Search found 5682 matches

by FiveK
Sat Nov 17, 2018 12:24 am
Forum: Personal Finance (Not Investing)
Topic: How did I miss this? Roth 401K
Replies: 8
Views: 1357

Re: How did I miss this? Roth 401K

captpete wrote:
Fri Nov 16, 2018 11:32 am
...my tax bracket will stay the same according to the website.
What will it do according to you - and why?
by FiveK
Sat Nov 17, 2018 12:21 am
Forum: Investing - Help with Personal Investments
Topic: Why You Should Consider a Backdoor Roth IRA
Replies: 9
Views: 1346

Re: Why You Should Consider a Backdoor Roth IRA

You probably should have continued reading. You might have learned something. What those two supposed experts said in the text I bolded was wrong, regarding qualifying for contributing to a Traditional IRA. The two posters above correctly explained why. Yes. And shortly thereafter came "I should ad...
by FiveK
Fri Nov 16, 2018 4:01 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

Assume I get 33k in social security (the max), and 12k is my standard deduction, and I get in 22% tax bracket after 38k (single) I need only (38k+12k-33k) = 17k of 401k distributions to get into 22% tax bracket at retirement. This is just (17k/4%) = 425k. This is something you can get in your last ...
by FiveK
Thu Nov 15, 2018 11:44 pm
Forum: Investing - Help with Personal Investments
Topic: Help With Backdoor Roth
Replies: 18
Views: 1026

Re: Help With Backdoor Roth

Thanks. So sounds like I can transfer the tIRA into her 401k before the end of the year then do the Roth conversion before Dec 31st 2018 once the Traditional IRA is zeroed out without any issues? Yes, if that is the only IRA she has with a pre-tax balance. Only thing I am trying to decide is if tha...
by FiveK
Thu Nov 15, 2018 11:29 pm
Forum: Investing - Help with Personal Investments
Topic: Help With Backdoor Roth
Replies: 18
Views: 1026

Re: Help With Backdoor Roth

justsomeguy2018 wrote:
Thu Nov 15, 2018 11:19 pm
OP here - if I roll my wife's tIRA into her t401k this year, can she still do the backdoor Roth this calendar year, or would we need to wait until 2019 to avoid any complications?
This calendar year will be ok. The important date is 31-Dec-2018. See form 8606 for details.
by FiveK
Thu Nov 15, 2018 10:44 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

If my tax-deferred portfolio is big enough, I switch to Roth 401K. Could you elaborate on how you define big enough? Are you calibrating traditional contributions to match expected deductions available upon retirement? A common definition is "such that the expected marginal tax rate on a 4%/yr with...
by FiveK
Thu Nov 15, 2018 10:41 pm
Forum: Investing - Help with Personal Investments
Topic: Contribute to Roth IRA now or tIRA later (to save tax)?
Replies: 20
Views: 1217

Re: Contribute to Roth IRA now or tIRA later (to save tax)?

One issue is how to deal and track the cost basis of non-deductible Traditional IRA, I leave it up to OP to decide whether or not they will keep their records into the future which could be possibly several decades. There is very little to recommend using a non-deductible tIRA. In the "traditional ...
by FiveK
Thu Nov 15, 2018 6:59 pm
Forum: Investing - Help with Personal Investments
Topic: Contribute to Roth IRA now or tIRA later (to save tax)?
Replies: 20
Views: 1217

Re: Contribute to Roth IRA now or tIRA later (to save tax)?

I have 1.1 Million in Traditional not happy with that. That may be true for you. For others, it is the marginal rate at which they (could have) saved tax when contributing vs. the marginal rate at which they will/would pay tax on withdrawals due to those contributions, that will determine whether t...
by FiveK
Thu Nov 15, 2018 6:46 pm
Forum: Investing - Help with Personal Investments
Topic: Contribute to Roth IRA now or tIRA later (to save tax)?
Replies: 20
Views: 1217

Re: Contribute to Roth IRA now or tIRA later (to save tax)?

retire2022 wrote:
Thu Nov 15, 2018 6:36 pm
Which one you think is the better deal?
Due to the commutative property of multiplication, it depends on the current and future marginal tax rates.
by FiveK
Wed Nov 14, 2018 11:59 pm
Forum: Investing - Help with Personal Investments
Topic: Contribute to Roth IRA now or tIRA later (to save tax)?
Replies: 20
Views: 1217

Re: Contribute to Roth IRA now or tIRA later (to save tax)?

just to add a few more words to Flyers response..............if you think your tax rate when you withdraw the funds will be lower than when you contribute (and deduct it), the conventional wisdom is to contribute pre-tax. If the withdrawal tax rate is expected to be higher , the wisdom is to contri...
by FiveK
Wed Nov 14, 2018 8:49 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

You guys should start with some assumptions on income, current tax, future tax, and then do the numbers on several scenarios, and then compare! Math is a universal language! This issue will result in a right/wrong solution in HINDSIGHT only. People speaking in definitive terms of one being wrong or...
by FiveK
Tue Nov 13, 2018 7:02 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

So you're future plan is to be mediocre? I see. Just because a lot of people do something, doesn't make it optimal or even favorable. You do understand that "being mediocre" (aka accepting market return for investments) is a cornerstone of Boglehead philosophy, correct? Of course, one is free to ad...
by FiveK
Tue Nov 13, 2018 3:45 pm
Forum: Personal Finance (Not Investing)
Topic: Q: Post Retirement Roth Contribution (Vanguard) & Earned Income Requirement
Replies: 14
Views: 702

Re: Q: Post Retirement Roth Contribution (Vanguard) & Earned Income Requirement

Yeah, don't take my comment to the bank: like I said, the language I've found is a little squirrelly. The MAGI calculation for Roth IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230985. Note that it makes no difference which of the MFJ filers has earned the AGI. Nor d...
by FiveK
Tue Nov 13, 2018 3:03 pm
Forum: Personal Finance (Not Investing)
Topic: Q: Post Retirement Roth Contribution (Vanguard) & Earned Income Requirement
Replies: 14
Views: 702

Re: Q: Post Retirement Roth Contribution (Vanguard) & Earned Income Requirement

FiveK, Thanks for the advice. I checked 2018 pay detail and yes I paid $1,500 OASDI (which includes FICA) on the $24,319 gross pay I received. Just to understand your logic for myself and perhaps others, are you saying (generally) that: Roth contributions are required to based on "earned income". T...
by FiveK
Tue Nov 13, 2018 2:58 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

Tax deferral always defers your ... marginal rate. On average you will come out ahead with tax-deferred contributions, because you will always defer your max/marginal rate, but on average your withdrawals will be taxed at your effective rate. Remember, too, that the choice between traditional and R...
by FiveK
Tue Nov 13, 2018 12:32 pm
Forum: Personal Finance (Not Investing)
Topic: Q: Post Retirement Roth Contribution (Vanguard) & Earned Income Requirement
Replies: 14
Views: 702

Re: Q: Post Retirement Roth Contribution (Vanguard) & Earned Income Requirement

If FICA was withheld from your pay in 2018 then you can contribute now and sleep well.

Based on what you posted you should be fine to contribute now, so the FICA test is just an extra layer of security blanket.
by FiveK
Tue Nov 13, 2018 12:15 pm
Forum: Investing - Help with Personal Investments
Topic: How much should Son and DIL put into Roth & Pre-tax 401k accounts...?
Replies: 21
Views: 1116

Re: How much should Son and DIL put into Roth & Pre-tax 401k accounts...?

Johnsson wrote:
Tue Nov 13, 2018 10:34 am
So, I'm asking for suggestions from experienced investors who are not the father... :wink:
Point them at Investment Order and offer to answer any questions.

It's possible they may come back and say "just tell us..." and that would be good, but if they learn on their own that's even better.
by FiveK
Mon Nov 12, 2018 5:21 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

You are currently in the 24% bracket. It takes ~$2.5 million in traditional accounts for a 4%/yr withdrawal rate on those alone to get out of the 12% bracket. Until you expect to reach that amount, putting 100% into the traditional 401k is likely best. This assumes the tax rates will stay at today'...
by FiveK
Mon Nov 12, 2018 2:07 am
Forum: Personal Finance (Not Investing)
Topic: Best free online tax return predictor?
Replies: 10
Views: 1165

Re: Best free online tax return predictor?

AFAIK the personal finance toolbox spreadsheet calculates more credits, phaseouts, etc., than any of the already-mentioned tools. It also includes ACA premium tax credit and IRMAA calculations.

Depends on what one needs....
by FiveK
Mon Nov 12, 2018 12:57 am
Forum: Investing - Help with Personal Investments
Topic: Spouse Roth IRA Contribution Limits
Replies: 4
Views: 673

Re: Spouse Roth IRA Contribution Limits

A very similar article to the one Flyer24 noted is Excess Contributions to Roth IRAs - Fairmark.com.

Neither of those mentions the Backdoor Roth IRA your spouse may wish to do following a recharacterization.
by FiveK
Mon Nov 12, 2018 12:53 am
Forum: Investing - Help with Personal Investments
Topic: Roth 401(k) conversion question
Replies: 3
Views: 659

Re: Roth 401(k) conversion question

I'm not sure if this question was answered before, but I'm going to ask it. If I started to do Traditional 401(k) to Roth 401(k) partial conversions, does each conversion have a separate 5 year clock like the Roth IRA and can I withdraw the Roth 401(k) conversions penalty free under age 59.5 AFTER ...
by FiveK
Sun Nov 11, 2018 10:58 pm
Forum: Personal Finance (Not Investing)
Topic: TLH to create larger Roth conversion ?
Replies: 18
Views: 953

Re: TLH to create larger Roth conversion ?

i'm still not sure how to measure if one technique is better than another, what is the best way to assess that? effective tax rate? estate value? marginal tax rate? cumulative tax paid ? "Highest spendable amount after tax and IRMAA costs" is probably what you want, but that may be easier said than...
by FiveK
Sun Nov 11, 2018 10:10 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

You are currently in the 24% bracket. It takes ~$2.5 million in traditional accounts for a 4%/yr withdrawal rate on those alone to get out of the 12% bracket. Until you expect to reach that amount, putting 100% into the traditional 401k is likely best. Could you explain this? For 2018 the 12% tax b...
by FiveK
Sun Nov 11, 2018 4:21 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional for low tax bracket
Replies: 10
Views: 977

Re: Roth vs. Traditional for low tax bracket

I think my biggest hang-up is not fully understanding why marginal tax rate is used vs. effective tax rate as part of this decision. Marginal rate is the rate applicable to your choice of traditional or Roth for the $18,500 (or whatever amount you choose) contribution. How much you are taxed on all...
by FiveK
Sun Nov 11, 2018 4:05 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

What "tax credit" are you referring to? Chances are that person is going to qualify for the same tax credits regardless of if they do traditional or roth contributions. Not true for the earned income credit. For that, one does two calculations: one based on earned income alone (affected by 401k con...
by FiveK
Sun Nov 11, 2018 4:00 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

Here is a simple rule to follow: if you make <50k (individual) or <100k (jointly), direct your contributions to roth 401k (or roth ira). If you make more than that, go traditional. Here are the rules of thumb from Traditional versus Roth on the wiki. If your current marginal tax rate is 15% or less...
by FiveK
Sun Nov 11, 2018 3:07 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

Here is a simple rule to follow: if you make <50k (individual) or <100k (jointly), direct your contributions to roth 401k (or roth ira). If you make more than that, go traditional. It is simple, and will be correct for some. For others, e.g., those who become eligible for more saver's and earned in...
by FiveK
Sun Nov 11, 2018 2:10 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

We only have a Roth 401K offered to us (husband's job). Are you sure? I thought Employers may offer a Roth 401(k) only if they already offer a traditional 401(k) . Is this the ideal order of contributions... contribute up to the company match in Roth 401k, e.g., into what account do the company mat...
by FiveK
Sat Nov 10, 2018 10:50 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

Under Current Tax Law, you have the ability to place retirement savings in a Roth 401k at lower tax rates than you'll be paying in 2025 when tax brackets are scheduled to return to their 2017 brackets. Assuming either a) current tax brackets and rates will continue in place forever, or b) the 2017 ...
by FiveK
Sat Nov 10, 2018 10:31 pm
Forum: Investing - Help with Personal Investments
Topic: Traditional or Roth IRA for spouse and I
Replies: 28
Views: 1589

Re: Traditional or Roth IRA for spouse and I

...OP is in the 12% federal tax bracket after the standard deduction.... Are they? Taking the midpoints of the bonus and self-employed amounts, with no retirement contributions one gets AGI = $125,253 Std. ded. = $24,000 QBI ded. = $700 Taxable income = $100,553 This puts them in the 22% bracket un...
by FiveK
Sat Nov 10, 2018 9:27 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional 401k
Replies: 129
Views: 6075

Re: Roth vs. Traditional 401k

You are currently in the 24% bracket.

It takes ~$2.5 million in traditional accounts for a 4%/yr withdrawal rate on those alone to get out of the 12% bracket.

Until you expect to reach that amount, putting 100% into the traditional 401k is likely best.
by FiveK
Sat Nov 10, 2018 8:25 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs traditional for lower income maid
Replies: 8
Views: 752

Re: Roth vs traditional for lower income maid

They have no retirement accounts or 401ks. ... Any comments on traditional vs. Roth for a couple in their 60s with what i assume are not much savings? While I heartily concur with the use of tax software to see their actual marginal rates, given the situation above saving any amount on taxes now is...
by FiveK
Sat Nov 10, 2018 8:15 pm
Forum: Investing - Help with Personal Investments
Topic: Traditional or Roth IRA for spouse and I
Replies: 28
Views: 1589

Re: Traditional or Roth IRA for spouse and I

I understand the pros and cons or Traditional/Roth but not understanding the AGI/MAGI limits and eligibility. Any help would be greatly appreciated! You can throw your numbers into the personal finance toolbox spreadsheet to see things in chart form. It might look something like https://i.postimg.c...
by FiveK
Sat Nov 10, 2018 7:55 pm
Forum: Investing - Help with Personal Investments
Topic: New job - not sure how much to 401k and how much to Roth IRA
Replies: 17
Views: 1376

Re: New job - not sure how much to 401k and how much to Roth IRA

If you plan to live on $24K/yr, your marginal tax rate in retirement will be 0%. Given that, 100% traditional is the correct choice now: pay no tax now, and no tax later. At worst, pay the 10% for early tIRA withdrawals if needed. Why pay tax to make Roth contributions? See Investment Order for more.
by FiveK
Sat Nov 10, 2018 7:47 pm
Forum: Investing - Help with Personal Investments
Topic: In-plan Roth conversion?
Replies: 3
Views: 371

Re: In-plan Roth conversion?

Because you can pay the conversion tax from cash on hand (aka taxable funds), converting at 24% now is somewhat better than withdrawing at 24% later.

See Maxing out your retirement accounts for more details, but in short the benefit comes from moving the tax amount from taxable to Roth.
by FiveK
Fri Nov 09, 2018 12:01 pm
Forum: Personal Finance (Not Investing)
Topic: FreeTaxUSA.com now has 2018 Return available.
Replies: 28
Views: 2971

Re: FreeTaxUSA.com now has 2018 Return available.

Do any of these free tax programs incorporate the new 20% pass through deduction for self employed persons who file schedule C? If so, where (which form or schedule) is the deduction taken? The deduction goes on line 9 of the new form 1040 - https://www.irs.gov/pub/irs-dft/f1040--dft.pdf. I'd expec...
by FiveK
Fri Nov 09, 2018 11:52 am
Forum: Personal Finance (Not Investing)
Topic: TurboTax: online vs download
Replies: 10
Views: 1364

Re: TurboTax: online vs download

There are some things the download version will do that the online version (same nominal version) will not.

E.g., see Fidelity free Turbotax - Page 3 - Bogleheads.org and a few posts following that.

Don't know if that will affect your specific situation.
by FiveK
Fri Nov 09, 2018 11:46 am
Forum: Investing - Help with Personal Investments
Topic: Retirement withdrawal plan Fall 2019, ACA vs Roth conversions
Replies: 10
Views: 901

Re: Retirement withdrawal plan Fall 2019, ACA vs Roth conversions

If you want to look at ACA cliffs, IRMAA tiers, SS benefit taxation, and all the other "usual" items, the personal finance toolbox spreadsheet is the only tool I know of that will do all the above in one place. And you get a graph of those effects vs. the amount of traditional money you choose to wi...
by FiveK
Wed Nov 07, 2018 6:54 pm
Forum: Investing - Help with Personal Investments
Topic: Convert Employer Match portion of 401(k) to Roth 401(k)?
Replies: 5
Views: 659

Re: Convert Employer Match portion of 401(k) to Roth 401(k)?

Am I missing anything in my pro/con list? Under current law, it would take ~$1.25 million in traditional accounts for a 4% withdrawal rate to get beyond the 12% bracket. If you can save 22% now, you might consider doing so until you expect to have that $1.25 million in traditional accounts when you...
by FiveK
Wed Nov 07, 2018 6:49 pm
Forum: Investing - Help with Personal Investments
Topic: EFTPS® vs. Direct Pay what's difference? Which one should I use for Roth conversion tax payment?
Replies: 10
Views: 685

Re: EFTPS® vs. Direct Pay what's difference? Which one should I use for Roth conversion tax payment?

According to Direct Pay Help | Internal Revenue Service , Yes. While you can use either [Direct Pay or EFTPS] to make individual tax payments online, IRS Direct Pay doesn't require a registration process. We actually prefer EFTPS because it has our bank account information so we don't have to re-ent...
by FiveK
Wed Nov 07, 2018 6:43 pm
Forum: Investing - Help with Personal Investments
Topic: 403b vs Roth vs taxable account
Replies: 14
Views: 899

Re: 403b vs Roth vs taxable account

I'm pretty sure I should have them max out the Roth accounts. For the rest of what they can invest (around 20K a year), should it be put in the 403b, or would a standard taxable account be better with Vanguard? If they have pensions that will replace a large fraction of their current income, Roth m...
by FiveK
Wed Nov 07, 2018 6:39 pm
Forum: Personal Finance (Not Investing)
Topic: Reversing/Undoing a ROTH IRA contribution
Replies: 5
Views: 261

Re: Reversing/Undoing a ROTH IRA contribution

Thus it can be a good idea to fill out a version of form 8606 now, based on what you expect to do, so you understand the effect of what you expect to do.
by FiveK
Wed Nov 07, 2018 6:35 pm
Forum: Investing - Help with Personal Investments
Topic: TSP(401k?) to IRA to ROTH - questions
Replies: 30
Views: 1217

Re: TSP(401k?) to IRA to ROTH - questions

I really do think that converting at least some relatively large fund amounts into a ROTH (albeit perhaps with a different broker) is still a good idea. Am I on track about this ? Yes! The general idea to do strategic traditional->Roth conversions is a good one. It's the specific tactic of using a ...
by FiveK
Wed Nov 07, 2018 4:02 am
Forum: Investing - Theory, News & General
Topic: Guide to work out your asset allocation?
Replies: 12
Views: 1100

Re: Guide to work out your asset allocation?

I'm looking to actually understand how the allocation changes based on each aspect. Vanguard's tool contains some heuristics, but there is no deterministic approach that is guaranteed to give the "correct" answer. You could read Asset Allocation Guide: Dealing with conflicting goals and the article...
by FiveK
Wed Nov 07, 2018 3:52 am
Forum: Investing - Help with Personal Investments
Topic: Tax efficiency in retirement
Replies: 6
Views: 1290

Re: Tax efficiency in retirement

Specifically, what share of retirement portfolio should be in Roths? This is best answered not in percentages but as "up to X in traditional with the rest in Roth if possible and taxable otherwise." To determine X, see the "Estimating withdrawal tax rates is not an exact science, but here is one ap...
by FiveK
Tue Nov 06, 2018 5:01 pm
Forum: Personal Finance (Not Investing)
Topic: Optimizing ROTH conversion calculation
Replies: 5
Views: 363

Re: Optimizing ROTH conversion calculation

I have been toying with the idea of substantially increasing the ROTH conversion to $180K-200K and accepting the one year Medicare hit so that we stay under that cliff for a few more years. This would also incur Net Investment Income Tax (NIIT). You could enter your situation into the personal fina...
by FiveK
Tue Nov 06, 2018 4:35 pm
Forum: Personal Finance (Not Investing)
Topic: Optimizing ROTH conversion calculation
Replies: 5
Views: 363

Re: Optimizing ROTH conversion calculation

I have been toying with the idea of substantially increasing the ROTH conversion to $180K-200K and accepting the one year Medicare hit so that we stay under that cliff for a few more years. This would also incur Net Investment Income Tax (NIIT). You could enter your situation into the personal fina...
by FiveK
Tue Nov 06, 2018 4:06 pm
Forum: Personal Finance (Not Investing)
Topic: Recommended reading for tax minimizing withdrawal strategies in retirement?
Replies: 6
Views: 657

Re: Recommended reading for tax minimizing withdrawal strategies in retirement?

Thanks for the suggestions of the i-orp and RPM. Given I'm in my 30's I hadn't come across them myself before. They look like they will be very useful. Both are indeed very useful. Because both make some assumptions and limited tax calculations, it can be worth checking their tax calculations for y...