Bogleheads.org

Wife just rolled her Traditional IRA into her 401k last week. She did not do a backdoor Roth IRA in 2022 due to the Traditional IRA being all pre-tax, and not wanting to mix pre-tax and after tax and deal with the pro-rata rule. Now that the Traditional IRA money is in a 401k, is it now possible to contribute to both 2022 and 2023 via backdoor Roth IRA?

I'm unclear on how this would be handled since the Traditional IRA had money in it as of 12/31/22. Would the pro-rata rule apply to a 2022 contribution even if done now (Feb 2023)? I get the feeling from the wiki that it might, but would like some help.

https://www.bogleheads.org/wiki/Backdoor_Roth

Practically, it's hard to figure out what percentage to use to get up to the $61k total limit (2022) or $66k this year (2023) with all the deductions, taxes, etc. The way I do it is to keep a spreadsheet and keep a running tally of the total amount that goes in, based on how much actually gets contributed each check from both me and my employer based on a certain gross pay % setting. You can project out the total contribution amount for the year based on the number of paychecks remaining and whatever the last contribution amount was. If the projection is a little over or under, you can change the percentage and recalculate after the next paycheck/contribution. This works best if you have a consistent pay amount going in every pay period, an...

Yes, there is no limit to what you can carry over, so you will be able to combine your previous losses to get to the 3k Income reduction for this tax year. Then, you can use some of the losses each year to reduce income by 3k. You can also use up the losses for any other capital gains that come your way.

Sorry everyone. I TLH'd yesterday, which made the market go down more today.

Unfortunately, no. You will have to pay taxes if you are doing this in a taxable account. Capital gains tax rate is based on your income, and since your income is $125k, you will pay 15% on the proceeds, plus whatever tax the state gets. For me, it's an extra 5-6%. Some states do not have income or capital gains tax. It depends.

I do not know each of the funds, but you can read this page to see if it would be beneficial to pay the tax to switch. There is a great spreadsheet linked at the bottom to plug in actual numbers.

https://www.bogleheads.org/wiki/Paying_ ... itch_funds

Do you have your cost basis set up as specific ID? No, they are FIFO or Average Cost. Can I change that? Go to the main Buy/Sell page for the holding. Under "holding options" change the Cost Basis Method to Spec ID. Another question - After the recent fiasco, VTTHX cost basis was stepped up so my shares now have a unrealized loss. Can I sell specific lots or even FIFO/Average Cost to generate funds to pay my Uncle Sam bill? Any pros/cons to this? If you are selling it now at a loss, you can only use it to offset future gains. It can't be used to offset the long term capital gains distributions from last tax year. If the entire holding is at a loss, no need to worry about selling specific lots. Just sell the whole thing and reinve...

nehawk87 wrote: ↑Fri Apr 01, 2022 10:43 am Talk about incredible timing with the M1 Finance rebalance this morning. Filled $TMF at $18.66, sold $UPRO at $64.02. Nice to see after an otherwise terrible quarter. Let's see what Q2 brings.

What time do you need to put in the request for rebalance for the morning window? I put it in about 7 am, hit confirm, yet at this point, it doesn’t look like anything was bought or sold. Does it take a while to show up?

I was also excited to get TMF on the cheap this morning, now it’s well over 19 and UPRO is down. I’m really disliking M1 at the moment.

I have this in my 401k plan as well, at Fidelity. They even give us a drop down tab on the "change contributions" page that lets you select whether or not to automatically convert after-tax contributions to Roth. It does happen immediately, so there is no taxable growth. For me, the funds automatically stay within the 401k, in a Roth-401k sub account. I believe all the company match stuff goes into the pre-tax portion of the 401k no matter what. The Roth money can then be left in the Roth-401k, or it can be rolled out into your Roth IRA. Before they added the auto conversion a few years ago (I had to call to get them to add this feature), I was calling every few weeks to have them do the in-plan conversion over the phone. I also r...

This guy on Reddit took out margin to lever up UPRO, which is already a 3x fund. He was something like 8x levered on UPRO, which is insane. He did this with several hundred thousand dollars and was something like $1.2 m in the hole when he got margin called.

Forester wrote: ↑Sun Mar 20, 2022 9:31 am Classic 'dead cat bounce' in a developing bear market, the rally will falter in the 4,590-4,600 area.

I thought you gave the go-ahead for the run up to 5200

I wish I bought MAFIX or BLNDX, instead of PSLDX. :oops: Why would you fundamentally want MAFIX? It has an expense ratio of 1.8% and looks to have less overall leverage. I suppose it does have slightly higher Sharpe, but it seems like there are other ways to accomplish that without paying 1.8% for it. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=2010&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=true&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=3&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&...

Don't you have to call them to convert the mutual funds to ETFs? I think you do.

Why are you so down on the large cap funds? I just sold my total market funds over the last few weeks and now own several large cap funds. Hopefully I will be able to tax loss harvest back to total market in a few weeks, but if I can't, then it's not really a problem. My rationale was that TSM contains more small caps, so I liked the extra diversification of the extra ~3500 stocks in case small caps have a good run in the next few years. But, small cap outperformance would probably have a minor effect on TSM and I don't feel convinced enough about small cap to have a true tilt. For that to happen, the market would need to climb from here, but that's anyone guess. It would be good if after a month I could TLH back into TSM as you said. Look...

jhfenton wrote: ↑Thu Feb 24, 2022 8:26 pm In fact, I did it this morning, adding to a position in my an emerging markets ETF in my IRA and then selling just the right amount of VSIGX (Vanguard Intermediate Treasury) to cover it. Easy peasy.

Fidelity will not let me do the same thing. You have to have margin—or at least limited margin in a retirement account—but they don't support margin in an HSA.

Wow, I did not think it could work this way. Did you have to do this transaction over the phone?

Having mechanical rules for TLH'ing provides a tool to resist market timing. If you have time to watch the markets and trade during the day, ETF's can allow more freedom. Trading with ETF's is different than with mutual funds and, if you are not careful, you can run into issues during times of volatile markets. That's fair. I guess I am tempted to time such that I can maximize my losses so that I can dispose of active funds sooner and get everything into index funds. What rules to you or others use? A certain $ amount and TLH no matter what? What happens if there is no good third fund because you only recently TLHd? My third option is Large Cap Index since I am in both S&P and TSM after TLHing only a portion of TSM earlier this month. ...

It would be painful to lose 2% by being out of the market waiting for a MF sale to go through when I could mitigate time out risk by converting to ETFs, then sell and rebuy an ETF immediately. But you do realize that you could also gain 2% by being out of the market, and that the odds for gaining or losing are about the same? And that you could gain or lose 2% by being in the market too. In the case of gaining while being out I would be happy with being lucky. Leaving the funds alone and seeing a 2% gain would limit some of my loss and result in paying more tax than if I had TLH'd to create a paper loss. Dropping further by 2% would increase my losses, and make me wonder if I should wait another day to see if it will go lower, which is luc...

Yes. The OP could lose 2% by being out of the market or lose 2% by being in the market. Which is more painful? Or gain 2% by being out of the market or gain 2% by being in the market. Which brings more pleasure? From the posts on this topic, it seems like losing 2% by being out of the market is more painful than losing 2% while in the market. Perhaps because one involves direct action by the investor, while the other is a passive event. In the same vein, gaining 2% while out of the market brings more pleasure than gaining 2% while in the market. Perhaps because one can congratulate oneself on being a good market timer. It also seems like the amount of pain from losing 2% while out of the market is greater than the amount of pleasure one mi...

I sold VTSAX last week and the very next morning I invested the proceeds into VV. I was out of the market less than one trading hour. This was more to my original question. I would get the end of day price on VTSAX, but another total market ETF could open at a higher price (say it opened 1% higher) in which case I would have lost 1%. The reason I'm concerned about 1% is that I'm trying to do this with $500k. I recently sold off many other funds that were held for years with an advisor, so my 500k in VTSAX/VFIAX were all invested in Oct-December, so am looking to harvest some tax loss, but not lose due to fluctuations. If your mutual funds are at Vanguard, call up Vanguard's trading desk and ask for a tax free mutual fund to ETF conversion ...

I sold VTSAX last week and the very next morning I invested the proceeds into VV. I was out of the market less than one trading hour. This was more to my original question. I would get the end of day price on VTSAX, but another total market ETF could open at a higher price (say it opened 1% higher) in which case I would have lost 1%. The reason I'm concerned about 1% is that I'm trying to do this with $500k. I recently sold off many other funds that were held for years with an advisor, so my 500k in VTSAX/VFIAX were all invested in Oct-December, so am looking to harvest some tax loss, but not lose due to fluctuations. If your mutual funds are at Vanguard, call up Vanguard's trading desk and ask for a tax free mutual fund to ETF conversion ...

UpperNwGuy wrote: ↑Thu Feb 24, 2022 1:21 pm I sold VTSAX last week and the very next morning I invested the proceeds into VV. I was out of the market less than one trading hour.

This was more to my original question. I would get the end of day price on VTSAX, but another total market ETF could open at a higher price (say it opened 1% higher) in which case I would have lost 1%. The reason I'm concerned about 1% is that I'm trying to do this with $500k. I recently sold off many other funds that were held for years with an advisor, so my 500k in VTSAX/VFIAX were all invested in Oct-December, so am looking to harvest some tax loss, but not lose due to fluctuations.

I would like to TLH out of VTSAX (total market) and VFIAX (SP 500) mutual funds and switch to ETFs so that I can use other things like iShares ITOT or the others mentioned in the wiki page on TLH. If I enter a sell order today, how long will it be before the funds become 'available to trade' such that I could buy another total market ETF? My goal is not to be out of the market in case there is a rebound. Would the funds be available to trade tomorrow morning on Vanguard? I prefer not to exchange into US Large Cap (VLACX) because I would be TLHing nearly all of my US stock position in my taxable account, which represents about 35% of my total net worth. Though, I do see that VLACX, VTSAX, and VFIAX all track closely. I prefer to have the div...

How much in capital gains do you have for VXUS? What is your tax rate and income?

If it does not have much in gains, then you can sell/exchange for VTI. If it does, it would make sense to sell up to the net investment income tax limit based on your filing status, aiming to sell shares with LTCG first.

Here's a good graphic:

https://www.bogleheads.org/wiki/Expense_ratios

Just explain that a 1% fee could cost them $250k due to compound interest and force them to work several more years. Should do the trick.

lostdog wrote: ↑Wed Jan 26, 2022 8:20 pm On Vanguard's front page:

https://investor.vanguard.com/investor- ... sting-view

Greg Davis wants YOU not to do anything stupid.

As a side note, I wonder how much money flows back an forth between VTSAX and VFIAX during times like these for TLH purposes.

It's a cool town. I spent Christmas there.

Some cool things to do:

• Alligator Zoo: if you're into alligators, crocodiles, birds, tortoises etc, this is a cool thing to check out. They have a TON of gators. There are also many gopher tortoises that can be spotted in the dunes along the beach. This might be more of a morning activity.

• Fort Matanzas: Cool old fort made of coquina, a seashell material that eats cannon balls

• Beaches: Crescent beach, Mary street beach. The angle of the beaches as it goes into the ocean is very gradual in St. Augustine. My in-laws moved there for this reason so that they could walk on the beach. It's nice during low tide when the sand is firm.

• Anastasia state park was kind of cool, but small.

Any reason the Vanguard Brokerage money (100% settlement fund) is not invested? You could use that as well as the savings account for a down payment on a house. I rented for 3.5 years after moving to a new location and regretted not buying a place sooner. How much equity do you have in your current place? Were you thinking of selling that and taking that as a down payment? A standard savings account typically does not give a good interest rate. I would switch that to Ally or Citibank high yield savings account (HYSA) which should get around 0.5%. Either way it's not a lot, but it helps you lose less to inflation a bit better than a brick and mortar bank rate. You most likely have more than 1 year in emergency funds. Most people recommend ab...

If you are looking to buy an annuity with 401k money, you might want to look into a QLAC:

https://www.forbes.com/advisor/retireme ... -contract/

viewtopic.php?t=279086

The size of distributions this year on actively managed funds is pretty crazy. I am working on getting rid of several such funds and was off by about $25k on the distributions and will have to pay a lot more than your parents.

Looking at AGTHX (Growth Fund of America), the size of the year end distributions are double what they were last year. Not sure how to figure out what the size of distributions are ahead of time, unless the fund puts out an estimate like Vanguard does. But that is only put out near the end of the year.

$450 isn't that big of a mistake.

At least I was grandfathered from the dreaded AUM fee. What was the fee structure you were paying, if it wasn't AUM? Hopefully you already set dividends and distributions to go to cash rather than reinvesting. My couple of American Funds paid distributions in the last few days. Not the end of the world if they did get reinvested though because you could sell them for no capital gains. Though, Schwab might have a fee to sell non Schwab funds akin to Vanguard's $20 fee for selling non Vanguard funds. I also recently moved from a similar place, Raymond James, and had the same problem of deciding when and how to sell funds. Here's the strategy I settled on: Sell highest fee, and lowest performing funds first, with an eye at freeing up capital ...

But now that what is left is at a loss, you have a golden opportunity to get out and possibly offset a little bit of the tax bill. Yes. Because the fund NAV is the proportional share of all the stuff held inside the mutual fund, it would have to be durably lower because there would be less stuff inside (i.e., the cash that was sent out). Thank you both. I confused the recent drop in this fund with a distribution payout. The price dropped off a cliff starting on 12/9 through 12/16, and looking at a few of the top holdings, it seems that they all dropped a lot over the last week as with other tech stocks. This would have nothing to do with distributions as you say. Since I don't want to be in this fund, it seems like a great time to sell. Th...

I recently left a financial advisor who had me in about 15 active funds in a taxable account, and now with the all the abnormally large CG distributions occurring, one fund is sitting at a loss with the drop in share price due to the distribution. I am wondering if I should just sell this fund now and cancel out the large distribution and to get out of the fund entirely. My goal is to eventually sell most or all these active funds but was waiting on this one due to LT/ST gains, as well as having sold several others this year. I was up against the NIIT limit but now will now be about 30k over due to distributions, which were much larger than I imagined when deciding to sell other funds. The fund in question, MSEQX (Morgan Stanely Large Growt...

carolinaman wrote: ↑Sat Feb 01, 2020 6:40 am

lakpr wrote: ↑Sat Feb 01, 2020 6:34 am No, Vanguard makes only the deposits. No reverse debit.

I did this process last week and it worked perfectly. There was a reverse debit for the deposit total

It's funny to think about how that single dollar (or $0.87 or whatever) has been used for all the bank account links. Think about how many bank accounts that dollar has been in!

Thank you all. I will shop around. It is encouraging to hear that others have had similar experiences with Geico, so it may be the company in addition to some added risk of the international property.

After reading a recent thread on umbrella policies, I decided to get a quote from Geico since my auto policy is also with them. I expected to get a quote of around ~$150-200 based on posts by other BHs for $1M and maybe a bit more for $2M. But they the quote came out with a whopping annual premium of $500 with a limit of $1M. Parameters of the quote are shown below. I thought it would be cheap given that we do not have kids, boats, violations, accidents etc. My fiancé recently was given a house in a foreign country (Germany), and I did mention it to them since they asked about foreign property. It’s a deal where her parents live in the house for the rest of their lives, but she is the owner. Perhaps this is why the quote was so high. I was ...

awval999 wrote: ↑Tue Nov 09, 2021 6:23 pm Everyone in this thread is wrong. The answer is a special $2 bill.

Came here to say the same.

My nephew recently lost a tooth, and got a $2. The funny thing was that my dad tried to buy the $2 bill from him, and got up to $5 and the kid wouldn't sell!

The total assets for OP are around $40K. 1.5% of that is $600/year. As a %, 1.5% is kinda high, but as an actual dollar figure, $600/year for an actual in-person adviser to spend time with you is not necessarily very much, if much time is spent. If you can do everything on your own, without the handholding, great. But not everyone can. That said, spreading this small-ish nest egg across 8-9 funds, and apparently not low fee funds at that, is, to say the least, not a great look for the adviser. So maybe THIS adviser is not very good. But still may be better if the next best alternative was sticking the money in a 0.5% bond fund, CDs, or a bank savings account, and/or not being motivated to save at all... Financial advisors are a better deal...

azcats22 wrote: ↑Thu Nov 04, 2021 11:11 am The Vanguard rep said I'd have to liquidate the Russell funds. I've initiated the move so I think I will wait and see if the Trad IRA with the Vanguard funds in it will transfer and then see if anything sticks from the Roth IRA through ACATS. Not sure how the advisor will react, but am thinking I will wait to contact until after I see what moves and what doesn't! Maybe a bit cowardly, but there it is. Thx for the input, az

Must be something weird with these funds. Anyhow, there are no consequences of selling within IRAs, so it isn't a big deal to move to cash. The big problem would be a taxable account, since you could realize some taxable gains.

If you have 100% made the decision to move away from the high fee advisor, I recommend submitting the transfer request in Vanguard before contacting them. They will try to make you doubt your decision and get you to stay. You don't owe them anything. In my case, I initiated the transfer and waited for Raymond James to call me, which they did to see if there was anything they could do. I waited two days and called them back, and politely thanked them and explained that I wanted to take my investing in a different direction, towards lower fees. I believe these assets should all transfer (in kind) to Vanguard without any problem. The only ones I have heard that can't be transferred are things like Fidelity 0.0 funds. They should all transfer a...

According to the link below, only certain WF locations offer them. You might try calling your local branch and see if they can point you to another branch that does them. Only certain people at the bank can do the medallion stamp. I can't find anything that says WF totally stopped doing them.

I got one a few weeks ago at Chase and it went smoothly. Vanguard accepted the paperwork. Be sure to send in the original stamped form because the stamp itself has several colors to show the authenticity. I made a copy for myself and sent in the original. Hope it works out.

https://esignatureguarantee.com/faq/whe ... -guarantee

Here's a comparison of the two funds: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&a...

ruralavalon wrote: ↑Thu Oct 07, 2021 6:35 am With this additional information I can suggest an overall portfolio plan for you to consider.

Thank you for taking time to dig into all of this.

I added all the 401k info to the original post.

Why not increase your 401k contribution to about 11% to get close to the pre-tax $19,500 limit? I wouldn't think getting a second 401k would allow you to put in any more than that.

Good news, I finally initiated the transfer away from Raymond James! I'm excited to get away from the AUM fee and the rest of the bad fund choices. Now if I could only convince my dad, brother, aunt, uncles, etc.

What percentage of the CIT is rated BBB or higher (investment-grade)? What percentage of the CIT is rated lower than BBB (junk bonds)? What is the "effective duration"? Is the CIT stated to track an index? If so what is the index tracked? If not what is the benchmark used for the CIT? Ahh, when I dug way down at the bottom of the info for this, I found this: The investment option is a unitized investment option. This description is only intended to provide a brief overview of the fund. This investment option is not a mutual fund. The Intermediate Bond Custom Fund invests solely in the Fidelity Intermediate Bond (FTHRX). A revenue credit is being eliminated in Intermediate Bond Custom Fund which results in a lower expense ratio th...

In terms of how long you it will take you to sell them off, the best way is to sell enough with long-term capital gains up to the limit of the 15% bracket or when you hit the NIIT bracket. I'm sure you know this, but sometimes it confuses people: the gains are on the difference between what you paid and what you sell them for. E.g., if you spent $10,000 and sell for $15,000, the tax is only going to apply to $5,000. Paying taxes isn't a bad thing. It means you made money. If you're not eligible for the various tax credits anyway, a little bit of extra capital gains income now isn't a bad idea. Unless you die and your heirs inherit the funds and get the step-up basis, the taxes are going to be due at some point. Realizing them now may save ...

What fund company manages "Intermediate Bond Custom Fund (ER 0.25)"? Can post a link to a fact sheet for this fund? I looked into this but it seems that this fund isn't a mutual fund and was provided through the plan sponsor, trustee, mgr etc. Its 85% domestic bonds, and about 11% foreign bonds. 41% of the fund is Government bonds, 36% is corporate, 16% is a mix of commercial-mortgage backed, asset-backed bonds. It's about 55% AAA bonds. Overall, it's classified as "Medium quality, limited interest rate sensitivity" Returns are: YTD (Daily): -0.32% 1 Yr +0.49% 3 Yrs +5.13% 5 Yrs+3.03% Then after that transfer consider how to switch the American Funds to Vanguard funds. I did save all the cost basis info, so it seems tha...

... Thanks. I do understand about the in-kind transfer. I have downloaded some info so far, but it makes sense to just grab all the statements before tipping my hand, as you suggested. Would Vanguard (or whichever place) provide the 1099 in Feb-March for any qualified dividends/capital gains during the 2021 tax year, for the funds that I would transfer? Ultimately I just do not want this info to get lost/not taken into account during filing. This gives me a better idea of the overall strategy, which is similar to what others have suggested for the AF in the original post: turn off dividend reinvestment and then look at selling each one individually over time. I did not understand what time horizon I should expect for, but it sounds like it...

stuff Wow, I cannot thank you enough for the long and detailed reply. Mortgage We did a refinance in 2020 when they dropped the rates the first time, around late March/Early April, thinking they would not get much lower. I have not paid close attention to how low interest rates have gotten, especially since we paid about $7k to do the refinance. A quick quote on the mortgage website, gave refinance options of a 15-year, 2.65% APR at the same monthly payment for a savings of $37k at a cost of 6.8k, or a 10-year, 2.94% APR, interest savings of 49k at a cost 7.8k with a higher monthly payment. It’s tough to figure out based on the website if they could do a recast; it looks like I’d have to call them. Either way, there definitely seems to be ...

OP would have done a little bit better, with a little bit more risk. Assuming he never paid the up front load (5.75%) and never will, the real difference might be taxes when he sells and CGains he pays annually. IF we assume that it is better to avoid manager risk, and he never will pay the upfront load the fund usually charges, and that it is less tax efficient than the indexes I would think putting all the annual CGain distributions into the index that mimics that fund IF he wants to mimic it. Selling in small lots over a few years, or selling when there is a big drop in the markets over all would be my approach, in large part because it has done well, but not better than the index allocation that mimics it. This is a good point, I proba...

Radiata It might help if you provide a little more information. The answer may still not be clear, but more information might help. What is your tax bracket, both federal and state? What percentage of your total portfolio is in American Funds New Perspective A (ANWPX)? What is the current balance and interest rate on the mortgage note? How much in additional taxes did you pay in 2017, 2018, 2019, 2020 for the distributions paid by this fund that were shown on the 1099s that the fund or financial institution sent to you? Did you withdraw money from the fund to pay these taxes? You can simply add this as an edit at the end of your original post. Just use the edit button (the pencil icon near the upper right corner of your post), it helps a l...