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Random Walker wrote: ↑Wed Mar 29, 2023 12:23 pm The main reason I ask the question is I have someone telling me that ETFs are far superior with regard to taxes. Any comments from a tax perspective?

Dave

Index funds are superior than actively managed mutual funds with regard to taxes. People often mistakenly equate ETFs with Index funds, but there are mutual funds that are also index funds. In fact Vanguard has index funds with both ETF and Mutual Fund variants - each is simply a different "class" of the same fund.

Regardless of whether you can estimate the qualified dividends or not, as long as you meet one of the safe harbor rules for estimated taxes, then you should not owe a penalty. The two most common, easily understood safe harbor rules are: 1) if you’ve paid 100% of the previous year’s tax obligation (110% under some circumstances) or 2) 90% of the current year’s tax obligation.

Basel Hodge wrote: ↑Sun Mar 26, 2023 5:18 pm Is there a mechanism built into the system with Vanguard online to see what those specific shares would be and their loss or gain effect as of any sale? I wish I could see this in action on Vanguard. It is probably more simple once you have done it successfully a few times but seems confusing to me. I guess I am concerned about what I might have to keep track of myself for tax evidence/reporting.

Yes, once you’ve changed to Specific Share Identification (if not already), there will be a cost basis tab that shows each lot, and the current gain or loss based on the most recent price.

Ideally, I suppose you'd have preferred them to list the cost basis as the value on the day of the transfer, and the acquisition date the day of the transfer. So subsequent sales would be covered as either short-term or long-term sales. If that's the case (and I don't see how any other would make sense), then despite you transferring them "in-kind" they're not really the same since they've shifted from being in a "tax-deferred" wrapper which has its own set of tax rules to a "taxable" wrapper which has different tax rules. I'm curious, what was your objective when you transferred them from the IRA to the taxable account in-kind? Was there a reason you didn't initiate an exchange from your traditional IRA direct...

LocusCoeruleus wrote: ↑Sat Mar 25, 2023 8:09 pm Wish vanguard had ach in/out and bill pay

They do have ACH in and out. You have to set up linked external bank accounts, but once the linkage is established you can send money to or pull it from the external accounts via ACH.

If you got it directly from the issuing bank or credit union, it probably has predefined early termination fees. Find out if that is the case, and how much they are, and then do a comparison of how much the cost to break the CD early would be, and the benefit from getting a new CD at a much higher rate.

This is plan specific. My plan has always allowed for after tax contributions without maxing the pretax/Roth deferrals first. There is no law saying you must max that first. My plan too allowed both types at same time But Why? Why would you contribute to the non-deductible bucket when you havent maxed out the Traditional 401k/Roth 401k annual max of 22.5k? Once my company allowed it, I contributed to both, but front loaded the after-tax contributions so that I would max them out in the first two months of the year, and then continued throughout the year with additional pre-tax contributions. There were a couple of benefits as I saw them. First, once the after-tax contributions were deposited, the plan allowed me to immediately roll them to...

Call_Me_Op wrote: ↑Fri Mar 24, 2023 3:11 pm The issue I have with muni bonds is they are often compared to treasuries (and perhaps brokered CDs) on the basis of tax-equivalent yield alone. But this is not really a valid comparison (IMO) because the munis are not as safe, and do not hold-up nearly as well in the face of market turmoil. So you need to decide if the slight effective tax advantage is worth it to you.

Only AAA rated munis could reasonably be considered comparable to Treasuries or FDIC insured CDs. To view lower rated ones as equivalent in safety would be a mistake. But really they should be compared with comparably rated corporate bonds, not government-guaranteed or -insured fixed income instruments.

Eligibility for contributing directly to a Roth IRA does not apply for rollovers from other plans. You should be able to rollover the "Roth" portion of your Roth 457 directly to a Roth IRA, and the $1400 pre-tax portion to a traditional IRA. And if you'd like, you could then convert that traditional IRA to Roth and pay taxes. It wouldn't be considered a tax year 2023 contribution; it is a rollover.

Title says it mostly, but I'm in a position of being able to invest a large sum in a taxable brokerage account, and am weighing options between muni bond funds and taxable bond funds. Of course I can compare pure yield via TEY, but the amount is large enough that I could move marginal brackets based on my decision. Which then got me thinking: could there be other advantages to dropping my overall taxable income (eligibilty for other tax credits, ability to invest in Roth IRA, child tax credit, stuff like that) that would go beyond purely the TEY comparison, making muni bond options even more attractive? Has anyone encountered anything like that in their own tax planning? The issue you raise is lower pre tax income (in measures that include...

I haven’t experienced it but it has long been in the back of my mind (when investing in munis), when it comes to qualifying for certain benefits in the future tied to income. The fact that the “reduced” rate is added to your income, rather than the “tax equivalent rate” seems to suggest you might qualify for things (e.g., ACA credit pre-Medicare, or maybe avoiding IRMAA when on Medicare) that you wouldn’t qualify for if the tax equivalent rate was included, as it is with taxable bonds. Might be other things as well. It would also allow you to do larger Roth conversions, though I think that is more directly tied to its TEY. These additional benefits are not as deterministic as the TEY calculation, so they’re harder to quantify.

No, I wouldn’t think so. Why would you think that, especially if you’re not planning to make any asset protection moves?

We just plan to toe the line that "we do not make financial decisions without consulting our financial advisor and lawyer, so no thank you". I am sure they will have retorts ready, …. Any other tips to avoid wasting time and escaping faster is appreciated. Yes. These people are serious pros at countering and overcoming objections. Yours is the same one I used the one time we did the time share visit and had to endure, er, sit through the presentation/sales pitch. In our case, they piled on a bunch of extra perks that were ‘good for today only’ to counter my ‘I need to run this past my attorney’ objection. The extra perks were enticing enough to make me pause, and I said “Let me think about it tonight and call you tomorrow”. But, ...

fetch5482 wrote: ↑Tue Mar 21, 2023 6:01 pm This was timely since we just agreed to attend a timeshare presentation in Mexico next month in exchange for an ultra cheap 5-nights all inclusive vacation.

Any other tips to avoid wasting time and escaping faster is appreciated.

Always remember that you do not owe them a reason for declining their “offer.”

tcrez wrote: ↑Mon Mar 20, 2023 3:09 am I’ve read about various insurance and guardrails to prevent your broker from losing your stock, but what if they lost or got wrong the records of who owned what.

And say your last account statement is a little bit old and doesn’t include that big transaction you made recently.

And even if you had account statements, it’s your word against theirs. Who’s to say you didn’t manipulate the document to give yourself 10x as many stock by adding a zero.

What would happen in this case?

If it’s simply your word against theirs, the more backup documentation you have the stronger your case. Is that a serious concern of yours or is it just a theoretical thought exercise, playing out worst case scenarios?

Fremdon Ferndock wrote: ↑Sun Mar 19, 2023 11:51 am Aren't they all 100% insured now?

Not by the FDIC.

If you sell a mutual fund within a brokerage account, the proceeds should automatically appear in your settlement account the next day.

I am curious - Fidelity and Schwab sell T-bills at price, i.e. they do not take any commission or gain anything from that transaction. Given these are "for profit" companies, what incentives do Schwab/Fidelity etc have to sell treasury bills? If you are a agent you take a commission and get the best deal. Think real estate agent. You can see the commission on the sales contract. If you are a principal you sell you inventory directly to the customer. Think car salespeople. Do you see a commission on the sales contract? No. This is how bonds normally work. There is probably a mark up but you can’t see it. For context this is why trading costs are not part of a mutual fund’s expense. Most large trades, bonds and stocks, work on a pr...

I made my very first stock market investment, my "life savings," in Mutual Shares, weeks before the crash of 1987. It was not exactly a warm welcome to the world of investing, and I'm sure that early experience made me a more conservative investor than I might have otherwise been. I recall getting a special postcard notifying me of Max Heine's death. I kept investing in my Class Z (no load) shares for many years, and it wasn't until the temporary crash of 2020 early in the pandemic that I got rid of most of my shares, moving the proceeds into Vanguard Total Market.

Although it has a notable place in mutual fund history, much like Magellan under Peter Lynch, at this point it is nothing special.

Any thoughts or advice on how to proceed? It's funny that we never see posts from financial advisors asking, "some of my clients are friends, and sometimes they leave, and I'd like to maintain the friendship after they leave, not for any business purpose, just want to keep the friendship... what's the best way to continue the friendship and allow them to feel comfortable with that?" Or, "For ethical purposes I've decided to change my business model so that I do not to do business with friends. I don't want to risk losing their friendship if an investment strategy I recommend doesn't work out to their benefit. How do I politely drop my clients who are also friends, in such a way that we can still maintain our deep friendship?...

Vanguard is not FDIC insured. CDs are issued by banks, the bank is most likely FDIC insured. Check at that level. All brokered CDs that Vanguard offers are FDIC insured up to $250k per institution per registration type - the standard FDIC insurance. Note that Vanguard doesn't issue CDs - they act as a brokerage, offering CDs from FDIC insured banks. I don’t think Vanguard makes that guaranty. Sure, that is what they regularly offer but still. Further CDs are not guaranteed - a “account” is. Buy 250k from Vanguard and another 250k directly from the bank and you are only insured up to 250k. Correct - whatever you hold in a brokered CD issued by a given institution is added to whatever you might hold directly at that institution to determine ...

alex_686 wrote: ↑Tue Mar 14, 2023 6:39 am Vanguard is not FDIC insured.

CDs are issued by banks, the bank is most likely FDIC insured. Check at that level.

All brokered CDs that Vanguard offers are FDIC insured up to $250k per institution per registration type - the standard FDIC insurance. Note that Vanguard doesn't issue CDs - they act as a brokerage, offering CDs from FDIC insured banks.

The critical date is the settlement date of the new purchase. With a settlement date of 3/16, and the T-Bill maturing on 3/14, you will see the proceeds from the redeemed T-Bill on 3/15 so it should not be a problem. If I have a T-bill maturing on 3/14 will Vanguard let me buy a T-bill on the secondary market on 3/13 with a 3/14 settlement date? Would I have to wait a day and buy on 3/14 with a 3/15 settlement date (or even push it another day)? That's the scenario I was alluding to. It can be a bit unsettling (no pun intended) when you get the warning email, since it's written in a way to make you doubt what you know. Theoretically it should work, but you might want to call them to confirm. Unless there's a unique time-limited opportunity...

The critical date is the settlement date of the new purchase. With a settlement date of 3/16, and the T-Bill maturing on 3/14, you will see the proceeds from the redeemed T-Bill on 3/15 so it should not be a problem. Even if the settlement date of the new purchase is 3/14, you should still be able to use the proceeds from the T-Bill maturing the same day, but you might get an email from Vanguard on 3/13 telling you that you might not have sufficient funds because those warning emails do not take into account maturing bonds. I've had that happen, but everything has gone through just fine without incident. Numerous times I've "suggested" that those warning emails should be aware of and take into consideration bonds for which a redem...

Hi, I contribute to an after-tax 401K and do a Mega Backdoor Roth (in addition to maxing out my pre-tax contributions). I made my 2022 after-tax contributions early in 2022, the market tanked, and then I thought I had to roll them over in the same calendar year, so rolled them over into a Roth IRA with about $5K in losses (the way my 401K is set up, I can't avoid investing my after-tax contributions without also not investing my pre-tax 401K contributions, so holding the after-tax contributions in a money market fund was not an option). Here are my questions: 1. Can I deduct those losses? 2. Is there any rule that requires you to roll over your after-tax contributions into your Roth IRA in the same year? In other words, should I have just ...

I wouldn't trust it as a source for real investment advice, but for fun I asked ChatGPT to write a commercial for a new drug called Investify AD, which makes people expert investors. Below is what it came up with. A complete work of fiction, but in my opinion hilarious. Enjoy! :sharebeer -------------- [The commercial begins with a man sitting at his desk, looking concerned while surrounded by stacks of investment papers and financial documents] Narrator: Are you tired of feeling lost and overwhelmed when it comes to investing? Do you want to take control of your financial future but don't know where to start? Pfizer has the solution: Investify AD. [The man takes the first shot of the medication and smiles as he looks over his investment do...

Sell if you feel that makes sense for you, but to say that a tax-free municipal bond that is not in your state gives you no benefit is an exaggeration. It may not be an optimal choice, but the interest it pays is still tax exempt on your Federal taxes.

In my experience at a megacorp that uses Fidelity for its 401k administrator, I was unable to have different asset allocations within the Roth 401k versus traditional 401k. So, I could not load up the Roth with 100% equities unless my entire 401k was invested that way. Rolling out to a separate Roth IRA eliminated that restriction. So, if that constraint exists for you, and if you'd like to have a different asset allocation in your Roth versus pre-tax portion of your portfolio for tax efficient growth, rolling it out may give you a long-term benefit.

I think it would be reasonable, and very conservative to assume some sort of expense to occur to retrofit the garage/parking spaces in the next ~10 years, and to allocate your share of that amount to your projected future living expenses. If you are mistaken, or if you overestimate the amount, then you'd have money for a nice vacation in 10 years. If you are correct, then you you've got it covered! But if it came to happen, it might not be a large one-time assessment. The condo association could take out a loan, and then spread the loan payments out among owners over a reasonable period of time. Or, they could start charging in advance of the work being done, to build up enough in the reserve to cover the expense. I'm sure there are other p...

As a general rule, the best tax software to use to estimate next year's taxes would be this year's tax software. So, to estimate 2023 taxes, Turbotax 2022 or H&R Block 2022 would be reasonable. Next year, you'd use the 2023 version of the software to estimate 2024 taxes, etc. Give yourself some buffer, though, because these are still only estimates and tax brackets get adjusted each year, and tax laws can change in the future. In fact, many of the provisions of the tax cut and jobs act of 2017 are set to expire on Dec. 31, 2025, so we can expect the tax laws in 2026 (especially deductions) to be different from what they currently are.

There is a part of the H&R Block interview where it asks if you’ve purchased bonds between interest payments. That’s where you’ll have the opportunity to tell it about accrued interest. It will subtract off that amount from your interest payments.

Are you afraid to ask your employer because you won't like the answer you'll receive? My guess will be they will tell you you need to sign it to get severance. On the day when I was told to leave, HR told me I do not have to sign to get the lump sum payment. I repeated this and got confirmed that day. Now in the document I found this. I contacted HR and now he said I have to sign, different to what he told me that day. As with most things of a contractual nature, it is only the information that is written down that matters. Verbal assurances are only worth the paper they are written on. From what you've provided, the plain text reading, to me, says that if your severance is more than 2 weeks, you must sign the release to get it. If you are...

I just received an updated 1099-INT for tax year 2021, showing some modest changes related to tax-exempt interest. The changes do not impact my tax obligation at either the Federal or state level, nor do they impact any Federal or state benefits (because I am not receiving any). But they would change the amount of tax-exempt interest reported. The only visible change to the federal return would be a slightly different value in box 2a, which is not included anywhere else on my return. The only change on the state return would be similar, where the changes net out to zero because they relate to municipal bond interest from my state. Now I'm pondering whether or not to file an amended return. I'm curious how others would handle this. Would you...

On my 1099-int from Vanguard, they show an amount called “accrued interest”. This is from my brokerage account in which I hold only treasuries that I bought at auction. Can someone explain what this is and the tax implications? Thanks… Adding to what others have already responded: If you bought them at auction, it seems strange that you would have paid accrued interest since you'd have bought them when they are originally issued. Are you certain you bought them at auction and not on the secondary market? If you buy a Treasury at auction and it is a re-opening, you can easily have accrued interest. Interesting. I thought at a re-opening, the settlement date would have aligned with the coupon date (so you're not buying between coupons), or i...

kobbiemandd wrote: ↑Wed Feb 22, 2023 8:20 pm On my 1099-int from Vanguard, they show an amount called “accrued interest”. This is from my brokerage account in which I hold only treasuries that I bought at auction. Can someone explain what this is and the tax implications? Thanks…

Adding to what others have already responded: If you bought them at auction, it seems strange that you would have paid accrued interest since you'd have bought them when they are originally issued. Are you certain you bought them at auction and not on the secondary market?

Regardless of whether he files in Colorado or not, in order to get a refund of California taxes withheld, he'll have to file a California state return.

Does he have some sort of documentary evidence that he is a Colorado resident, such as a signed lease, credit card bills sent to a Colorado address, or similar?

Hello, I posted a few days ago and am confused about the responses I’ve received, especially about taxes due on Fidelity activity. Here are my questions: I bought one Fidelity stock several years ago and sold it last January, realizing a significant gain. I did not withdraw the funds from Fidelity, and have not yet bought any replacements, but intend to in the coming months. For the past year or so the proceeds from the sale are just sitting in my account at Fidelity, earning interest. But I might, in the coming months, transfer the funds to a bank account, and I know that I will have to pay taxes (2023) on the gains when/if I do that. But for now I have to file a 2022 tax return so need to know if I must include this 2022 interest in my i...

I successfully filed two federal returns yesterday (Feb 18) using the Mac version of the H&R Block Deluxe package.

Your approach seems to go against the general tax optimization principle of (to the extent possible) keeping equities in tax-exempt (i.e., Roth) accounts, then taxable accounts, and keeping fixed income in pre-tax (traditional 401k and IRA) accounts. In the long run, IMHO, that approach is likely to give you more after-tax money than optimizing your portfolio for tax-loss harvesting. But maybe I'm wrong about that.

You’d have a plethora of warnings well before that ever happened. So if you were to let it get that far, it would be on you. But if it did happen, the tow truck’s only real option is to tow you home or to a charging station.

tashnewbie wrote: ↑Thu Feb 09, 2023 11:35 am

Masterblaster wrote: ↑Thu Feb 09, 2023 11:10 am So my question is:

can I invest $7500 this year in a Roth IRA?

Or is it $7500 less the $870 and the $1580 401-K contributions.

Or what? Please enlighten me how this works for small income amounts.

The tax-deferred 401k contribution does reduce your wage income (box 1 of the W2).

I think you'd be eligible to make a Roth IRA contribution of $7.5k minus $870. You could wait until you get the 2023 W2 in 2024 to confirm your eligibility.

I think it would be the $8000 of earned income less the $870 in pre-tax 401k contributions, or $7130. I believe that is what will show up in box 1 of your W2.

If you gifted the stocks, then the dividend distributions would be reported on a 1099-DIV under the new owner’s SSN. The new owner could choose to gift you those dividends (subject to gift tax laws), but still would be responsible for any tax obligations on the dividends. From an ownership perspective, the rights to receive stock dividends are not really separable from ownership rights of the stock in general.

Homeby5, whoever has POA here should immediately inform the nursing home staff that your mother inherited an annuity, and the family is concerned she may no longer qualify for Medicaid. The staff should be able to assist you with how to communicate with the state Medicaid office. In my experience what has transpired is not a trivial matter. People not qualified for Medicaid should not be on it. Now your mother has been on Medicaid for around half a year when it sounds like she should not be. If you do nothing and instead, just continue to let the monthly annuity payment accumulate somewhere, then I think after your mother dies, the burden on the executor/executrix will be greater. By law, states are required to pursue estates for reimburse...

Be open and receptive to criticism - fight any tendency to be defensive (if that exists in you).
Ask whether there was a change in the number of people who could be assigned to each category. Assuming the staffing was consistent from the previous year, I'd think this is likely the case.
Ask for specific examples of where you could have done better.
Ask if your boss viewed an overall change in your performance the past year, relative to the previous year, or whether there were only a few specific examples of where you could have done better - perhaps taken on more responsibility or more of a leadership role?

It's disheartening, of course, but try to view this in a larger perspective as an opportunity for growth in the coming years.

Blues wrote: ↑Wed Jan 25, 2023 7:59 am I can tell you that the one thing I noticed this morning was that there was no longer any mention of my having to wait for my brokerage consolidated 1099, and that the site only alluded to the two mutual fund side tax documents applicable to the period before I switched over to the brokerage.
(It said "Your two tax documents are available"...and I already had those tax documents from the mutual fund side for over a week.)

I observed the same (or equivalent) thing yesterday. I wrote them a secure message and am awaiting a reply. It's very unsettling when something like this happens, calling into question the credibility of the information provided on their website.

There once was a risk-averse guy
“Investing for some? Sure, not I.”
But then he did read
On Bogleheads feed:
Choose only to buy VTI

While dealing with life’s consequences
His assets grew well beyond pences
Retirement’s here;
Let’s toast to good cheer!
With 50 times yearly expenses!

There once was a new college grad
Who lost all the money he had
But staying the course
Allowed him to divorce
(The crazy temptation
From feigned adulation)
The trap of each ill-fated fad

(Apologies to limerick purists for the extra BB phrase - it is optional!)

Beensabu wrote: ↑Mon Jan 23, 2023 11:29 pm

GRP wrote: ↑Mon Jan 23, 2023 11:18 pm I bet at least half of these were written by ChatGPT.

How dare you, I say!
You shall not take away
All those years spent
Not worrying about rent
So I could learn AABBA.

Outstanding retort! Bravo!

Is your employer's contribution of 9.5% tied in any way to your own contributions? If you stop contributing entirely, will they continue to put in 9.5%?

BogleFanGal wrote: ↑Sat Jan 21, 2023 5:55 pm Now...the next thing I'd like to know: Which year will they use to verify annual income? Prior year (as PPP, IRS and other govt programs often do) or the actual year you do the purchases/installs? For those with uncertainty year to year (self employed) or others working now, but pondering retirement, huge timing factor.

Since the rebate is given at the point of sale/time of purchase, it would seem the only thing available at that time would be the prior year's annual income. Right?