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GAAP wrote: ↑Sun Mar 26, 2023 11:47 am Do it soon -- you're running out of time.

contributions made.

mhc wrote: ↑Sun Mar 26, 2023 2:44 pm The rule is box 1 minus box 11.

https://www.irs.gov/pub/irs-pdf/p590a.pdf

Look at p.6 under "What is Compensation?"

Thanks for pointing to box 11. My W2 box 11 was about 7k which leaves plenty of compensation to qualify for the Roth contribution.

2022 was my first full year of retirement, and now that I have submitted my tax return it seems evident that I can make a Roth contribution for 2022. I give my situation for 2022 below. My question to you is, am I correct in concluding that we can contribute 7k each for my wife and I (age 61 and 65) for 2022 (done before the April deadline)? Situation: - Earned income: I have RSUs that vested in 2022 from the job that I retired from in 2021. Box 1 on my W2 form is 134k$ and this is the entry in our 2022 IRS form 1040-SR line 1a (MFJ). Therefore, we have sufficient "earned" income to contribute to a Roth IRA. - MAGI: my AGI for 2022 (MFJ 1040-SR line 11) is 408k and this included Roth conversion of 213k (1040-SR line 4b) of pre-tax...

While not exactly your question, can you or your wife do backdoor Roth contributions at this time?

When our kids were young we had a few camping areas we liked … we live in NJ:

1. Cabins at worlds end state park in PA in the fall with other families when they were 2-5 years old. Little hikes, fires and plying with other kids.
2. Tent camping at fish creek pond in the Adirondacks in late august when they were 6-9 years old. Hiking canoeing, fishing, swimming, kids mountain biking, and park games.
3. Boundary waters wilderness canoeing 10 years old and up …I know Minnesota is not in the NE but we still love it.

I did not realize that Roth conversions do not contribute to MAGI for the Roth contribution limit just in time to make Roth contributions for 2022. Thanks to this thread!

My situation:
2022 is our first full year of retirement and first year making Roth conversions.
Earned income from RSUs … 134k from 1040-SR line 1a
AGI … 408k from 1040 line 11
Roth conversions …. 213k from 1040 line 4b

This makes my Roth MAGI 195k which is under the 2022 limit of 198k for MFJ so we can contribute 7k to each of our Roths!

Is this correct?

Ok I went through this exercise so perhaps I can help. First set you asset allocation. 50/50, 60/40 etc. So if you have 3 funds, I'm guessing one is domestic total stock, then international total stock and then domestic total bond. You can also add a 4th. international total bond. Example: Domestic total stock 50% Inernational total stock 10% Domestic total bond 40% Set all the stocks and bonds to Specific ID for the cost basis Have the dividends and interest sent to your settlement account. Lets say you need 100K before taxes to live on and you get 50K in interest and dividends. That would be proportional to what you are holding. For example you will get more dividend from Domestic total stock than international total stock because you ow...

watchnerd wrote: ↑Thu Mar 02, 2023 7:24 am

whodidntante wrote: ↑Thu Mar 02, 2023 7:21 am

watchnerd wrote: ↑Thu Mar 02, 2023 7:19 am

whodidntante wrote: ↑Thu Mar 02, 2023 7:17 am Do Roth contributions if possible

Can't, over the income limit.

There is no such limitation for Roth 401k.
Do a backdoor Roth IRA also

I already do backdoor Roth conversions.

In excess of the $7500 401k catch up contribution limit.

I would guess that the company match limit may be 6% of salary the the pre tax 401k contribution limit is over 20k, not 7.5k (that is for IRAs). Does your plan allow for Roth 401k contributions and can these get a company match?

Miami is #2 in quality of life.

You should be wary of wash sales if selling bnd in taxable while reinvesting bnd dividends in tax deferred.

2 down

It sound like you have the fund in an old mutual fund account at fidelity. You may want to transition to a brokerage account which will have a settlement money market account and have access to a wider range of investments.

My first Medicare bill came with no IRMAA.

Then came a notice of my IRMAA rate, with information about how to appeal if appropriate.

The next bill included IRMAA with retroactive charge for to no-IRMAA months.

Is this what you are talking about?

You may want to consider maxing a Roth IRA and possibly using a Roth 401k if available while also considering company match if available. Also depends on wether you expect to be in higher tax bracket in the future which would also favor Roth now and tax deferred later.

Now, if we never withdraw any funds until 2022, but experience a series of gains and losses over the years I guess (and this is just a guess) we should probably sum up all the losses and gains to date and start with that as an initial first year excludable gains in the IRA. I would be guided by what I would be willing to defend in an audit since there are no functional guidelines from the NJ Division of Taxation. So, here are the 2 different IRAs with their first distribution in 2022: IRA 1: opened in 1985, includes some NJ taxed contribution, some government share dividends in both QIF and non-QIF funds, and has a QIF capital loss in 2009 of about $900 and capital gain of $1500 in 2010. Converted in 2022 to Roth IRA. I have added all of t...

Now let us Look at an IRA - Gains/Losses on non-QIF investments don't matter, ignore them. - Exempt dividend income is treated separately, not related to the Gains/Losses - Treat carry over with same rules as taxable accounts Thanks, If I use the rules above, they imply that negative QIF net gains in any year do not reduce the excludable portion of a withdrawl or the excludable amount which is carried over from year to year until fully disbursed, whereas positive QIF net gains in any given year do add to the excludable amount which then can be carried over from year to year. For the uses that I have, none of our IRAs had a withdrawal until 2022 and so the use of Worksheet C for 2022 and any future withdrawl seems unambiguous to me given th...

Okay, so I spent some time yesterday to put together a customized version of the NJ IRA Worksheet C. This Google Sheet is read-only, but you can open and copy to play with. It has 4 samples of situations. A partial Roth Conversion, a full Roth Conversion, a long-time IRA with lots of history including exempt contributions, USGO income and previous distributions (really 2 different versions including a future year). It allows you to take direct annual exemptions for USGO distributions, and also the more typical pro-rata approach. I also show how I tracked the USGO distributions. My examples show various scenarios including both approaches. There is a comment on the right side of each tab that describes the scenario. Sample Worksheet Example...

If I understand your situation correctly, you are buying a house and have several ways to pay for it and you are focusing on some appreciated energy stock in a taxable brokerage or an inherited ira. You may want to consider:

- using the emergency fund for the house, since you now have the inherited ira that could serve as an emergency fund with tax deferral benefits.
- consider any other assets that you may not have mentioned (e.g. less appreciated assets)
- it may indeed be good to use the appreciated energy stock to lower your risk to that one sector and since it would be taxed at ltcg rate
- adjust your investments to be tax optimized given addition of the inherited ira and the new house

As you say it is not known if BND will go up or down or how high the fed rate may go. Right now the 30 day BND yield is 3.95 which is looking at the past 30 days, and the CDs are looking at the future year or so, so these are different metrics.

BogleMelon wrote: ↑Thu Feb 02, 2023 3:41 pm

galawdawg wrote: ↑Thu Feb 02, 2023 3:26 pm What airports in NJ and NC?

Newark and Raleigh-Durham

I flew a lot out of Newark before retiring 2 years ago. I would drive to meetings north of Washington DC or to Albany, but not any further. It was too much wear and tear on me to be in transit so long. I did fly to Chicago just a couple weeks ago and travel is back like it was pre Covid. Delays should not be bad in March especially in the morning.

My employer discouraged long drives due to safety concerns, which I appreciated.

But I like to drive if I have time to split it up and do things on the way.

Your choices for your 401k are a part of your overall investment portfolio and plan which you have not provided. Low cost index funds as noted above are generally good choices of the options you provided in this 401k.

I would roll over to 401k. And if you have existing low risk investments in 401k (e.g. stable value), you could shift those to equities (e.g. total stock market) since while the money is being rolled in it will be in cash at that time keeping your AA more constant.

While I realize the order won’t be processed today. Has anyone else been waiting for the calendar year to change so more ibonds can be purchased? If so, is there any reason not [/b] to place the buy order today? Happy new year :sharebeer Nobody is buying I-bonds today. Everyone will calculate the last possible day they can buy while earning the most interest in the meantime. Some will be wrong by a day of course and end up purchasing on the worst possible day in February, and that will ruin the rest of 2023 for them. Well not as much as entering an order to buy today would. Would you please explain that specific calculation to a newbie? You get the interest for the month regardless of when during the month you buy. So if you want to optimi...

. You look like you are in great shape and saving strongly. Not sure what your concern about money is? If you can identify your concern, there could be changes made to reduce them. It probably wasn't a rational worry. Even though we were doing fine, I think I just felt the pressure of being the sole provider. Two retirements and two college educations weighed on me. It's really only in the last couple years that I started to feel like we were pulling ahead. I'm trying to relax a little more. I had similar worries when we had kids and when I retired. Here is a couple of things that helped for me: 1. I ran a bunch of scenarios to develop my overall plan to convince myself that my plan made sense. Most of the things that tended to worry about...

I have been donation appreciated old vanguard funds to my fidelity DAF with no problem. Transfer is initiated via Fidelity and the cash value of the appreciated funds are added to the DAF. This allows easy contribution of appreciated funds, lumping donations to overcome the currently high standard deduction, and tax free growth once invested in the DAF. I do not recal exactly, but it takes about a week for the transfer to occur, but I would allow for a few weeks (I have typically done this end of November to ensure it gets done within the tax year).

You look like you are in great shape and saving strongly. Not sure what your concern about money is? If you can identify your concern, there could be changes made to reduce them. As others have suggested, I would diversify the large amount of company stock and invest the 1yr EF to have some earnings. This would free up your taxable account which can be invested in such a way as to serve whatever you may need that money for. For example, some college savings (529), emergency fund in t-bills, some buy and hold stock for the long term that would build up captain gains (eg VTI), and manage your accounts so that if you need to withdraw some from taxable, it can be done tax efficiently (eg, no wash sales and tax efficient…may want to use spec Id ...

2023 for me will be similar to 2022. Continue Roth conversions. And intend to simplify, and travel more; I did not get very far on these in 2022.

ejm009 wrote: ↑Wed Dec 28, 2022 6:59 am I have done this in both RPM and my own spreadsheet. Success with RPM has been limited. When you indicate it seems to work well, are the results showing conversion to the top of a tax bracket ?

One method I have used to debug the RPM results is to sweep the conversion amounts for each year and plot the resulting final portfolio value as shown.



Notice the results are very choppy. I do not believe this is proper and have tried various settings in RPM such as controlling allocation re-balancing and disabling taxes without impact.

Until this is understood, I don't see a path to use optimization in RPM.

Could the steps be irmaa thresholds?

As a fellow 2021 retiree, I have had some tendency towards becoming overly focused on investments given the last year. From what you describe, looks like you are in great shape. Some suggestions: 1. On housing, unless you really want a house I would not suggest it. Sounds like you are considering moving, and I do not see the real estate market as a particular opportunity at this time. 2. Looks like this would be a good time for you to do Roth conversions given your currently very low tax rate. 3. You might want to use some retirement planning software to better understand your overall retirement plan and be able to adjust as your situation changes. I expect it would give some guidance on your questions such as what money to use, when to tak...

Does it cast anything to transfer?

I also have individual TIPS in a rollover IRA that I am using for Roth conversions. Seems very unclear what to do…thanks for starting this thread.

I bought my first ibonds in 11/2021 near the start of the “ibond party” and have more recently been buying tips in my ira. Given that ibonds look back over 6 months to gauge inflation, will ibonds be superior to tips during the next year or two as inflation is expected to decline and is known to have been declining for the past over which determine their yield?

For your emergency fund I would suggest using 6 month t bills and money markets in you brokerage account which should both give good yields now. Sounds like you use vanguard brokerage. For the money market you could choose the sweep account, treasury, or CA muni (the latter 2 giving you some tax benefits). You may want to make sure that your cost basis in your taxable account for equities is spec I’d so that you sell equities in a tax managed way should you need them. This would all help keep things simple.

Congratulations on your investments so far!

mamster wrote: ↑Sat Dec 17, 2022 6:38 pm An individual 401(k) is for when you run your own business. Since both the jobs you described are W-2 jobs, the income would not be eligible to contribute to an individual 401(k) (or SEP-IRA or any other small business/self-employed retirement plan).

Maxing out the Roth IRA and filling it with VTI sounds like a great idea. Beyond that, he might consider I-bonds and/or more VTI in a taxable account. I don't see any reason to get more complex than that.

+1

For us we currently keep about 2 months expenses in checking…all expenses go through our checking account…about 25k.

When I was working, we kept a month or less in checking and had auto saving to our brokerage to roughly ballance income minus expenses. Now that money market rates are higher, I will probably shift to keeping more in a sweep account and perhaps set up autopay to checking to offset expenses.

One thing that you are missing is that the inflation index for TIPS look back a few months … see http://eyebonds.info/tips/help.html. So some of the inflation rate for a bond that has 4 month duration is already known, and cpi month to month fluctuates a lot. This leads to large fluctuations in real yields of TIPS with short duration.

I am new to TIPS so others will tell us if I am correct.

Also, wash sales are matched by shares. If the number of shares purchased by the dividends is small compared to the number sold for a loss, you may not care about the wash sale. You only lose the whole tax loss if the number of shares purchased via the dividends is equal or greater than the number of shares sold for a loss. Thanks rkhusky for reminding me of this! Since in this specific case the shares purchased in one quarter are only about 10% of the after tax RSU shares for this year. That fraction multiplied by our tax rate and the possible % decrease in the price of those shares makes the impact of a wash sale not very material. If the shares are sold in one bunch, the oldest shares are those whose loss is washed. These usually work o...

rkhusky wrote: ↑Wed Nov 30, 2022 10:15 am
Also, wash sales are matched by shares. If the number of shares purchased by the dividends is small compared to the number sold for a loss, you may not care about the wash sale. You only lose the whole tax loss if the number of shares purchased via the dividends is equal or greater than the number of shares sold for a loss.

Thanks rkhusky for reminding me of this! Since in this specific case the shares purchased in one quarter are only about 10% of the after tax RSU shares for this year. That fraction multiplied by our tax rate and the possible % decrease in the price of those shares makes the impact of a wash sale not very material.

I have been receiving vested RSUs from my past megacorp employer for the last decade around this time of year, and have about 5 more years to come. The shares get deposited in my computershare account. This years RSUs just vested and should show up in Computershare in the next couple days. In the past I have sold these thru Computershare asap so long as the price did not drop before I could sell. My reason to not sell if it dropped, is that I wanted to avoid a wash sale. I also own megacorp shares in my 401k and these shares dividends must either be paid out of the 401k (and tax paid on these as ordinary income) or be reinvested to buy more shares (I have always had them reinvested). Since reinvestment occurs every quarter with the next in ...

Based on the above information, in 2023 we estimate about $100k of income from her from pension, her partial year SS, my survivor SS, as well as interest, dividends, capital gains, etc., from our taxable accounts...... In retirement, our annual gross income requirement will be about $100k...... So, I am trying to determine how much to draw down yearly from the $3.8M in my combined retirement accounts in the next few years before RMDs start for both of us. In the interim, social security income will kick in (first for my wife, and then for me). If I understand correctly, your income is $100k. And your expenses are $100k. Is that correct? If so, you don't have any need to withdraw from retirement accounts now. But you may want to withdraw so...

My wife and I (age 38) are well above the limit for making deductible IRA contributions, or even Roth contributions. I rolled my IRAs into my employee plan (has no fee, low cost index funds), so I could make backdoor Roth contributions. She has $162k in IRA and 13k in a Roth (from when our income was lower). I have read a lot about how dicey Roth conversions are given the uncertainty about future taxes. That being said, is there a calculator that takes in the account the fact that if I convert the $162k, I am able to do backdoor Roth contributions for my wife without invoking the pro-rata rule? it seems like a complete nightmare to constantly track your basis. Converting 100% of the IRA (I would pay taxes in cash) allows me to do that in p...

Thanks Mike,

I have read git-5…sound like I am in the same boat as you (not a NJ tax expert).

... State return : People are going to be unhappy to hear this, but Turbotax appeared to completely punt on what to do about accrued market discount on the state return for my state. I don't want to get into the whole issue, discussed in other threads, of whether accrued market discount is or is not "treasury interest" that can be deducted on a state return. I'm just saying what Turbotax did which was ... apparently punt to the user of the software: It did NOT ask whether the accrued market discount was associated with a Treasury and it did NOT automatically deduct it from the state return I didn't find any area in the "interview" mode for the state tax return that seemed to have anythng to do with dealing with income f...

Thanks for the input, everyone. I should note that they have enough in taxable accounts that it's unlikely they'll ever have to draw beyond the RMD on their IRAs, even if there are 6-figure annual LTC expenses. A scenario: period a: 3 years when they're MFJ filers at 22% rate period b: 3 years when one of them is a single filer, at 24% marginal rate period c: 10 year clock for the child heirs runs. Most income to child heirs would be at 22% bracket. Assume a $75,000 conversion and child heirs inherit, then with the Roth conversion: * Pay taxes now of 22% * $16500 * Avoid paying similar amount of taxes (assume account earns at roughly inflation rate) on a date in the future My inclination in this scenario is to do nothing, because the amoun...

DrDoodle wrote: ↑Sat Nov 19, 2022 12:43 pm (plus another million of appreciated assets but those aren't the source of my concern).

Why are you not equally worried about the million of appreciated assets? Since you would get a step up for those, won’t you also have a decision about how to invest/reinvest those too ? I would think you would make an overall plan for all of you investments and expenses/cash flow ( including housing)?

If it was me I would reinvest all (including the ira) as part of my overall plan.

Thanks all for the comments. Together they seem to confirm that I should hold where I am now until the situation changes. I expect that the stable value fund yield will eventually peak and be surpassed by available bonds, but I will continue to monitor until it becomes clearer.

I retired last year, and we (65 and 61 years old) plan to live off of our portfolio and likely leave some to our heirs. My 401k (now) makes up a significant portion of our portfolio (currently 41% of our portfolio…it has done well over 2022). Prior to retirement, I had planned that I would close the 401k soon after retirement, move appreciated employer stock in 401k (now 6% of portfolio) with NUA to a taxable brokerage, rollover aftertax (now 1% of portfolio) into a Roth, and rollover the rest (34% of portfolio) into a rollover IRA. I would do this in order to take advantage of NUA and Tax free earnings of Roth. However, the 401k has a stable value fund that has proven very important to us over the past 2 years that would not be an option i...

As implied in your post, since rmds plus Ss are sufficient for your parents, the conversions would be primarily for minimizing taxes for the children. Factors to keep in mind are: - tax rate if one parent predeceases the other (rmds of surviving parent) - ten year period for children to pay tax on inherited iras (and 10 years to keep inherited Roth) - any step up of taxable assets - any IRMAA thresholds that may be passed or avoided by conversions While the parents are old, a Roth may end up existing for over 15 years (5+ years for one of the parents, and another 10 years for the children) so this is still a fair amount of time for investment growth. There may well be a case for conversions, but of course they are not necessary as noted abo...

Stormbringer wrote: ↑Fri Nov 11, 2022 10:51 am The problem is that: (a) selling the I-bonds is a taxable event; and (b) the proceeds are not going to be in a tax-deferred account.

TIPS are a pain in the butt to own in a taxable account, because you have to pay taxes on the principal gain each year. Not only will this be a drag on your return compared to I-bonds, but you are going to have paperwork and a bigger bill from your CPA every year.

Would TurboTax take care of the extra paperwork for holding individual tips and tips funds in taxable? All my tips are in pretax, and I am not sure if I would want them in taxable but it would be good to know.

With all the talk about switching out of bonds in the forum here and local chapters, I wonder how many of you are staying the course with bonds. I have at least 30 years horizon before I retire and have not changed my asset allocation or monthly contributions to stock vs bonds. Moving out of bonds feels like market timing. I know timing market is hard and you often make the wrong decision but starting to wonder if I am doing the right thing by staying the course. Any advice? I have been staying the course on my fixed income asset allocation, but have been moving away, and continue to move away from total bond fund for the past 2 years. I retired in 2/2021 and at that time, having taken my pension lump sum, decided to bump up my fixed incom...