed losses are $435 (combined across all sales) or the full $7...

All,

Thanks so much for the excellent responses. With regards to TLH, would TSP’s C Fund be considered substantially identical to VFIAX? If I sell VTSAX and purchase VFIAX, can I TLH out of VFIAX in the future if I have regular investments into the C fund? Thanks.

RandomGuy

livesoft wrote: ↑Wed Oct 26, 2022 3:36 pm Please sell ALL the lots, then with the money not needed for the upcoming purchase buy something substantially similar, but not substantially identical. Many people would use VLCAX or VFIAX as something substantially similar.

Great point. I do understand TLH, but have shied away from it due to complexity and potential for a wash sale with automatic contributions going into my 401k. If I decide to only sell the shares I need for the purchase, is my above thinking correct? Thanks.

RandomGuy

All,

I'm fairly new to taxable investing. I have approximately $46k in VTSAX purchased in fourteen different lots over the last two years. All lots have capital loss associated with them split fairly evening between short-term and long-term losses. I have a need to sell about $20k to fund an upcoming purchase. Am I correct in thinking that I should sell the lots with short-term capital loss since those losses can reduce taxable income (up to $3k per year) in the same manner as a long-term capital loss? On the other hand, if the market recovers quickly it will be advantageous to have shares with long-term capital gains rather than short-term gains. Appreciate any help you can offer. Thanks.

RandomGuy

Thanks, everyone. I'm following. I'll just need to be diligent about tracking this on my own. I've been doing the conversion as soon as I make the after tax contributions to my employer's plan so the "taxed portion" should be negligible.

RandomGuy

Soon2BXProgrammer wrote: ↑Tue Jun 08, 2021 11:32 am no they are treated as a conversion. so they have a 5 year timeframe... however, there is no penalty on the "tax free" conversion portion... but you can't get to it, if you have an older conversion that has to come out first.

Thanks for that. My Roth IRA is at Vanguard. Is Vanguard tracking the converted amount and starting the 5 year clock or is that up to me? Thanks.

RandomGuy

Hi All,

For those utilizing mega backdoor Roth IRA contributions, are they treated as normal contributions for the purposes of making an early withdrawal? Specifically, there is no penalty for withdrawing contributions to a Roth IRA at any time. I'm asking if the same is true if the contributions are made through the mega backdoor method. If you are able show where this is spelled out in the tax code, I'd be very grateful. Thanks.

RandomGuy

According to the Portfolio Analyzer, Vanguard Large Growth has a correlation of 0.97 with Total US Market. If US Market is considered the Gold Standard, how is a fund that tracks it at 0.97 considered a wild gamble? Vanguard Small Value has a correlation of 0.88 with Total US Market. If US Market is the Gold Standard, this is by definition a much more risky fund than Large Growth. Yet this fund is never discussed as risky a gamble like Large Growth. In fact many on this forum recommend this more risky tilt. I look at my portfolio and the correlations with US Market and see a much much less risky portfolio than if I tilted Small Value. Lower correlation with US market does not equal more risk. Cash would have a correlation less than 0.88 wi...

To summarize, it looks like the consensus is that any AA probably won't make or break my retirement...stay heavy in equities if I believe I can stomach the risk and want to build wealth...move a more substantial portion (in years of expenses) to safe assets if I just want to secure my own retirement to the spending levels listed in the original post. Agreement?

RandomGuy

Watty wrote: ↑Thu Dec 17, 2020 9:29 pm

RandomGuyOnInternet wrote: ↑Thu Dec 17, 2020 12:58 pm Projected Pension Benefit: $79,000

Is the pension indexed to inflation?

Will you or your spouse get Social Security too? If so how much?

Pension is indexed to inflation. Social Security will start 12 years into retirement and reduce need for income by ~$12k/yr.

Another approach is to decide how many years of expenses (what you need each year after pensions and SS) you want to keep in cash/bonds (a stable value fund is good for this if you have one). The total needed will vary since you'll be collecting the pension before SS, and once SS kicks in you'll need less. Some people want 3 years piled up, some 5 years, and some 10 years. Start to build that pile. Then, keep the excess at 90/10 or 80/20 or 70/30. There really isn't that much difference between 10 points of asset allocation. Since you're still saving and the markets have been good, I'd build most of the pile now and use your next 10 working years to keep buying the rest of your retirement income as a high percentage of stock. If the market...

59Gibson wrote: ↑Thu Dec 17, 2020 2:23 pm 60-100% equity..Doesn't matter much due to your pension and SS meeting your required 90k sometime in the future. In fact you could retire earlier/ or cut back hours, why wait 10 more years unless it's needed to fully vest pension. You'll be over-funded but the time will be gone.

Great point. I need the 10 years to vest the pension and I genuinely enjoy working.

With the pension paying for a v. large chunk of your "base" retirement expenses, I see no real need for you to go 60/40 in retirement. I would say that 70/30 is probably fine, long term. (I am 7-9 years from retirement and currently 70-30, with pension expected to make up 66% of base expenses.) 80/20 right now, 10 years out, would be pushing it for me, but others will say it is fine I am sure, Your post says nothing about social security. Will you and/or your spouse get it, or is the pension in lieu of SS? If it's the former, there's def no need for you to be 40% bonds. I should have mentioned that I'll begin taking Social Security 12 years into retirement. That will add ~$12k/yr to the income stream reducing the need for portfol...

Hi Everyone, I'm currently 10 yrs out from retirement and I'm considering making changes to my planned AA as I near retirement. This consideration is not due to recent market returns, but a reconsideration of my expected pension benefits. Here are the details: Marital Status: Married Projected Retirement Expenses: $130,000 (Split approximately $90k required, $40k discretionary) Projected Pension Benefit: $79,000 Income Required from Portfolio: $51,000 Current Retirement Portfolio: $940,000 Future Retirement Account Contributions: $57,000/yr for next 10 years Based on a 3.5% SWR, I'd need a portfolio value of $1.28M in 2030 to meet planned expenses. Conventional wisdom would say glide down from 80/20 allocation to 60/40 in the next 10 years,...

Thanks for the responses everyone. Given that VTSAX won't distribute capital gains and the ease of automatic investing, I'm going to go with the original plan. Appreciate all the helpful replies.

daektr, For my anticipated level of assets is tax loss harvesting even worth the effort? Well, TLH is pretty easy to do. I think it's worth spending the time "learning how to do it". After that, whether it is worth it or not is probably dependent upon how big of a loss you have available, relative to the value of your time. It also isn't really available "in the large" that often with VTI after you've been investing for a while. Is there anything else I should be doing with respect to tax efficiency? I have heard one should hold ETF's (VTI) instead of mutual funds to avoid unrequested capital gains -- and I've always followed that (VTI in taxable) so don't have any scars to prove it... With Schwab (at least), this 'speci...

Magicrat,

Thanks for the feedback.

magicrat wrote: ↑Tue Dec 08, 2020 10:10 pm Your plan looks good. Having a large number of lots is a non-issue. ETFs are fine though many, including myself, prefer funds.

My personal rule is that I don’t tax loss for less than $3k annually, the limit that can be used to offset ordinary income. That’s a ~$1k tax savings for me. Any less is not worth the complexity of having a TLH partner fund, at least that is my preference.

I'm also leaning toward mutual funds because I prefer automatic investing and mutual funds allow me to not worry about buying full shares. Am I incorrect in thinking that ETF purchases would have to be made manually every two weeks if I opt for VTI over VTSAX? Thanks.

RandomGuy

David,

David Jay wrote: ↑Tue Dec 08, 2020 9:41 pm Based on spousal income, she is allowed to contribute to an IRA.

I suspect the lack of SS number will be a huge problem with brokerage firms, as it prevents reporting to the IRS. Is she allowed to apply for a SS number?

Thank you for the reply. Unless I'm missing something, I think you may have responded to the wrong thread.

RandomGuy

Hi All, Well, I've finally managed to have a little money to invest after having maxed out all of my tax advantaged options (401(k), Roth IRA x2, HSA, Mega Backdoor Roth, 529s (not really maxed but funded to my target level)). I am anticipating contributing ~$12.5k/year over the next three years to a taxable account. These funds will act as a cushion if childrens' college expenses run higher than expected. Otherwise, it be considered part of our retirement portfolio. If the funds go toward college, I'll pass them through my 529 plan for the state tax break in the year that they are needed. My allocation will be 100% to a TSM index fund. I have a 10+ time horizon on the funds and can afford to take some risk here as I believe I am nominally ...

vasaver, Thank you for your analysis. Good catch on the $10k/year limit for k-12. I missed that and would need to cash flow the difference for those high school years or use taxable/roth withdrawals. $30k/year for college was based on tuition and room/board at the state flagship university. I've been hesitant to really load up the 529s in case things change (no private school or kid doesn't want to attend college). I can't really see an advantage to contributing directly to the 529 vice contributing to the backdoor Roth and withdrawing the funds when needed and the using the 529 as a pass through. As you mentioned, those funds could be left in the Roth for emergencies. I could be convinced that any additional funds should be invested direct...

retire2022,

Thanks so much for your response. My wife and I are both 40. With our current retirement assets, I feel very good with respect to our financial standing for retirement.

My post was primarily to get a sanity check for my education savings plan with respect to savings rate, asset allocation, and account management. Thanks.

RandomGuy

Bump. Hoping for a couple replies. Thanks!

Hi Bogleheads, I've been lurking on this board on and off for the better part of two decades. This is my first post. I'm looking for some feedback on my investment strategy for my childrens' education. Below are the relevant details: State Tax Bracket - 5.75% (Virginia) Children: 3 (ages 12, 10, 4) Savings Goal: Starting in 2024, fund their education at the following amounts: - $10,000 per year for private elementary/middle school - $15,000 per year for private high school - $30,000 per year for 4-year college (The private school choice is for personal reasons rather than lack of good public schools. The 2024 start date is a function of the fact that we'll be living abroad until then) This totals $605k in education costs paid out in varying...