Bogleheads.org

I've read that ETFs can be have favorable tax consequence when used in a taxable account. My situation is that I have S&P 500 index mutual funds now, so are the potential tax advantages of a ETF worth the consequences of inuring capital gains on the mutual fund sale/transfer? I realize this depends on tax rates, etc. But is there a rule of thumb? I'm kind of inclined to let sleeping dogs lie for now, since I expect to start to draw down the taxable stuff in about 3 years when retirement starts.

Thoughts?

This question has come up a number of times, I know because I had the same questions a few months ago so I read those threads (do a forum search if you'd like). My conclusion, as many have stated, is that it doesn't really matter.

So what do I do? When I need to move or buy the equity portion of my AA I now use a TSM fund if it is available otherwise I just use a S&P 500 fund. Note that this means I need to track an extra fund or two as part of my overall portfolio spreadsheet, if i didn't already need to maintain such a spreadsheet I'd probably not even bother with the TSM fund just to keep things simpler.

Hyperchicken wrote: Tue Feb 04, 2025 2:51 pm Now you all are making me want to buy more bond funds.

Yeah, it make me think of something I read in a Peter Lynch book eons ago about buying when everyone is complaining and selling when everyone is bragging.

nalor511 wrote: Sat Nov 23, 2024 3:15 pm

mikebh wrote: Sat Nov 23, 2024 3:08 pm How do you get the tax and add that to your California Tax return , when there is no any official Fidelity income form for the HSA?

You don't "get the tax" you get the "income" from your brokerage statement or transaction history (1/1-12/31) and you plug it into your state tax software as "HSA earnings" which goes to 540-schedule-CA and the tax will be computted for you by your tax software

Sgov is not taxed in CA because it's Treasury income, typically

As a NJ resident, which also taxes HSA, are there any NJ folks out there who can confirm that tax SW (i.e. TurboTax) does the same for NJ?

Atretes1 wrote: Thu Jan 30, 2025 5:52 pm

Dufus wrote: Thu Jan 30, 2025 6:46 am

They may have changed, but last time we were with Optum in addition to fees, you could not invest your whole balance.

Yeah like 2k cash and I need to keep 3k cash in it to also avoid a $2 monthly fee. I have no choice because my work uses it. Maybe I can transfer out the invested portion and do that once a year. Its a $20 fee for outbound transfers also.

I also have Optum, not happy about it but I don't get to chose. $24/year in fees and stuck in a treasury fund (I'm in NJ) At some point I'll have to weigh the cost/pain of transferring to a Fidelity HSA. If I understand the rules I only have about 2.5 more years where I can contribute if I take medicare @ 65, so maybe I tough it out until then.

Dufus wrote: Wed Jan 29, 2025 7:28 amNOT Optum.

Agree, NOT Optum. Opened my spouse HSA at Fidelity.

For those of you who are adjusting your asset allocation due to the change in administration, what exactly are you doing?

I am not adjusting AA due to any potential administration changes, however I am due for a AA change as I near retirement. Compounding things is a forced 401k processor change by my employer, so it is on my mind, since I have to sell and repurchase anyway. I'm staying the course on funds not held by my current employer 401k. What I *think* I'm going to do is move into a MM and cost average into my new AA over a short time frame with fewer equities due to my approach to retirement.

So the bottom line I guess is that I'm not changing my AA due to administration changes, but am hedging a re-balance with short term ...

I've got a new 401k provider that isn't offering a total bond fund, just an intermediate and a long term. The intermediate bond fund is Dimensional (DFIGX), who I haven't heard of and the long term is Vanguard (VBLIX). Vanguard has a lower expense ratio of course. I read its been recommended to use an intermediate in lieu of a total bond fund, but how does intermediate compare to long term for a bond leg of a three portfolio strategy?

jebmke wrote: Sat Jan 25, 2025 8:03 am

ScubaHogg wrote: Sat Jan 25, 2025 8:00 am Just short them I reckon. But this seems like a lot of work for little point

yeah; there isn't anywhere to draw the line. I don't try -- if I did I'd certainly add Palantir to the list. Slippery slope -- before you know it you're back to individual stocks.

“Don’t give in to hate. That leads to the Dark Side.” - Obi Wan Kenobi

jbogler wrote: Sun Jan 19, 2025 2:40 pm 2. Is it advantageous to break up VTSAX into its various components as individual index funds of each market group, so that you have more fine grained control over where money flows?

I think getting the percentages right is the challenge since you are trying to beat the total market,the question is will it or won't it beat the index?

Stebanoid wrote: Sat Jan 18, 2025 9:58 pm My previous employer had HSA with Optum and I bought funds there. I had to liquidate them to transfer to Fidelity. I paid my CA taxes on the capital gains. Additionally, "auto investment" was on in Optum, so I had a ton of different transactions. Calculation of these taxes manually was "fun".

Good information, thanks. I live in NJ, so I'll probably face a similar tax issue with Optum. I'm only 2 week into the HSA so no investment activity yet, but turning off reinvestment sounds wise. I'm starting to question the real value of HSAs, as they seem to be a bit of a pain to avoid screwing up.

This might seem like a dumb question but do bond fund performance average annual returns only reflect bond price, i.e. just the price of the fund share? I look at FXNAX and it has a 10 year return of 1.33%! Are dividends paid by the fund not included in those performance numbers?

samsoes wrote: Tue Jan 14, 2025 8:34 pm Yep - There was a point where I had accounts at all 3. I ditched both Schwab and Vanguard.

I still have all three and then some. I'm slowly trying to consolidate to Fidelity since I like their interface better. I find Schwab & Fidelity about the same, but Vanguard is clunkier. I don't do anything fancy just mutual funds so my demands are light.

dbc47 wrote: Mon Jan 13, 2025 7:31 pm I've seen a couple places online that will provide the Medallion service for a fee ($150 + or -) which is not a problem at this point, but has anyone here used any online service for this? If so, who did you use and how did it go?

I needed a medallion a few months ago and tried the app used by Lincoln Financial, it failed with a real reassuring "Oh Snap, something went wrong" just the kind of non-professional verbiage you want to hear when you're dealing with a big cash transfer In any case it was just $20.00 Fortunately I have an account with a local bank that was able to do it for me, oh snap, they didn't make $20 off of me .

jaceziii wrote: Tue Jan 14, 2025 12:39 pm Do I invest all $7k in my chosen ticker symbols at once or set up auto invest every "2wks/month"?

All at once unless you don't have the cash on hand, otherwise you're paying tax on the money while its sitting in a taxable saving account.

You said you were new to investing so I will challenge you on the Roth direction, do you know if that will be an advantage? I hear a lot of young folks get recommendations to use Roths. There are some reasons for younger folks to use Roth, but its not a one size fits all thing, you should know why you want a Roth verses and traditional IRA.

shoreguy wrote: Sun Jan 12, 2025 7:30 pm Open to all ideas/suggestions

Most have said all at once, but its scary ripping the band aid off. I'm in a similar situation now as well, so I'm doing it fund by fund, not over 2 years and not all at once either, I hope to be finished in a few weeks or so. My scariest change is that my current employer is changing 401k providers and there is a week long black out period where I have no idea whats going on, is it liquidation and repurchase over a week or one day? To me the key take away is to not dawdle and get caught up with daily market swings.

jebmke wrote: Mon Jul 22, 2024 5:11 pm There must be thousands of homes in NJ over $1 million. Are you working with a broker?

Tens of thousands, maybe hundreds of thousands!

Another vote for NJM, I've had them for 40+ years.

One question though, were is the house located, on the coast?

My approach will be to download the EOB pdfs from the insurance web site and save them just in case I want to tap the HSA earlier. this may not capture the whole amount but probably the lion's share.


This is not sufficient documentation because it does not show whether or not you actually paid the expense. If you pair this with a credit card receipt or similar, that is probably sufficient.

IRS Pub 969:
You must keep records sufficient to show that:
• The distributions were exclusively to pay or reimburse
qualified medical expenses,
• The qualified medical expenses hadn’t been previously paid or reimbursed from another source, and
• The medical expenses hadn’t

Hmm, that seems kind of troublesome to pair pdfs with paper receipts ...

2025 is my 1st year for a HSA as well, I'm planning on saving the HSA for medical use during retirement (3 years) if I can afford to eat the costs now plus max the contributions to the HSA My approach will be to download the EOB pdfs from the insurance web site and save them just in case I want to tap the HSA earlier. this may not capture the whole amount but probably the lion's share.

BolderBoy wrote: Sat Jan 11, 2025 9:28 pm

applesfall23 wrote: Sat Jan 11, 2025 7:15 pmWe live in NJ so should we think about something tax advantaged?

Keep it simple. Vanguard's VUSXX (Treasury MMF) is almost entirely exempt from NJ state income taxes and highly liquid.

I've seen this before, but don't understand how you report this at tax time? Is it up to you to make a guess at the exempt portion of the fund's assets doing taxes or does the 1099 break this out for you? The unknown of this has made me shy away from using a Treasury MMF in the past (I live in NJ also).

prioritarian wrote: Sat Jan 11, 2025 2:32 pm Charging at level 1 charger would increase your EV energy costs because is inefficient (~75-80% efficiency vs 85-90% for Level2)

Can you confirm if those efficiency numbers are for charging of the batteries or the consumption of line power by the chargers?

Not a network security engineer, but I needed to pass software security reviews, audits and certifications in my employed life. I do exactly what BH13 does.

Not a security engineer either, but I was a telcom engineer and now a Medical device engineer and still employed doing risk management so I lean towards the least exposure necessary. I don't disagree with mrb09 & BH13, I'm sure they are fine if they take precautions. There are new attacks strategies happening all of the time, I've seen a demonstration how to get past 2FA by cloning a cell number, yes its a pretty advanced attack but it is possible if the target is worth the effort. Also to be honest, I hate using the tiny screen on a phone for anything, so security is another ...

alex_686 wrote: Thu Jan 09, 2025 7:17 pm

JustGotScammed wrote: Thu Jan 09, 2025 7:07 pm Why ~500 then? Why not Top 50? Top 3500?

Nice round number. You could do the computations in a reasonable time on a 1960s vintage computer.

If I recall the INDU (Dow Jones Industrial) was 30 stocks so you could use the 1896 vintage computer, pencil & paper

MGTRP0309 wrote: Thu Jan 09, 2025 7:10 pm I'm wondering if it would be beneficial to combine the two into one account to help boost the compounding effect.

If you're still working for the employer with the 401k, you probably can't combine it with your IRA, after you stop working you can usually roll it out of the 401k into a provider like Fidelity, Schwab, etc. As other's have said it won't matter if its one or two accounts.

Other's will post about investment recommendations, but my word is to scrimp and save as much as possible.

good computing hygiene


No separate device.

1) I practice good computing hygiene
2) I do NOT use a phone or any device on a mobile network.
3) I do not use social media apps on my phone.
4) I do NOT use a password manager I keep an offline password file with encryption.
5) I keep my phone contacts limited to family & friends as much as possible.
6) Until recently I only used a wired connection to my router.
7) I've considered a dedicated cell phone/number just for Two-factor authentication messages, but I'm too cheap to pay for another phone.

I'm not paranoid, just respectful of the abilities of bad actors. The old saying about raccoons and garbage cans helps a lot, if you make your trash cans harder to get into than your neighbors ...

stay_the_course wrote: Sun Jan 05, 2025 9:15 am Do what's known as a "60 day rollover". You basically create a fake expense and get it reimbursed to your checking account via ACH at Healthequity (using the reimburse me option). Then within 60 days you call up Fidelity and ask them to pull the exact same amount from your checking making it very clear it is a 60 day rollover (not doing so has tax consequences). There's an extra line you need to fill out come tax time to ensure you're not taxed for the distribution but you should be able to find it on Google.

I've read that the 60 day rollover can only be one once every 12 months, so does this mean you can only move your HSA funds once a year?

I found this older thread, but I think it applies to me, I'm looking for some confirmation. I now have a HSA for 2025 and live in NJ, the processor is Optum Financial and they offer Vanguard Treasury Money Market VUSXX which seems to mostly treasuries, so if I use this fund I'll have to report the percentages of non-treasuries as income or am I misunderstand things?

retired@50 wrote: Mon Jan 06, 2025 8:59 am The point is to have a portfolio you're comfortable with (in all circumstances), so that if the stock market tanks tomorrow you won't go running toward your computer to sell your stock index fund(s) or individual stocks.

I think this is my quandary, I'm a buy & hold guy, I'm not going to sell if the market goes down and if this is the only rational then I should be 100% in equities. I guess what I'm looking for is how to quantify AA as a risk mitigation rather than a comfort tool. Maybe something like a 60/40 AA mitigates a 30% equity correction over 5 years, as opposed to a 50/50, etc.

Age 62, probably retirement in 3 years @ 65.

I've been using an Asset Allocation of 60/40 for many years, but have started to trend it downwards towards 50/50 for no other reason than the "age in equities" rule (100-age) and its more aggressive variants (110-age & 120-age) indicate that I should be less aggressive. I was ok with this until I stumbled into Boggleheads a few months ago and see a number of folks who don't really follow the rule of thumb, I know that everyone's situation is different and I'm ok with that. What I'm trying to sort out is how to quantify AA other than "gut feel" or a simple rule of thumb?

My 1st thought is once you've accumulated your targeted retirement amount, then that becomes your bond AA percentage and the ...

szxmb751 wrote: Wed Jan 01, 2025 12:10 am I don’t get it. Why hasn’t anyone recommended liquidating some stocks to fund the down payment?

Yeah, I agree, and isn't buying a house a valid use of IRA tax deferred money (no penalty?) We had the same choice 40 years ago, albeit without the stock pile the OP has. We chose to save for the house, even skipping the company match,(yeah dumb, but back then you couldn't use 401k money for a down payment). Another thing to consider, the OP is young and likely heavily weighted in equities and more exposed to a large market correction, in the event of a downturn, they'll still have a roof over their heads.

ssel wrote: Fri Dec 27, 2024 3:46 am

MedEngineer wrote: Thu Dec 26, 2024 9:08 am Although a more likely scenario might be to keep saving receipts up to age 70 (take SS) or age 72 (RMD age), then treat the HSA like a Roth.

Nope. At age 65 you can treat the HSA like a pre-tax IRA. Not as good a deal as using it for qualified medical expenses.

Yes, I was meaning that once I collected enough medical receipts the HSA is Roth-like, that is I don't have to incur fresh medical expenses to withdraw from it since I saved prior documentation over the years.

Good point by Running Bum about using HSA before Roth for inheritance reasons.

Sorry to kind of hijack this thread, but the Subject line is my question also, albeit without the FSA. Bummer for the OP with the FSA.

I have a HSA starting in Jan, my spouse is not employed, hence covered under my plan, we are both over 55. I was under the impression that I can contribute $8750 ($7750+$1000) into my employer plan and my spouse, since she is entitled to the over 55 catch-up, can contribute $1000 into her own external HSA (Schwab, Fidelity, etc.), therby raising the total "family" contribution to $9750? I inquired at Schwab and they said they don't do individual HSAs without an employer, am I misinformed? Has anyone else been able to create a HSA for non-employed spouse?

Northern Flicker wrote: Sat Mar 23, 2024 12:04 am In NJ, your first $750 contributed is matched with $750 from the state. This is free money. After that, up to $10K/yr of contribution can be deducted from income for state tax purposes.

https://www.njbest.com/why-njbest/njbest-benefits

Note that the NJ "free" match of $750 has a hard AGI limit of $75k to qualify for the free money. Also note that the NJBEST just changed the plan administrator in November, it was Franklin Templeton, now its Ascensus College Recording Keeping, however you still signup via the NJBEST website. The investment options have also changed, there are target funds and index choices now.

As I understand it, I can save all my medical receipts for years, then take money out of the HSA all at once, up to the amount I have receipts for.


Your understanding is correct. In my case, after I retired, I did not touch my HSA for years, invested in Total Stock Market. I have a pile of receipts that could support a large withdrawal. What I am actually doing is using the HSA to reimburse myself for the previous year's Medicare Part B premiums. When I turn 70 and take SS, the Part B premiums will be paid from the SS and I will use HSA for dentist and stuff I guess.

Thank you all who have responded, this is exactly what I was thinking, if I can push it out 10 years then I would select more aggressive investment choices, but if I ...

All assumptions are using current tax law...

As I understand it, I can save all my medical receipts for years, then take money out of the HSA all at once, up to the amount I have receipts for.

For example, I now have access to a HSA so I can contribute the max amount each year until age 65, that is 3 years from now, lets say this is about 27k. If I have 27k worth of receipts at age 65 or later I can take the 27k tax free and go buy a boat or something, right? Although a more likely scenario might be to keep saving receipts up to age 70 (take SS) or age 72 (RMD age), then treat the HSA like a Roth.

The downside of the above example is that I have to pay current medical expenses using my 2025, 2026, 2027 post tax dollars, which hurts now ...

You can be sued for anything, so there is always that risk.

As for the electrical DIYer, if you follow the National Electric Code, you've done your due diligence. For some reason people trying to save money on labor by DIY also feel they can save money by not following code since no one is watching. If one is a high net-worth individual then they better enjoy doing this work and they should have pride in doing it right, otherwise spend some of that cash and do something else you enjoy more.

I have multiple tIRA accounts at Fidelity that I want to merger into one. I've read that you can simply transfer funds from one account to another via the web interface, this sounds too easy. I'm thinking there must be some form or paperwork to document that this is movement of tIRA to tIRA funds so that it doesn't look like a withdraw or Roth conversion. For anyone who has done this, can you tell me about your experience?

Don't overlook joint cards (spouse, etc.) When traveling we always make sure we each have a unique card in the event of a lost wallet. For us we have 2 Visas & a Discover.

novolog wrote: Wed Dec 18, 2024 4:33 pm That's true, we are trying to buy a van so it will probably be closer to 130k this year.

Circling back to your OP, needing cash for a young family verses savings for retirement, I was there, a lot of us were. At age 32 its good to be thinking about this, but 60 is a long way away to be thinking you've got enough now. Its fundamental to have a plan, write it down! You may want to dial back for a season, then pick it up again, according to your written plan, adjust as you go along life is unpredictable.

novolog wrote: Wed Dec 18, 2024 2:44 pm shows over $3 million when we are 60. This would be far more than enough to cover our expenses in retirement.
Thoughts?

You didn't mention your ages, 3M sounds nice now, but how far away is age 60?

The BH wiki page about MBDR is here:
https://www.bogleheads.org/wiki/Mega-backdoor_Roth

Backdoor Roth (IRA) and mega backdoor Roth (401k) are separate and unrelated.

There is no income phase-out for a MBDR but it is possible for a participant (generally “highly compensated employees”) to have their after-tax contribution limited or returned after annual Plan testing.

The maximum 401k contribution* cannot exceed the IRS annual total limit, which for 2025 is $70k + >age 50 catch-up of $7.5k.

* includes employEE contributions (elective deferrals + MBDR after-tax contributions) and employER contributions.

Ok, I didn't get that they were different, Mega is definitely out for me, I can only dream of being highly compensated. What I'm ...

… I do have a small Roth that I contribute to each year after I exceed the 401k max, but it’s a low single digit percentage of the retirement pot. …

If you have any Taxable savings (including an emergency fund) or are making Taxable contributions, prioritize Roth over Taxable as Roth grows tax free.
1) Are you making the maximum contribution allowed each year to your Roth IRA?
2) Does your 401k plan offer a mega backdoor Roth?


For #1: Yes, I make the max Roth IRA contribution ($8k) after I max the traditional 401k.
For #2: Not sure about the backdoor, we just changed providers and I need to check, but if it does I don't fully understand the backdoor rules, are you allowed to exceed the 401k maximum using backdoor as long as you ...

I never thought in terms of multiples of salary, but in minimum responsibilities, e.g. leave your spouse with a debt-free house, and your kids college funded. After that, eh, you don't want to be too valuable dead

lakpr wrote: Wed Dec 11, 2024 1:31 pm I hate debt, but I think Roth IRA wins. The opportunity will be gone forever if you let it pass by. Student loans can be repaid a little later than initially projected, there is no deadline that you MUST meet, it is not like you are held as a defaulter if you don't repay the loan by 2031.

This assumes that a Roth will benefit you down the road, its not always easy to know. One thing that hasn't been mentioned is the mental relief of not paying debt, its different for everyone. What's it worth for you to not think about it anymore, a few of percent points of gain? Again its a personal thing.

For my situation, I go Roth only when I can pay 12% federal tax, or less.

I assume this is a post retirement scenario that I'll need to revisit in a few years, thanks for the 12% number, I've been wondering where folks draw the line.


However, maintaining a HELOC could even out withdrawals to cover a spending shock and so minimize the tax impact, reducing the incentive to fund a Roth.

For couples, the reality that one likely will eventually be filing single favors having some portion of the portfolio in Roth. The greater the difference in life expectancy, the more likely is single filing with its smaller standard deduction, narrower brackets, and lower IRMAA limits. How much to pay for this contingency and when to fund it is an issue ...

I did the math and I believe that Roth conversions aren't in my best interest, however I have a new 401k provider for next year that is offering Roth in the 401k, bummer I didn't have to think about this before :( I think Roth still isn't in my best interest for now, but I just read about the concept of Tax diversification in the Roth wiki (https://www.bogleheads.org/wiki/Traditional_versus_Roth) and now I'm wondering about this Tax diversification thing and how much might make some sense. I do have a small Roth that I contribute to each year after I exceed the 401k max, but its a low single digit percentage of the retirement pot. The wiki mentions 50/50 along with the logic that you can't be more than 50% wrong, which I get, but 50% Roth ...

My employer is changing 401k providers, the good news is that most funds are Fidelity or Vanguard, the bad news, none are broad "Bogle-like" index funds.

It looks like I only have 1 choice for a "broad" market fund - iShares S&P 500 Index K (WFSPX).

My other choices are Fidelity funds for Large, Mid & Small caps
FSPGX, FMDGX, FECGX
I guess I could live with the S&P fund or maybe try to make a total market by combining the Fidelity large, mid & small caps, but in what percetages?

My only bond choice is Vanguard's VBILX intermediate bond fund, I guess that's going to have to suffice.

International fund choices are all Vanguard, Large (VTMGX), small /mid (VFSAX), and Diversified emerging markets (VEMAX).

Service contracts are just a form of insurance that you have to personally decide if its worth it.

My personal experience is with my parent's, and now my oil furnace. My parents had a service contract until the burner was too old (40+ years), they just called the company and things were taken care of. We replaced the burner a few years before they passed. Now I own the house and after a total renovation we have Gas in the upstairs living space and kept the 3 year old oil burner to heat the basement on demand, which I'll use as my work office for the next few years. I use a single tank fill for a season, so I see no need for a contract, I had it serviced once in 5 years for about $300 which included a replacement of the nozzle or something ...

Like the OP, I don't really get TIPS, maybe I need TIPS explained to me like I'm 3 I only held bonds in an aggravate fund, and I've been kind of ignoring TIPS thinking they are for further down the retirement path, I equated them to CDs with inflation protection, but maybe that's not a good comparison?

I am 60yo still working with a 50/50 portfolio. My bond allocation is in Fidelity FXNAX. The uncertainty of future inflation, tariffs, etc has me concerned enough that I'm considering moving bond allocation to cash, like FZDXX. I understand long term intermediate bonds beat cash. Trying to stay the course but struggling to do so. Bogleheads, any advice appreciated.

I'm in a similar situation, about 50/50 AA, Age soon to be 62 with a mixed bag of bond funds and have similar concerns. I am in the process of consolidating those mixed funds to FXNAX, and plan to do similar with some maturing CDs unless rates go up again, so I guess I'm leaning in the opposite direction. Maybe buy low, sell high if I'm lucky, in any case I stick with the ...