Search found 7150 matches

by Wagnerjb
Sat Feb 03, 2024 6:55 pm
Forum: Personal Investments
Topic: For those with experience managing employee stock options, some questions regarding time value
Replies: 4
Views: 442

Re: For those with experience managing employee stock options, some questions regarding time value

I worked for a MegaCorp and in the second half of my career I received equity compensation along with salary & bonus. For 6-8 years the equity compensation was in the form of stock options, then at a merger the new company switched to RSU's. The equity portion of compensation is driven by your grade level, and I received an option value equivalent to 37.5% of my salary. HR would calculate the value of an individual option, then deliver me a number of options equivalent to that 37.5%. That's likely why your wife got an odd number of options. Several times the company issued 100 stock options to every single employee. Sadly the less sophisticated employees exercised right away in the second or third year once the options had an intrinsic ...
by Wagnerjb
Mon Jan 22, 2024 8:41 am
Forum: Personal Finance (Not Investing)
Topic: Risk of deferred compensation
Replies: 13
Views: 1433

Re: Risk of deferred compensation

I contributed to a (non qualified) Deferred Compensation Plan when I worked at a large corporation. I was fully aware of the bankruptcy risk that you mention, and I managed that risk in three ways: 1) I set a limit on the amount of my net worth in the Deferred Comp plan. My personal limit was targeted at 10%, with the logic that I didn't want a bankruptcy to derail my retirement. The investments in my plan grew handsomely and I was actually in the low teens at the end of my career. 2) I waited until later in my career to make significant deferrals. This shortened the time that the funds were at risk. 3) I set the distribution schedule to a short 5 year term. This also shortened the time the funds were at risk. I recommend that folks with a ...
by Wagnerjb
Sun Jan 07, 2024 2:33 pm
Forum: Personal Finance (Not Investing)
Topic: IRS Letter CP2000--529 Issues
Replies: 29
Views: 3130

Re: IRS Letter CP2000--529 Issues

I got the same IRS nastygram two years in a row, both times regarding my 529 withdrawal. I sent them a note outlining the educational expenses by category, adding up to more than the distribution and that resolved it. I suspect the trigger was the large 529 withdrawal, maybe because I had two children in college those two years. But it was annoying that the IRS takes this "guilty until proven innocent" approach.

Best wishes.

Andy
by Wagnerjb
Tue Apr 18, 2023 10:55 am
Forum: Investing - Theory, News & General
Topic: Direct Indexing Adventure
Replies: 180
Views: 36492

Re: Direct Indexing Adventure

Studies have shown that 35 stocks provide something like 95% of the diversification benefits. You will match the index (pretax) but have tracking error. I found the average tracking error to be 6% but my overall results matching the market almost perfectly over that time. you might want to read Bernstein's The 15-Stock Diversification Myth I have read it....a long time ago. While I don't disagree with the concept, I have three issues: a) I held 35 stocks, not 15. b) The study was done in 1999, during the dramatic boom in tech stocks. No wonder they found such skewness. The article states "Second, and much more important, many of the stocks of the S&P 500 on 11/30/1999 were not in the index at the beginning of the period. The recen...
by Wagnerjb
Tue Apr 18, 2023 8:55 am
Forum: Investing - Theory, News & General
Topic: Direct Indexing Adventure
Replies: 180
Views: 36492

Re: Direct Indexing Adventure

I used a strategy similar to “Direct Indexing” for around 15 years - between 1999 and 2015 - and the results were excellent. (I retired in 2015 and have been winding this strategy down slowly). My objective was to match the market using individual stocks. This was only practical for the US Large cap segment of my portfolio and I used low cost passive funds for international, Small Cap, Value and fixed income. Studies have shown that 35 stocks provide something like 95% of the diversification benefits. You will match the index (pretax) but have tracking error. I found the average tracking error to be 6% but my overall results matching the market almost perfectly over that time. There are no costs to my strategy, unlike Direct Indexing. As an...
by Wagnerjb
Mon Feb 07, 2022 1:28 pm
Forum: Personal Investments
Topic: Parents portfolio -- tax issues with large taxable acct
Replies: 18
Views: 2619

Re: Parents portfolio -- tax issues with large taxable acct

If they plan on gifting to family members, they can gift stock/fund shares in-kind and the giftee retains the parents’ cost basis. Works well if the giftees have a lower tax rate. True, but there is also another way for family members to get the shares without tax cost. Before the parents’ deaths? There was no tax cost to my kids at the federal level when they were in the 0% LTCG bracket and I gifted them shares. I agree with both Delamer and Livesoft. I am a big fan of the Donor Advised Funds, as Livesoft suggests. But I also agree with the strategy of gifting children highly appreciated assets for them to sell with 0% LTGC tax payment. Sure, the kids will inherit $5 million when the last parent dies, but that may be way too late for them...
by Wagnerjb
Wed Dec 01, 2021 1:14 pm
Forum: Investing - Theory, News & General
Topic: If 30 years treasuries went to 10% would you put all your money in them? If not tell me why?
Replies: 44
Views: 4364

Re: If 30 years treasuries went to 10% would you put all your money in them? If not tell me why?

Anybody on this forum who is over 60 years old has actually lived through a time when interest rates were indeed at 10%. Nobody was rushing to put 100% of their investments into 30 year Treasuries back then. Inflation is the answer to your question.
by Wagnerjb
Sun Nov 21, 2021 12:31 pm
Forum: Personal Finance (Not Investing)
Topic: DAF vs employer match
Replies: 10
Views: 1020

Re: DAF vs employer match

So I just finally opened a donor-advised fund in my name at Fidelity. I am planning to start small, but hoping that it will grow well over time. At the same time I also see value in donating right at this moment, so I have been using the employer match function to donate. The question is, do you think or know if there is any way I can have my DAF donations matched by my employer, is this done at all? I work for a big company. Thank you! I worked for a big Oil company and they match the actual donations to charities (out of the DAF). They did not match my contribution to the DAF. I made large contributions to the DAF while working (at a higher tax bracket) and I have been retired for 7 years now. The company matches for retirees as well so ...
by Wagnerjb
Sat Nov 20, 2021 12:14 pm
Forum: Personal Investments
Topic: Deferring compensation
Replies: 28
Views: 3889

Re: Deferring compensation

I will share my real-world experience with a NQDC deferred compensation plan and share my strategies and advice. I worked for a major oil company for 33 years, retiring 7 years ago in early 2015. I had the ability to defer up to 50% of my salary plus up to 100% of my bonus. My first deferral was in 2007 (at age 50) and I deferred in five years between 2007 and 2013. My marginal tax rate in those years was as follows: 2007: 35% 2008: 33% 2009: 25% 2012: 25% 2013: 33% In addition to saving income taxes at my marginal rates, in 2009 and 2012 I realized other tax benefits from the Deferral. In 2009 I reduced my AGI sufficiently to allow my wife and I to contribute to Roth IRAs. In 2012 I reduced my AGI sufficiently to allow me to take a $2500 A...
by Wagnerjb
Wed Nov 17, 2021 2:05 pm
Forum: Personal Investments
Topic: ACA Subsidy OR Tax Gain Harvest?
Replies: 14
Views: 1204

Re: ACA Subsidy OR Tax Gain Harvest?

You have MANY opportunities to tax gain harvest. You can gift highly appreciated shares to your children for college. Or for a wedding, a car, etc. Your kids (once they are over 18 or 24 if in college) can likely sell and pay 0% tax. You can donate highly appreciated shares to a charity, or (as I have done) donate to a Donor Advised Fund and get a tax deduction for the full market value of the shares, without paying capital gains taxes. You can gift shares to your children when they are in their mid-20's and use the funds for contributions to their IRA or HSA (again, with no capital gains tax). Personally, I would go with the ACA tax savings in 2022. Don't be in a hurry to tax gain harvest. Your kids are likely younger than mine but the tax...
by Wagnerjb
Mon Nov 12, 2018 10:20 am
Forum: Investing - Theory, News & General
Topic: Investments with zero yield
Replies: 41
Views: 4665

Re: Investments with zero yield

In another post, somebody was hollering about wanting high dividend yield, because they think that's the way to supercharged investment returns. (Or something like that.) My question is exactly 180 degrees from that. Does anybody know of some kind of mutual fund/ ETF / UIT / Grantor Trust that pays zero yield? No dividends or capital gains distributions? Basically, I'm looking for something that approximates the market return, but with zero tax liability associated with it. The closest thing I can think of is an Investment Only Variable Annuity, but that comes with another set of problems (IRD, early w/d penalty, lack of flexibility, etc.). One of the most experienced posters here (and I have totally gone blank on his screen name - wagnerj...
by Wagnerjb
Mon Oct 01, 2018 8:34 pm
Forum: Investing - Theory, News & General
Topic: Sears, a 125 year old company is now a penny stock.
Replies: 127
Views: 19136

Re: Sears, a 125 year old company is now a penny stock.

perhaps I have it reversed. Instead of saying "Don't buy individual stocks" I should have said "Don't buy stocks individually." Does that better capture the essense? When I say "Don't buy individual stocks" what I really mean is to suggest in conrast to "Buy the market" (which means don't buy them individually, own them all". I could have also said, "Don't buy individual stocks, buy the stock market" language can be a difficult and confusing thing. Thanks. I don't think you understood my point. Let me restate. The problem is not with individual stocks, it is with the lack of diversification. You could buy 35 large cap individual stocks (as done by the mutual fund BRLIX) and your perfor...
by Wagnerjb
Sat Sep 29, 2018 10:39 pm
Forum: Investing - Theory, News & General
Topic: Sears, a 125 year old company is now a penny stock.
Replies: 127
Views: 19136

Re: Sears, a 125 year old company is now a penny stock.

arcticpineapplecorp. wrote: Fri Sep 28, 2018 8:00 pm
A cautionary tale about buying individual stocks, no matter how long they've been around.
I think what you mean is "a cautionary tale about the importance of diversifying". Buying an index fund is nothing more than buying a bunch of individual stocks.

You said it more clearly at the end of your post:
The three most important things when it comes to investing is diversify, diversify, diversify."
Best wishes.
by Wagnerjb
Sun Sep 23, 2018 10:18 pm
Forum: Personal Investments
Topic: Looking for advice on whether to participate in Deferred Compensation Plan
Replies: 18
Views: 2906

Re: Looking for advice on whether to participate in Deferred Compensation Plan

In my experience, the biggest benefit from a DCP was the tax arbitrage. For example, I deferred compensation (salary and bonus) in 2013 when I would have paid 35% and 39.6% of income tax on that income. I am withdrawing those funds now in early retirement in the 12%, 22% and 24% brackets. The biggest risk is bankruptcy of your employer. You manage (minimize) the bankruptcy risk three ways. First of all, you manage the percentage of your net worth such that a total bankruptcy would not derail your retirement. Personally, my target was 10-15%. Second, you minimize the time that your investments are exposed to this risk by waiting until later in your career to defer funds into the DCP plan. Third, you minimize the time that your investments ar...
by Wagnerjb
Sun Sep 23, 2018 9:09 pm
Forum: Personal Investments
Topic: Looking for advice on whether to participate in Deferred Compensation Plan
Replies: 18
Views: 2906

Re: Looking for advice on whether to participate in Deferred Compensation Plan

Here are a few important issues the need to be factored into the evaluation:

How old are you now?
When do you anticipate retiring?
Do you expect to stay with your current employer all the way until retirement?
What percent of your net worth is in the DCP plan today?
How good are the investment choices in the DCP plan?

Let us know these answers and those on this board can better help you frame the pro's and con's of this decision.

Best wishes.
by Wagnerjb
Wed Jul 18, 2018 9:13 am
Forum: Personal Finance (Not Investing)
Topic: Received IRS notice CP 2000 asking more tax. Need help.
Replies: 30
Views: 5157

Re: Received IRS notice CP 2000 asking more tax. Need help.

Thanks 47 percent and HI investor. This is reassuring. ram, I got one too relating to qualified expenses and the AOTC. See here: https://www.bogleheads.org/forum/viewtopic.php?f=2&t=253141&p=4004768&hilit=IRS#p4004768 Responded on May 24th (one day after I received the notice) with a detailed response. Two weeks ago received a notice that they were "reviewing my response" and would get back to me within 60 days. Still no word back. I did write a detailed response and provided backup documentation to support Tuition paid (copies of University account statements with notes in the margin to tie things together). I am hoping that will suffice, but 7 weeks in still await their final response. Mike: I got the same CP2000 le...
by Wagnerjb
Wed Jul 18, 2018 8:28 am
Forum: Personal Finance (Not Investing)
Topic: Received IRS notice CP 2000 asking more tax. Need help.
Replies: 30
Views: 5157

Re: Received IRS notice CP 2000 asking more tax. Need help.

For 2016 my wife and I filed a joint return by using Turbo Tax. Yesterday I received IRS letter ( notice CP 2000) stating that I need to pay more tax. The additional tax demanded pertains to two things: 1) Withdrawal from 529 plans: I have one dependent, my daughter who was a 2nd year medical student for the initial 6 months of the year and 3rd year medical student for the second 6 months of the year. She has a full tuition scholarship so we pay no tuition. I used the published living expenses from the university website ( and have a printout). I added 50% of 2nd year expenses and 50% of 3rd year expenses and the total comes to $25,974 for 12 months. I had withdrawn $ 24,509 from two 529 plans ( my state and Vanguard /Nevada). Of this $907...
by Wagnerjb
Sun Jul 08, 2018 11:17 am
Forum: Personal Investments
Topic: Diversifying Employee Stock Options when options > 4x portfolio
Replies: 8
Views: 1330

Re: Diversifying Employee Stock Options when options > 4x portfolio

As I mentioned earlier, I have no experience with the AMT-related tax issues from ISOs. However, I am aware that the new tax law severely scales back the AMT tax, so you would be wise to understand the new AMT rates. My initial understanding is that AMT doesn't kick in until you reach income of $1 million, and if that is true you might not have any AMT issues in your situation.

Best wishes.
by Wagnerjb
Sun Jul 08, 2018 9:09 am
Forum: Personal Investments
Topic: Diversifying Employee Stock Options when options > 4x portfolio
Replies: 8
Views: 1330

Re: Diversifying Employee Stock Options when options > 4x portfolio

Welcome to the Boglehead forum. I see three aspects of your situation that call for some pretty immediate diversification. First, the fact that the options only have 2 years until expiration. That tells me that they have blossomed very handsomely over the past 8 years and have little time left to run. Second, the fact that the options represent 80% of your net worth. And lastly, that the option value is significant itself (a 22-year old with $10k in options may have 80% of his net worth in options, but the dollar amount isn't a compelling call for action). Before I go any further, I will mention that I had a similar diversification issue with options, but mine were the plain vanilla non-qualified options. Since yours are ISO options, be sur...
by Wagnerjb
Sun Jun 17, 2018 8:15 pm
Forum: Personal Investments
Topic: Kid's Online Access for Kid's Brokerage Accounts
Replies: 10
Views: 1500

Re: Kid's Online Access for Kid's Brokerage Accounts

livesoft wrote: Sun Jun 17, 2018 9:23 am My MIL opened UTMA accounts. The kids didn't care and were not interested in seeing anything. When they cashed them in, they figured out how to log in and sell. Then they had dad help them figure out the taxes.

So I personally don't think the kids need access because they just don't/won't care.
This was my experience as well.

Best wishes.
by Wagnerjb
Sun Jun 03, 2018 9:25 am
Forum: Personal Investments
Topic: Thinking about RSUs and asset allocation
Replies: 18
Views: 2303

Re: Thinking about RSUs and asset allocation

In other words, if there is a market crash over the next year and US stocks fall 50%, the US stock based portion of my portfolio will fall 50% and my RSUs that vest will also be worth half as much. Conversely, if the market doubles, the stocks in my existing portfolio will double and the value of the RSUs when I get them will double as well. It seems to me that my portfolio is exposed to the performance of my RSUs even though I don't own them yet. I'll put some more solid numbers on this. Let's imagine my portfolio is currently worth $1MM (of which 650k is US equities) and the after-tax value of my RSUs vesting next year would be $250k at the current price. If no prices change, I'll have $1.25MM a year from now. If US stocks drop 50% and n...
by Wagnerjb
Thu May 31, 2018 10:20 pm
Forum: Personal Investments
Topic: How to buy commodities (soybeans)
Replies: 16
Views: 2486

Re: How to buy commodities (soybeans)

A common strategy is to sell the beans directly out of the field at market price, and immediately buy them back at market price using some kind of financial instrument. The spread is low because the physical delivery and the option/contract both clear at the day's closing price. This gives the farmer the flexibility to truck the beans whenever he needs to, or when the weather allows, and still have some flexibility to choose when to actually sell them off of the books. Using this strategy, it's basically a competition between the cost of physically storing the beans (extra capital, shrinkage, and trucking cost) vs. the cost of the financial instruments to "store" them. I don't know if the financial instruments used are forward co...
by Wagnerjb
Mon May 28, 2018 10:56 am
Forum: Personal Investments
Topic: Tracking Year to Year Carry Over Losses
Replies: 11
Views: 1021

Re: Tracking Year to Year Carry Over Losses

What kind of professional tax preparer would prepare a tax return without having seen the previous year's return? Almost everyone I know including myself. Its great to have last year's return (just to compare and note "omissions" if nothing else) but I can state the number of new clients who bring in last years return is a very low number. That is my experience with the volunteer Tax Aide program. In fairness, the questionnaire does ask about carryover losses, but many of the customers are not sophisticated enough to even know they have a carryover. If the individual wasn't a customer last year (and thus isn't in our computer system) and they don't bring a copy of last year's return, and they don't check the box for a carryover o...
by Wagnerjb
Fri May 18, 2018 4:24 pm
Forum: Personal Investments
Topic: Non-qualified Stock Options; when to sell?
Replies: 8
Views: 1452

Re: Non-qualified Stock Options; when to sell?

As you know, financial theory says to wait until the last day, but that ignores the issue of personal diversification. I generally waited until the last year or two, but I set a target % of my retirement funds that I wanted to keep under. Mine was 20% as I recall, but if your retirement assets are $1M, then you are closer to 33% today.

I would be inclined to exercise the oldest options until you achieve a diversification level with which you are comfortable. Then continue to hold the rest.

I don't see a need to suddenly change your exercise strategy such that you pull the trigger much earlier. But you need a diversification strategy to drive your exercise decision.

Best wishes.
by Wagnerjb
Sat Apr 21, 2018 3:50 pm
Forum: Personal Finance (Not Investing)
Topic: Best Way to Decline an International Job Assignment
Replies: 23
Views: 3058

Re: Best Way to Decline an International Job Assignment

Any advice on how to tactfully decline an international job assignment? You haven't provided any information for us to help you. Why do you not want the transfer? The truth is usually the best approach. Apologies. It’s not really a transfer. It would require onsite work in a different country for multiple week stints. I assume this isn't a plum assignment that would good for your career? I worked for 30+ years in energy. A 3-5 year assignment at an international location was a plum position and was great for advancement. Some of those positions were in challenging countries and management understood that many employees would not consider the difficult locations, especially those with a spouse and kids. You would be viewed positively if you...
by Wagnerjb
Sat Apr 21, 2018 11:25 am
Forum: Personal Finance (Not Investing)
Topic: Strategy for Use of Restricted Stock Units
Replies: 18
Views: 2815

Re: Strategy for Use of Restricted Stock Units

I immediately sell the RSUs once they vest. You will have a tiny short term capital loss when you do so, as the sales proceeds are usually reduced by commissions and fees. Then use the funds for any purpose you see fit. Do not leave the stock in the account (by not selling) after it vests, as you are undiversified and adding risk. If you want to keep the funds for investment purposes, transfer the money to your brokerage account and invest in low-cost well-diversified passive investments, such as mutual funds.

Best wishes.
by Wagnerjb
Fri Apr 20, 2018 4:55 pm
Forum: Personal Finance (Not Investing)
Topic: Exercising NQO Stock Options with Incorrect FMV
Replies: 9
Views: 1504

Re: Exercising NQO Stock Options with Incorrect FMV

The most elegant answer would be for your friend to "gift" you highly appreciated shares in exchange for the stock. He might exchange to you shares worth say $25 or more. He saves by avoiding the capital gains tax. You take over his very low cost basis and sell the shares, effectively monetizing your capital loss. And you get a higher after tax price from him. I am 99% sure this isn't allowable by the IRS, as any gift by your friend and a corresponding "gift" of the shares by you to him will be viewed as an exchange and the shares will be valued to you at FMV, not his original cost. But I am not an attorney and if this transaction is a very highly valued one it might be worth visiting one to see if such a transaction - o...
by Wagnerjb
Fri Apr 20, 2018 9:56 am
Forum: Personal Finance (Not Investing)
Topic: Exercising NQO Stock Options with Incorrect FMV
Replies: 9
Views: 1504

Re: Exercising NQO Stock Options with Incorrect FMV

Could you donate these shares to a charity? If so, would they value them at $35 per share? If the answer to both questions is yes, then consider exercising and donating the entire lot to a Donor Advised Fund. The DAF will sell the shares immediately and presumably value them at $35. So, in the year you exercise and donate, you have income of $25 and a charitable deduction of $35, for a net tax benefit. The value of the shares may be well above your normal annual charitable donations, but the DAF serves to allow you to spread the grants out over time. The bottom line is that you save on taxes, and you spend $10 to replace donations you would otherwise make for $35. If I was considering this, I would be sure up front that the DAF will value t...
by Wagnerjb
Thu Apr 19, 2018 9:59 am
Forum: Personal Finance (Not Investing)
Topic: Account for Adult Children Allowing Parent Some Control
Replies: 31
Views: 6734

Re: Account for Adult Children Allowing Parent Some Control

They need to understand the rules, how to open an account, and how to read the statements. Why would you deny them the learning experience? Most importantly, they will lose out on building the habit of saving. When the parent(s) die some year, do you think they will just start saving then?[/color] Celia: i was providing an elegant solution for the OP's question. The solution is elegant because it allows wealthy parents to save on capital gains taxes by gifting highly appreciated shares to children, to be used for purposes dictated by the parents. I have used this method to fund college costs for one child, to fund wedding expenses for a daughter, to fund a car purchase for a (student) child and to provide matching funds for earnings of a c...
by Wagnerjb
Wed Apr 18, 2018 10:01 am
Forum: Personal Investments
Topic: Vanguard Cost Basis Transfer Issues
Replies: 1
Views: 688

Re: Vanguard Cost Basis Transfer Issues

I wouldn't do anything right now. The new broker won't submit any cost basis or date purchased to the IRS, just the proceeds when you sell. If you don't sell for a year from Feb 15th, you will be able to enter "various long term" into your tax software, enter the correct cost basis, and all will work out fine.

Best wishes.
by Wagnerjb
Tue Apr 17, 2018 7:44 pm
Forum: Personal Finance (Not Investing)
Topic: Account for Adult Children Allowing Parent Some Control
Replies: 31
Views: 6734

Re: Account for Adult Children Allowing Parent Some Control

Tell your adult children that you are going to set up an account in their name and you will fund it.....but that it is for long-term purposes (as you determine) and they are not to worry about it. Open an account in their name at your brokerage company - the one you use for your other brokerage business. You will need their signatures on the paper documents to open the account in their name. But be sure to use your email account and your cell phone number and your address on the account application... If you open up accounts using your children's names and SS numbers then they will be responsible for the taxes on the earnings. At minimum you will have to send them copies of the 1099s to use in completing their tax returns. My parents tried...
by Wagnerjb
Tue Apr 17, 2018 8:05 am
Forum: Personal Finance (Not Investing)
Topic: Account for Adult Children Allowing Parent Some Control
Replies: 31
Views: 6734

Re: Account for Adult Children Allowing Parent Some Control

Here is how to do it: Tell your adult children that you are going to set up an account in their name and you will fund it.....but that it is for long-term purposes (as you determine) and they are not to worry about it. Open an account in their name at your brokerage company - the one you use for your other brokerage business. You will need their signatures on the paper documents to open the account in their name. But be sure to use your email account and your cell phone number and your address on the account application. Once the account is open, you can sign up for online access yourself. You will set up the password and account ID and your children won't know them. Then you can fund that account from your account via a transfer, and that ...
by Wagnerjb
Mon Apr 16, 2018 8:03 am
Forum: Personal Investments
Topic: Gifting Shares to Son to fund ROTH
Replies: 6
Views: 1121

Re: Gifting Shares to Son to fund ROTH

Your strategy is sensible and many others do the same. You need to learn about the Kiddie Tax (or tell us much more about your situation) so that you can avoid paying capital gains taxes on the appreciation on those gifted shares.

Best wishes.
by Wagnerjb
Mon Apr 16, 2018 7:59 am
Forum: Personal Consumer Issues
Topic: Costco gas
Replies: 67
Views: 10251

Re: Costco gas

tmsul100 wrote: Sun Apr 15, 2018 11:13 am Do you go out of your way to buy gas at Costco? Those who drive a "premium" tier car, do you buy premium gas? Thanks!
I drive a premium car, and I buy premium gasoline. I try to fill up at Costco, although it isn't very close to home. As a retiree, I try to avoid filling up on weekends since the lines are longer. But I save maybe 40-45 cents a gallon when I fill up so it is worth it to me. I won't drive 15 miles just to fill up, but when I am in the area and anywhere close to half full (or less), I top off.

I won't go out of my way in this manner for generic cheap gasoline (at a supermarket), but Costco is not only less expensive, but it is Top Tier quality as well.

Best wishes.
by Wagnerjb
Sun Apr 15, 2018 9:10 pm
Forum: Personal Finance (Not Investing)
Topic: Can't afford health insurance -- options?
Replies: 23
Views: 4008

Re: Can't afford health insurance -- options?

Can he save money by living with you?
by Wagnerjb
Wed Apr 11, 2018 8:42 am
Forum: Personal Investments
Topic: Question on the lost decade
Replies: 44
Views: 4711

Re: Queson on the lost decade

indexonlyplease wrote: Wed Apr 11, 2018 6:17 am From 2000-2009 I beleive they call this the lost decade. Someone that holds the 3 fund portfolio how do they protect themselves form 10 years of negative returns.
You invest for 4 or 5 decades, not just one. That's your best protection.
by Wagnerjb
Wed Apr 11, 2018 8:20 am
Forum: Personal Investments
Topic: Donor Advised Fund -- checks voided
Replies: 3
Views: 962

Re: Donor Advised Fund -- checks voided

I also use Fidelity's Donor Advised Fund, and this happened to me twice. I regularly donate to 10 or 12 different charities each year through Fidelity DAF, and a voided check has never happened with my regular charities. It happened to a new charity a few years ago, and I considered that my sign that the charity wasn't well organized....so I didn't waste my own time trying to figure it out. Same for the second time. For charitable donations, I get matching funds through my former employer. I often have to badger the charities to confirm the donation with my employer, otherwise the matching funds are not disbursed. It is annoying to waste my personal time doing this, and if this happens repeatedly I consider dropping that charity. I have a s...
by Wagnerjb
Mon Apr 09, 2018 8:17 am
Forum: Personal Finance (Not Investing)
Topic: Job search advice for a soon-to-be engineering grad...
Replies: 41
Views: 6112

Re: Job search advice for a soon-to-be engineering grad...

I see a warning flag if he didn't get any offers from the organization's he interned for. Is it truly "geographical preference" or a workplace issue? Good grades and book smarts doesn't always trranslate into top notch practicing engineers. I had the exact same thoughts. Many organizations will offer their interns a permanent position (often right after the summer is over), so the fact that this student doesn't have offers from his summer jobs is a huge red flag to me. If I am a recruiter and I see a person who had multiple summer jobs but doesn't have offers from them, I am going to assume the person isn't a good worker. The "geographical preference" may just be a cover up for the lack of offers from the summer jobs. I...
by Wagnerjb
Mon Apr 09, 2018 7:55 am
Forum: Personal Finance (Not Investing)
Topic: Trustees of Special Need Trusts - Who Files your Beneficiary's 1040?
Replies: 9
Views: 1010

Re: Trustees of Special Need Trusts - Who Files your Beneficiary's 1040?

We have a special needs trust in the family. Brother #1 became disabled later in life, and is functional and cooperative. Brother #2 is the trustee of the Special Needs Trust. I am brother #3 and I have (with brother #2's agreement) done the taxes for the trust itself for the four years the trust has been operating. Once I complete the trust tax return and K-1, I send the documents to brother #2, who signs them and sends them to the IRS. This year is the first year that Brother #1 had to file a personal tax return, due to the higher level of trust distributions. I told brother #1 that I would gladly file his tax return for him and he agreed. He even encouraged me to e-file if at all possible. I used the IRS free software program, picked a c...
by Wagnerjb
Sun Apr 08, 2018 9:39 am
Forum: Investing - Theory, News & General
Topic: Help Me Make The Case Against Online Trading Academy
Replies: 43
Views: 7663

Re: Help Me Make The Case Against Online Trading Academy

It's funny how it is a BH thing to advocate index funds and to be skeptical of annuities and we see people offering opinions on those to others on the forum, but outside of that it is mind your own business. It is like we will offer opinions anonymously on the forum but avoid it face to face. No trouble here telling people to get away from Edward Jones, UBS, and other such 1.5% AUM types. I would have no trouble telling a friend that this online trading seminar is fraught with misdirection and is sketchy for anyone to invest a large sum of their money. After all, this person has not yet made a commitment to the seminar. Not as if I am getting him to change investments. The difference is that your friends using Edward Jones or UBS are inves...
by Wagnerjb
Fri Apr 06, 2018 12:09 pm
Forum: Investing - Theory, News & General
Topic: Bond Portfolio for High Net Worth Individuals - Different Rules?
Replies: 67
Views: 12103

Re: Bond Portfolio for High Net Worth Individuals - Different Rules?

Because a HNWI has a lot of cushion to handle a lot of risk, I would think the percentage in stocks would be dominant no matter if young or old. Why do you say that? For a retiree with $5 million in assets and spending $200k annually, they have no more "cushion" than the guy with $500k in assets and $20k in spending. If a retiree has $5 million in assets and is only spending $50k annually, they may have a nice cushion. For the first guy, the rules aren't any different. Best wishes. Disagree. The person with $5 million and a $200,000 budget has many more options to cut spending before they have to resort to cat food and living under a bridge. What do you cut out when you are spending $20,000 a year? We will have to agree to disagr...
by Wagnerjb
Wed Apr 04, 2018 9:53 am
Forum: Personal Investments
Topic: Roth contribution $5500, Taxable compensation $5499 for 2016. How to fix?
Replies: 17
Views: 3766

Re: Roth contribution $5500, Taxable compensation $5499 for 2016. How to fix?

Andy, I don't think that is going to work. Yes, there is surely $1 worth of income like interest on a checking account or something. But it can't just be income. It has to be compensation . It seems to me your solution might trigger a computer choke up and spit out an inquiry because things don't match up. However, I'm just guessing. The reason I suggested line 12 of the 1040 form is that is self employment compensation and is considered "earned income" for the purposes of a Roth contribution. I would tell the OP that he gave somebody some advice "tutoring income" and got handed a $1 bill for the advice. He/she can report that cash income on Schedule C. Since you round to the dollar on tax forms, the income tax and self...
by Wagnerjb
Wed Apr 04, 2018 8:16 am
Forum: Personal Finance (Not Investing)
Topic: Thoughts on approach to student loans
Replies: 16
Views: 1825

Re: Thoughts on approach to student loans

totallystudly wrote: Wed Apr 04, 2018 6:20 am
In theory over time the O investment should pay back the loan and I should still have the investment which should be worth more than it is today.
What if the value of O stock declined by 40% and they cut the dividend dramatically?
by Wagnerjb
Wed Apr 04, 2018 8:05 am
Forum: Personal Investments
Topic: Roth contribution $5500, Taxable compensation $5499 for 2016. How to fix?
Replies: 17
Views: 3766

Re: Roth contribution $5500, Taxable compensation $5499 for 2016. How to fix?

retiredjg wrote: Tue Apr 03, 2018 6:46 am I looked at line 12 on Form 1040x and don't see how it applies.
When I made my recommendation to the OP, I did not notice that he was referring to 2016. On the 2017 form 1040, line 12 is the line where you would enter the additional $1 of earned income.

To adjust 2016, you would simply use the form 1040x to amend the return. The correction would show up on line 1 of the form 1040x, but the taxpayer might need to attach a schedule C to the amended return (I am not sure if such a small amount would require a schedule C or not).

Either way, I suspect that solution is a lot less hassle.

Best wishes.
by Wagnerjb
Mon Apr 02, 2018 8:03 am
Forum: Personal Investments
Topic: Roth contribution $5500, Taxable compensation $5499 for 2016. How to fix?
Replies: 17
Views: 3766

Re: Roth contribution $5500, Taxable compensation $5499 for 2016. How to fix?

HeadSpinning wrote: Mon Apr 02, 2018 2:07 am Yes, W-2 box 1 is $5499 and the Roth contribution was $5500.
Show $1 of income on line 12. You earned that $1 of income sometime during the year....don't you remember? :D You may not even have to file a schedule C if the amount is that small.

That $1 avoids any headaches with the Roth contribution. I would not suggest this solution for a much larger amount, but for $1 the path of least resistance may be the best one. I would rather avoid the hassle and headache of a tiny withdrawal from the Roth, and I would rather avoid having to file documents that may complicate my future withdrawals (I don't want any distributions to be tainted by the $1 of potentially pretax money).

Best wishes.
by Wagnerjb
Sun Apr 01, 2018 10:20 am
Forum: Personal Investments
Topic: Tax Adjusted Investing
Replies: 11
Views: 1436

Re: Tax Adjusted Investing

I never did it and I am glad that I didn't because in retirement my income taxes are so close to zero that it really didn't matter. Have you tried to estimate your true taxes on your total income? It could be less than 5%. See this thread: https://www.bogleheads.org/forum/viewtopic.php?t=163748 In my first full year of early retirement, my taxes were slightly less than 5%. :D I had gross income (AGI) of $160k. Of that income, $70k was offset with itemized deductions and personal exemptions. So $70k of that income was taxed at ZERO. I had $48k of long term capital gains from selling $88k in assets. Of the capital gain, $32k was taxed at ZERO, while the remaining $16k was taxed at 15%. Of the remaining $42k of ordinary income, $18k was taxed...
by Wagnerjb
Sat Mar 31, 2018 2:46 pm
Forum: Personal Investments
Topic: Tax Adjusted Investing
Replies: 11
Views: 1436

Re: Tax Adjusted Investing

I never did it and I am glad that I didn't because in retirement my income taxes are so close to zero that it really didn't matter. Have you tried to estimate your true taxes on your total income? It could be less than 5%. See this thread: https://www.bogleheads.org/forum/viewtopic.php?t=163748 In my first full year of early retirement, my taxes were slightly less than 5%. :D I had gross income (AGI) of $160k. Of that income, $70k was offset with itemized deductions and personal exemptions. So $70k of that income was taxed at ZERO. I had $48k of long term capital gains from selling $88k in assets. Of the capital gain, $32k was taxed at ZERO, while the remaining $16k was taxed at 15%. Of the remaining $42k of ordinary income, $18k was taxed...
by Wagnerjb
Thu Mar 29, 2018 8:10 am
Forum: Personal Investments
Topic: IRMAA and Roth Conversions
Replies: 22
Views: 2956

Re: IRMAA and Roth Conversions

Should I be allowing IRMAA to limit our Roth Conversions? Has anyone here faced similar decisions and how did you decide what to do? There are a lot of unknowns and moving parts. Thank you! By coincidence, I was discussing this with a fellow retiree yesterday at lunch. He is 65 (I am a few years away from 63, so this is his issue right now....not mine) and plans to convert to a Roth up to the top of the 24% bracket for the next several years. He is aware of the additional IRMAA cost but is going ahead anyway. I agree with him, and I would do the same thing. In very rough numbers, you can convert another $150k from the 22% bracket to the top of the 24% bracket. You will pay $36,000 in tax at 24% on this additional taxable income. The impact...
by Wagnerjb
Mon Mar 26, 2018 8:16 am
Forum: Investing - Theory, News & General
Topic: A new twist--flex fees
Replies: 7
Views: 1611

Re: A new twist--flex fees

Now for the trick. These are not index funds. One of the funds, FFTVX, is a very growthy fund and is benchmarked against the S&P500. FFTVX holds some international and 27% mid cap. Another is benchmarked against the Russell 1000, but it holds no small and no value at all. It seems to me that Alliance Bernstein could easily game this system. They can create one fund with value stocks and one fund with growth stocks. Both are benchmarked against a blend index such as the S&P500. One will lose to the index and have an ER of 0.1%. The other will beat the index and have an ER of 1.1%. Taken together, Alliance is almost guaranteed to get paid an average of 0.6%. While that isn't excessively high for an active fund, they might sucker some...
by Wagnerjb
Sun Mar 25, 2018 10:21 am
Forum: Personal Finance (Not Investing)
Topic: Reporting Interest on Schedule B
Replies: 14
Views: 1456

Re: Reporting Interest on Schedule B

This seems like an obvious question, but do you report interest itemized per-account, or one total per institution? Obviously the amount will (probably) be different, so the issue is which number the IRS will see. So if you have twenty accounts at an institution, and they report to you the interest earned on each item and also a total, which should you copy the schedule B? It would be easier to report the total, of course, but what matters is what the IRS wants, and I haven't found that in the instructions. Paul: I have an experience that suggests using the total figure from the 1099-INT statement. About 5 years ago I got a letter from the IRS "correcting" my tax return. I owned a handful of individual stocks (held at Vanguard) a...