Bogleheads.org

Do print out the Summary Plan Description documents about your 401(k) plan as well as your cash balance pension account. In the last four jobs I had worked at, these documents have always been available on a company intranet site that you can download on demand. Getting access to those documents after you leave the company could be a hassle. Also print out the payslips year-to-date that carry information about your YTD amounts of how much you contributed to 401(k) so far (this would dictate the amount you can defer at your future employer), taxes paid, etc. Yes you would get a W2 next year, but having this information handy could help you do tax-planning -- IF YOU SO CHOOSE. If you opted in for any FSA plan, make sure you exhaust those amou...

Doctor Rhythm wrote: ↑Sat Apr 01, 2023 2:30 pm I’m not sure I fully understand the funds flow here, but are you able to transfer money by Zelle? There is a usually a low maximum (my bank limits it $3000 per day), but it near instantaneous. I just transferred $100 to myself as a test, and it took 15 seconds for the receiving bank to credit the deposit after I hit SEND.

THIS!! Doesn't matter whether it is a weekend. If the overdraft is not super high, you should be able to do a Zelle transfer to self.

I would move His Roth IRA also to a target date fund, but not 2045 fund. I'd do something like 2065 or 2070 fund so that you have a higher allocation to stocks as befits a Roth account. The reason for this recommendation is the Wash Sale rules. Should you need to sell your VTI in your current taxable account, and if you sell for a loss, that loss may be disallowed because you may have just happened to buy the same VTI through automatic dividend reinvestment over which you have no control. Having completely different investments between the Roth IRA and taxable would sidestep the problem altogether. You could move either the taxable account VTI to another ETF, or Roth IRA. Depending on the amount of gains or losses, you COULD sell the taxabl...

PghPharmBoy wrote: ↑Tue Mar 28, 2023 8:57 pm

lakpr wrote: ↑Mon Mar 27, 2023 8:05 pm This is called "TRUE-UP". <<snip the rest>>

Respectfully, this was not a true up. My employer paid out out match one time, in Q1, of the year *after* contributions were made. And, you had to be employed on the day of the match payment or you got nothing.

If it is looking like a duck, and quacking like a duck ...???

Stinky wrote: ↑Mon Mar 27, 2023 8:55 pm I agree with paying down the HELOC as you can, which will give you a guaranteed 6.99% return.

+1!
It is 7% AFTER -TAX return, which is all that more sweeter! HELOC interest is not tax deductible unless used for improvement of the home. Clearly not the case here.

OP, I suggest editing the title of the first post in the thread too, putting "[Solved]" as prefix, including the square parentheses

"Yup, they only put money in from last year in a lump some the following year." what do you mean by this ? employer contributed for year 2022 in the year of 2023 ? I have never heard of this usually they should match 4% of your every weekly paycheck. e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it. OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was n...

Thanks! I actually opened a ROTH IRA last week (have only contributed $100 to it so far). I wanted to open an IRA rather than contribute more to my 401k because: 1. I wanted to have more investment flexibility than my 401k offers. 2. I plan on increasing my contributions to my 401k in the next couple of years to the point where I will be capping it out eventually. 3. Using money from my side business to contribute to the ROTH. Side business income varies significantly so I wanted the flexibility to contribute more or less to the IRA depending on my side business income for the month. I have read the IRS income limits and am confused if I am over them or not. If your userhandle is a true indication of the state you reside in -- then you sho...

Answer 1: No, Roth conversions are irreversible, after the passage of Tax Cuts and Jobs Act Answer 2: I am not sure what your expectations from the CPA are. Roth conversions are fairly simple that any decent tax software should be able to handle it. You did get a 1099-R from the custodian of the new Roth funds, right? Comment 1: Given that your income is $280k, and assuming that this level of income would stay fairly stable over the next few years, a Roth conversion may not have been a bad idea. Remember that the current 24% tax bracket is scheduled to expire at the end of 2025. After that, at your income level, I would guess you to be in 28% tax bracket. Being able to convert at 24% rate now is like getting 4% cash back on your purchase .....

Pretty tempting offer. $525 for 25k on deposit for 60 days. The downside is it appears to require opening an account in a branch. https://bonusoffer.wf.com/savingsbonus?sub_channel=WEB&vendor_code=WF&collateral_code=MQ1&_ga=2.206218267.906590254.1679886913-1101070766.1677364228 Fine print says you cannot be the beneficiary of any other WF offer that required a promotional code. Since, as I posted above, I bit the $325 offer on checking account, I assume I am (and other posters who may be in my position) ineligible. Edit: I suppose I can persuade my spouse to open the account instead Tecjnically, the fine print says that you cannot be a beneficiary of any other WF savings offer with a promotional code. You are not eligible for t...

whodidntante wrote: ↑Sun Mar 26, 2023 10:19 pm Pretty tempting offer. $525 for 25k on deposit for 60 days. The downside is it appears to require opening an account in a branch.
https://bonusoffer.wf.com/savingsbonus? ... 1677364228

Fine print says you cannot be the beneficiary of any other WF offer that required a promotional code. Since, as I posted above, I bit the $325 offer on checking account, I assume I am (and other posters who may be in my position) ineligible.

Edit: I suppose I can persuade my spouse to open the account instead

GibsonL6s wrote: ↑Sun Mar 26, 2023 10:27 pm It was the comment that he could put her in any funds he wants. He may have a POA with authority to do withdrawals and can put her in inappropriate fund for her situation. I am not questioning Dimensional funds but would think the son needs to understand the advisors relationship here.

I read it differently. OP said (bold underline emphasis mine)

He doesn’t charge her any fees. I’m sure he could put money into whatever funds she wants.

OP clarified later that there seems to be a $170 flat annual fee, not quite zero.

Absolutely agree that the actual nature of advisor relationship should be understood

With only $340k in principal balance remaining on the mortgage, 4.5% rate, you are looking at annual interest of $15.4k per year. Coupled with $10k maximum SALT deduction, it is only $25.4k itemized deductions, less than the $27.5k standard deduction. In other words, that 4.5% you are paying on the mortgage is fully after-tax. To get a 4.5% after-tax return, you should earn 4.5% / (1 - 22% - 6%) = 6.25% on any pre-tax investment. Or at least 5.75% on Treasuries (free from state tax). It is possible to get about 5% on Treasuries or up to 5.25% on regular bank CDs, so you are paying essentially 0.75% to 1% premium to keep your money liquid. On the annual $16k remaining that you are asking the question about, that amounts to $120 to $160 per Y...

rmstickler wrote: ↑Sun Mar 26, 2023 3:16 pm Thanks to everyone who's responded so far! I'm still very new to all of this, so I appreciate your input and advice.

I've also updated my post above with more details, as requested. Looking forward to hearing your suggestions based on this info!

You still missed the most important detail that Bogleheads are looking for, expense ratios of the offerings in your 401(k).

ADP offerings are usually more expensive (meaning higher ERs than what you could get in Traditional or Roth IRAs). That information could drive the bias towards less 401(k) funds vs. more ...

Not to be alarmist but I would get her away from the advisor ASAP. These situations are ripe for fraud or bad investment decisions, the last thing she can afford it to loose her assets. I would want her to have her money at Schwab, VG, Fidelity etc. She does not need an advisor with you in the picture. &1 @Annette and @Gibson, Not to get sidetracked from the OP's question, but not sure why you say this. The original post said that this particular advisor put her in Dimensional Funds (which, while slightly more expensive than Vanguard/Fidelity funds, are not outrageously expensive; if funds like that are offered in 401(k) most people would say they are reasonable), plus $170 annually (mentioned in a subsequent post). I am as much hardco...

steadyosmosis wrote: ↑Sun Mar 26, 2023 9:01 pm I am not a millenial, but credit cards have superior consumer protections.
I never use a debit card for purchases.

Not a millennial either (I am actually 50+); ditto. With one caveat -- I do use debit card for purchases, sometimes, but whenever I use it, it is always through Apple Pay.

Just my opinion here ... but with a $295k combined income, it would be pretty much selfish to say "let the kids take educational loans, I want to retire in 10 years no matter what" ... There's something to be said about implied obligation to the next generation ... "make the world a better place than the state you found it to be" By no means overextend yourself, but if you can comfortably meet the anticipated educational expenses by delaying your intended retirement by another 4 to 5 years (and you can!), if it lets your kids be debt-free from college costs, you should delay. For what it is worth: I am older than 50, my spouse younger by 5 years and younger than 50, and two kids (twins) entering college next year. We hav...

Not to be alarmist but I would get her away from the advisor ASAP. These situations are ripe for fraud or bad investment decisions, the last thing she can afford it to loose her assets. I would want her to have her money at Schwab, VG, Fidelity etc. She does not need an advisor with you in the picture. &1 @Annette and @Gibson, Not to get sidetracked from the OP's question, but not sure why you say this. The original post said that this particular advisor put her in Dimensional Funds (which, while slightly more expensive than Vanguard/Fidelity funds, are not outrageously expensive; if funds like that are offered in 401(k) most people would say they are reasonable), plus $170 annually (mentioned in a subsequent post). I am as much hardco...

Northern Flicker wrote: ↑Sun Mar 26, 2023 7:58 pm

lakpr wrote: That said, if she has not yet filed taxes for 2022, pull out $7,500 out of that taxable portfolio and stick it into traditional IRA for an immediate $1600+ in reduced tax (22% bracket assumed). If affordable, double that $7,500 for 2023 too at the same time.

The IRA contribution limit for 2022 is $7000 for someone age 50+. It goes up to $7500 in 2023.

Ah, true. Let me correct my previous post.

I just wanted to say, if your Mom’s financial advisor is indeed charging only a flat fee $170, you got an excellent FA there. The portfolio looks very reasonable, good to excellent funds, and does seem like tailored to be conservative as to not lose the principal (age appropriate). Hard to find such FAs. Sure the portfolio can further be optimized and brought in line with the Boglehead standard 3 fund portfolio. But that requires somewhat hands on maintenance of her current portfolio; the current situation is quite reasonable indeed. ————- That said, if she has not yet filed taxes for 2022, pull out $7,000 out of that taxable portfolio and stick it into traditional IRA for an immediate $1600+ in reduced tax (22% bracket assumed). If afforda...

sapien wrote: ↑Sun Mar 26, 2023 5:00 pm What would be the acceptable dollars/sq. ft in NY area (suburb) for new construction?

Central NJ resident; not quite NY suburb, but I hope I am providing a close enough data point. I see new constructions around $400/sq. ft. around my area.

My plan limits non-deductible contributions to 10% of the paycheck. Since it is a per paycheck basis, I would lose out on maximum contributions if I don’t contribute every paycheck.

I set my 401(k) contributions as: 50% of the paycheck to Traditional 401(k), 10% to Roth 401(k), 10% to after tax 401(k). The readily is front loading of contributions to the plan, IRS limit of $30,000 (I am older than 50) reached by last paycheck of April, and the non-deductible contributions continued throughout the year. My paycheck for the first 4 months of the year after these deductions and healthcare premiums and transit expenses deductions is $200 every 2 weeks!!

Wiki has answers to all your questions; please read them and post follow up questions if those articles did not answer them.

1. Traditional vs.Roth
2. No tax implications (other than that you will pay tax on the contributions you make to Roth 401(k) now).
3. Backdoor Roth

If the credit union has the best terms for the loan, is there a downside to joining? Other than what is probably a relatively small fee or annual fee? RM If there has been no activity for a certain number of years (3 years?), your account will be turned over to the "Avandoned property" of the state. Speaking from personal experience -- this did happen to us. But in the end it was far easier to claim that abandoned property from the state, and have the check deposited later into an account that is frequently used. Zero interest earned during those 3 years, of course, but easier than dealing with the credit union. I mean, I don't see the "abandoned property" as a potential negative, perhaps even a positive. NJ makes it so...

With only $277 in losses, I would sell everything, and invest in only VTI. For someone in the 32% tax bracket, that's peanuts.

I would not hold VXUS in taxable account, even though it provides the so-called foreign tax credit. From my experience, I found that the amount of non-qualified dividends that get taxed as ordinary income, and the FTC, tend to cancel each other out. I'd hold anything that complicates my tax situation in tax-deferred / Roth accounts.

No disrespect. I just find this interesting. There are some people on the board that see moves into the 10's of thousands of dollars, if not more in their portfolio values in a single day. I really like $325 dollars. Don't think I don't! However, it seems like I would rather be spending time with something else than following continual bank bonuses. I get it though. It just seems like I would increase my equity allocation. I think you may see the forest through the trees. :beer No disrespect taken either. Completely understand your viewpoint, however the same argument can also be argued about credit card bonuses: "why bother about credit card bonuses when the bonus amount is dwarfed by the daily movement of one's portfolio" ... A...

Is Bank A Citibank?

I bit today on Hells Fart Go bank offer for $325 bonus for opening a new checking account and add direct deposit.

$500 opening amount to avoid monthly fees
$1000 direct deposits required within first 90 days, I am opting to do this within 30 days via $500 per paycheck
Leave the money for 90 days to get the bonus then drain down the balance to $500 for additional 90 days to serve out the clawback period

$325 return on an outlay of $1500 for 6 months equals 43% rate of return. After taxes it is more like 28% return.

Intend to close after 6 months. Will be eligible again only in 2027.

dips wrote: ↑Wed Mar 22, 2023 4:55 pm FYI - Schwab is give over 5% p.a., even on short term starting from one month. In case, someone is looking for high yield CD for short term
https://www.schwab.com/fixed-income/cer ... es-deposit

Schwab is one of the banks that is under stress, suffering from the same malady as SVB and FRC (or so the news articles I read said). You should still be good since you are staying below the FDIC limit

muddgirl wrote: ↑Wed Mar 22, 2023 4:20 pm In 2023 you will convert the balance in your IRA, say it's still $1700. All of that will be converted tax-free (because you already paid tax in 2022) and you will have a remaining basis of $500.

I am not so sure about the bolded part. If the balance in the Traditional IRA is $0 as of December 31st, as it should be if you are doing the Backdoor Roth correctly, I do not think the unused $500 basis carries over.

Best to not convert to Roth if the value of the IRA does not exceed the basis.

Do you have the equivalent amount of this CD, in a taxable account?

There is an auction tomorrow for 10-year TIPS. Last time 10-year TIPS were auctioned in Jan-2023, the yield was 1.17% real. No reason not to expect at least that much with tomorrow's auction.

Getting 1.17% above inflation seems a good deal to me, except that this auction can only be in taxable accounts. Hence the question of whether you have the equivalent of this IRA CD money in taxable.

If you do, simply buy TIPS at the auction tomorrow, and invest this maturity IRA CD into 100% stocks. Will result in exact same risk as before.

All of the alternatives are affordable to you, given your high salary and projection of "reasonably stable" jobs going forward. Of the three though, spending the $300k and building an extension on your current property seems to be the cheapest alternative, although possibly taking the longest time to complete. In your shoes, I'd opt for that.

Edit: I'd rule out renting the current house. You would lose the primary home capital gains exclusion if you rent it out more than 2 years out without selling.

Even in 24% tax bracket, with $1 million already in Traditional TSP / 401(k) assets, I would suggest Roth TSP contributions. With 30 years to RMD age, even with not a single dime added to the Traditional pot, this $1 million will grow to be $8 million (doubles thrice, once every 10 years), and that's assuming a modest 7% real return (meaning 7% + inflation over the long term, which seems plausible to me). A 4% withdrawal from $8 million = $320k, which puts the couple in the same 24% tax bracket (if it survives) or 28% tax bracket (if the current tax bracket does not survive the scheduled expiry date of 12/31/2025, and revert to 2017 tax code). So Roth TSP contributions now would at WORST be the same as making Traditional TSP contributions, ...

Didn't read all the responses, but chiming in here that we did exactly what the OP is proposing to do, 14 years ago. At that time we had been living in a 3bed 2ba 1400 sq. ft. townhome, $200k odd in value. We then moved to a $600k single family home, 0.8 acres, 4 bedroom 2.5 bath, 2800 sq ft (and 3300 sq ft if we include finished basement space) for both (a) better reputed school district, and (b) additional room for parents when they visit. Our combined salary was also about $200k ($140k for me, $60k for my wife) about then. Mortgage rates were similar too, 5% odd, and $3,400 PITI sounds just about right what we paid on our first mortgage (refinanced multiple times since then, paid off in 2019). Yes we did have to buy all those riding lawn...

3. I would stop ESPP since the discount is minimal. Redirect money to child (UTMA, 529) or to wife for Roth IRA Disagree here. It is 5% discount every quarter, so equivalent to 20% cashback on whatever the amount the OP decides to invest in ESPP. Of course, the standard advice is to sell immediately after the shares are vested, and given that these will be short term sales, taxes are due at ordinary income tax rates. So that 20% cashback is more like 14% cash back, still a GREAT deal. Something like, let's say the average stock price of the employee stock over the first quarter is $100. @GamerDad gets it for $95, and immediately sells for $100, pocketing the $5. Repeats the cycle every quarter, so $20 in total for the year. The outlay from...

NewDawnGlory wrote: ↑Mon Mar 20, 2023 9:05 pm If I understand you correctly, your suggestion for our "house upgrade" savings is to just pay down our existing mortgage, rather than a CD (or some other safe, short-term investment) or the Vanguard Conservative Growth Fund.

Bingo, yes you understood the point I was trying to make, exactly.

I believe you must dispute the charge in writing rather than over the phone, to preserve your rights...

AnEngineer wrote: ↑Mon Mar 20, 2023 12:49 pm

lakpr wrote: ↑Mon Feb 06, 2023 8:00 pm I disagree with not carrying the comprehensive and collision coverage; I found it, in practical experience, to be penny wise and pound foolish. At one time, I thought of saving $340 per year in insurance premiums by increasing my auto deductible to $5,000 instead of the normal $1,000. Guess what ... after about two years, I was involved in an at-fault collision, and the repairs to my car came to about $5,600 (fortunately a minor fender bender, but the front of the car needed some body work). I did pay it out of pocket, but it stung. I went back to paying $340 extra per year but carrying lower deductible.

But how much would you save by dropping it completely?

Not even interested in finding out, sorry !

For the Mega Backdoor Roth, my employer allows a certain percentage of the paycheck to be designated as Pretax 401(k), a certain percentage as Roth 401(k), and a certain percentage as after tax 401(k) for every paycheck. The only constraint is the the percentages cumulatively cannot exceed 75%.

Is it not the case at your employer? Must you max out either Traditional or Roth 401(k) before you are allowed to contribute to After Tax 401(k)?

If what my employer allows is also allowed at your employer, simply divide the $22,500 (or $30,000 if older than 50) by 24 and set that up as the pretax percentage and remainder as after tax contribution.

You say are in Maryland, and you listed your tax brackets as 22% Federal and 5% state. I am aware that in Maryland, most localities impose their own local taxes. Silver Springs, Baltimore, etc. What's your locality tax rate? With a $330k mortgage and 3.125% interest rate, you are paying a mortgage interest annually of $10,125. Assuming the max SALT deduction for Married Filing Jointly, the itemized deductions come to only $20,125, less than the standard deduction of $27,500 for 2023. So you will be taking the standard deduction on your Federal tax return. In other words, you are paying an after-tax interest of 3.125% on your mortgage. If I assume a modest 2% local tax rate (and I am aware that in some cities it's as high as 3.5%), your effe...

Copy that on the rollover. If I am feeding my Traditional IRA with taxed money, call it lump sum out of my savings account, don't I get a pass on being taxed? I will not be contributing to my Traditional IRA with pre-tax money. Disregard my previous post, although I am not going to edit it again. I misinterpreted your first post where you said "I have since rolled it over to my Fidelity account", I assumed it was to a Rollover IRA. Later @dvvader pointed out that you rolled it over into your *Fidelity 401(k)* account!! If all the Traditional money is in 401(k), then pro-rata rule does not apply. The little $6,000 that you do have in the Traditional IRA, you would want to convert to Roth IRA in entirety, so the pro-rata rule does ...

Sounds like a panic reaction to the news ... I would have not exited the 25% S&P 500 stocks. One of the first principles of Bogleheadism is to be "Time in the market, not Timing the market". If tomorrow the S&P 500 posts a gain, you would be kicking yourself for missing out on all that gain. Being in late 40's, you have at least 15 years to go before you retire (unless you are aiming for an early retirement) and/or needing this money to sustain your lifestyle. Over that period, stocks are likely to be better choice than either bonds or TIPS. You’re right - it was a panic reaction. I’m aiming for retirement at 60… so 12-13 years from now. 25% stocks is still the right choice for 12-13 years of investment horizon. My advice...

During my military career, I contributed to Traditional and Roth TSP and yes, I recently rolled that into my current civilian employer's Fidelity 401k. It was about $110k worth. I am still in the military, but a reservist and only participate part-time. Then, when you do a Backdoor Roth, are you aware that every Roth conversion will be pro-rated against both the deductible and non-deductible balances in your Traditional IRA? So if you have $110k worth of Traditional IRA, and you contribute $6,500 (say), then you convert $6,500 to Roth ... * you may be expecting to not make incur any additional taxes. BUT * IRS disagrees, it would see that $6,500 as a conversion of $6,500 * ( $6,500 / $116,500 ) = $362 of non-deductible contribution convert...

Sounds like a panic reaction to the news ... I would have not exited the 25% S&P 500 stocks. One of the first principles of Bogleheadism is to be "Time in the market, not Timing the market".

If tomorrow the S&P 500 posts a gain, you would be kicking yourself for missing out on all that gain.

Being in late 40's, you have at least 15 years to go before you retire (unless you are aiming for an early retirement) and/or needing this money to sustain your lifestyle. Over that period, stocks are likely to be better choice than either bonds or TIPS.

I had another 401k (TSP) that I've since rolled over into my Fidelity account. I have also just opened a Roth IRA with a lump sum of $6,500. I estimate I am just under the Roth IRA MAGI requirements this year. Next year, my wife plans to go back to work, so I may need to do the "Backdoor Roth" method to continue to feed this account. If that is the case, I will open up a traditional IRA in order to do that. Is your TSP account still open? I would roll the Traditional IRA back into the TSP, or at least into the current 401(k) plan, to take it out of the "pro-rata" calculations if you choose to do Backdoor Roth. No. TSP not open anymore. The only IRA's I have are a Traditional with $6000 in it. My wife and I were above th...

1) Its unclear how much you are making each year and saving, but if you are in the 24% federal tax rate, you will likely be taxed less in retirement. I would suggest a regular 401k to avoid taxes on the income today Disagree on this point. OP is in 24% tax bracket, suggesting at least $230k in gross income annually. OP also stated 16% of the income is contributed to the 401(k) plan as employer match, that's $37k per year anyway going into Traditional 401(k). Given that the OP is only 46, assuming even a modest 6% + inflation rate returns over the next two decades, by age 66 he would have $1.4 million in 2043 money, and that's not including whatever he put into TSP (rolled to Traditional IRA). It's very likely that Roth 401(k) now is quite ...

Frequentflyer77 wrote: ↑Sun Mar 19, 2023 6:12 pm I had another 401k (TSP) that I've since rolled over into my Fidelity account. I have also just opened a Roth IRA with a lump sum of $6,500. I estimate I am just under the Roth IRA MAGI requirements this year. Next year, my wife plans to go back to work, so I may need to do the "Backdoor Roth" method to continue to feed this account. If that is the case, I will open up a traditional IRA in order to do that.

Is your TSP account still open? I would roll the Traditional IRA back into the TSP, or at least into the current 401(k) plan, to take it out of the "pro-rata" calculations if you choose to do Backdoor Roth.

If you can find it, a Toyota RAV4, even if it is a gasoline only version. Even models as old as 2014 vintage will give you trouble free service at least another 5 years.

For safety reasons, I don't recommend going older than 2014 model years. That's about when Toyota added safety features like rear camera as standard on RAV4

Current owner of a 2021 RAV4 Hybrid.

Of the three, my vote would be for UMn. Higher ranked CS program.

Even if there is an annual fee, it is most likely to be imposed in the first billing cycle itself, and one would have paid for it for the entire first year anyway ... there is no further cost to hold the card for 12 months.