Search found 11447 matches

by FiveK
Wed Jun 16, 2021 11:53 am
Forum: Personal Investments
Topic: Pay off mortgage vs bonds in taxable (after maxing out other retirement)
Replies: 33
Views: 3019

Re: Pay off mortgage vs bonds in taxable (after maxing out other retirement)

Looking at the advice on MrMoneyMustache's site: https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153 7. Pay off any debts with interest rates ~3% or more above the current 10-year Treasury note yield. 8. Invest in a taxable account and/or fund a 529 with any ext...
by FiveK
Tue Jun 15, 2021 2:45 pm
Forum: Personal Investments
Topic: 401k Expenses- should i invest in taxable instead
Replies: 10
Views: 746

Re: 401k Expenses- should i invest in taxable instead

So technically before maxing out my 401k plan I should contribute to a traditional IRA at Fidelity for my wife using my income, fund my ROTH, and then contribute to my employer 401k? Do I receive the same tax benefit contributing to a tIRA for my wife as I would with the payroll deductions for my 4...
by FiveK
Tue Jun 15, 2021 12:52 pm
Forum: Personal Investments
Topic: 401k Expenses- should i invest in taxable instead
Replies: 10
Views: 746

Re: 401k Expenses- should i invest in taxable instead

My rule of thumb is that you should prefer a taxable account if the product of the extra expenses and the number of years you will be in the plan exceeds twice your tax rate on qualified dividends. Thus, since you pay 24.3% tax on qualified dividends, and pay about 1.25% in extra expenses, you woul...
by FiveK
Tue Jun 15, 2021 12:12 pm
Forum: Personal Investments
Topic: 401k Expenses- should i invest in taxable instead
Replies: 10
Views: 746

Re: 401k Expenses- should i invest in taxable instead

Thank you if my wife does not work can I use my income to invest in a traditional IRA at fidelity? Yes, based on the two of you being in the 22% bracket and thus under the IRA Deduction Limit for someone not covered by a retirement plan at work (but whose spouse is), she may contribute to her own t...
by FiveK
Mon Jun 14, 2021 9:12 pm
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

Mom's entire tIRA is a variable annuity. So on her Form 1040, the tIRA distribution is included in line 5b "Pension and annuities income", and not on line 4a "Traditional IRA distributions". Was it correct to enter the tIRA annuity distribution in cell B32 rather than cell D31? ...
by FiveK
Mon Jun 14, 2021 6:09 pm
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

Those go in cell D31. B55 is for Roth IRA contributions. For tax purposes, a tIRA withdrawal is pretty much the same as a tIRA->Roth IRA conversion. The chart, however, does the work of calculating the IRA conversion tax effects for you. :) Thanks for the detailed instructions. I entered various am...
by FiveK
Mon Jun 14, 2021 4:32 pm
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

It may be the best tool for showing what marginal tax rate various amounts of Roth conversions would incur this year Cashflow.xls graph curves rendered on Microsoft 365 browser-based version of Excel :D. I am guessing that Cashflow.xls, "Calculations" sheet, cell B55 ("Other Specific...
by FiveK
Mon Jun 14, 2021 12:10 pm
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

wolfv wrote: Mon Jun 14, 2021 5:33 am I am using LibreOffice Calc. I am running the Linux operating system and don't have a Windows machine. Can Cashflow.xls render graph curves on Microsoft 365 browser-based version of Excel?
I would guess so, but don't know.
by FiveK
Mon Jun 14, 2021 2:49 am
Forum: Personal Investments
Topic: Tax witholding/just got married
Replies: 14
Views: 913

Re: Tax witholding/just got married

... with the two spouses having rather different incomes, W-4 filing seems to aim at equalizing withholdings, increasing them for the less well paid spouse and reducing them for the well-paid one. The Form W-4 allows one to reduce withholding at Step 3 or increase withholding at Step 4c, so it's ve...
by FiveK
Mon Jun 14, 2021 2:42 am
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

[Marginal and Cumulative lines appear flat at 0.0%.] Are you using Excel? Unfortunately other spreadsheet tools (Google Sheets, LibreOffice Calc, etc.) don't seem to be able to generate the curves such as those shown in the Roth IRA conversion wiki. [*]Invest. Order sheet > 4. Rule of thumb: tradit...
by FiveK
Sun Jun 13, 2021 10:33 pm
Forum: Personal Investments
Topic: Tax witholding/just got married
Replies: 14
Views: 913

Re: Tax witholding/just got married

My wife and I just got married, and I'm trying to figure out next steps for tax witholding/W4 changes. The first step should be estimating your total tax liability for 2021. After you have that, compare to the amount that will be withheld if you do nothing, then adjust your withholding (or not) as ...
by FiveK
Sun Jun 13, 2021 10:23 pm
Forum: Personal Investments
Topic: Retirement cap gains vs. income - proper mix for lower tax
Replies: 3
Views: 592

Re: Retirement cap gains vs. income - proper mix for lower tax

I played with some numbers in a tax program and it seemed like this one resulted in the best mix (this was using a 2020 tax program): 196K income + 54K cap gain in one year 196K cap gain + 54K income in the other year The tax for those were 37,347 and 24,892 respectively = 62,239 total. I am thinki...
by FiveK
Sun Jun 13, 2021 9:25 pm
Forum: Personal Investments
Topic: Decrease/stop 403b contribution for self and contribute to children's Roth IRAs
Replies: 15
Views: 1126

Re: Decrease/stop 403b contribution for self and contribute to children's Roth IRAs

Do your children have the earned income (aka compensation) that is needed to allow Roth contributions?
by FiveK
Sun Jun 13, 2021 5:15 pm
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

Might be worth putting her other income numbers into something like the personal finance toolbox Excel spreadsheet and seeing the marginal tax rate she will pay on tIRA withdrawals. E.g., see the chart in the Using a spreadsheet section of the Roth IRA conversion wiki. Thanks for the suggestion. I ...
by FiveK
Sat Jun 12, 2021 10:22 pm
Forum: Personal Finance (Not Investing)
Topic: Roth conversion / Capital Gains optimizer
Replies: 14
Views: 1447

Re: Roth conversion / Capital Gains optimizer

https://www.bogleheads.org/wiki/Tools_and_calculators#Personal_finance_toolbox OP, Please check out personal finance toolbox. It is free. KlangFool MarkBarb, in particular, the '0% LTCG or t->R' tab is set up for exactly this question. There is usually not a huge difference, but it usually is the c...
by FiveK
Sat Jun 12, 2021 1:49 pm
Forum: Personal Finance (Not Investing)
Topic: Better to payoff mortgage
Replies: 16
Views: 1793

Re: Better to payoff mortgage

Yes, if you have $600K sitting in cash and don't want to invest any of that, taking $180K of that and paying the mortgage is probably a good choice. Should you be willing to invest most of that $600K in stock index funds, leaving a much smaller balance as an emergency fund, then the choice is much l...
by FiveK
Sat Jun 12, 2021 1:14 pm
Forum: Personal Investments
Topic: Planning mom's retirement portfolio - sanity check
Replies: 34
Views: 3585

Re: Planning mom's retirement portfolio - sanity check

Balancing portfolios - Set all fund cost basis to FIFO. Consider using "Specific ID" instead. That gives the most flexibility for minimal complexity increase. 4. I appreciate you pointing out any errors you found. RubyTuesday already commented on the inherited tIRA taxation. Might be wort...
by FiveK
Fri Jun 11, 2021 7:46 pm
Forum: Personal Finance (Not Investing)
Topic: Roth vs Traditional 403b - consideration of beneficiaries?
Replies: 5
Views: 342

Re: Roth vs Traditional 403b - consideration of beneficiaries?

My understanding (please correct!) is that charitable donations will not be taxed at all, so that a tax-deferred (traditional) 403b would result in more $$ going to these organizations. Yes, you understand well! Combining the ability to deduct Qualified charitable distributions from your RMDs, and ...
by FiveK
Fri Jun 11, 2021 12:22 pm
Forum: Investing - Theory, News & General
Topic: [Roth IRA vs Traditional IRA]
Replies: 12
Views: 1085

Re: [Roth IRA vs Traditional IRA]

But with Roth you've only paid taxes on what you put in - no taxes on the growth, which should be substantially larger than what you put in. With Traditional you're paying taxes on what you put in and all the growth as well, the whole pie. I thought that was the main advantage? Nothing to add to Da...
by FiveK
Thu Jun 10, 2021 10:40 pm
Forum: Personal Finance (Not Investing)
Topic: How massive of Roth conversions, given lopsided holdings post-retirement?
Replies: 63
Views: 4791

Re: How massive of Roth conversions, given lopsided holdings post-retirement?

No. Modest conversions the first two years of retirement then no more, just living off the traditional. I’m assuming because it decided without substantial taxable I should just spend down for normal living expenses. Ah, that sounds more like I-ORP: whatever conversions it suggests usually (absent ...
by FiveK
Thu Jun 10, 2021 10:11 pm
Forum: Personal Finance (Not Investing)
Topic: How massive of Roth conversions, given lopsided holdings post-retirement?
Replies: 63
Views: 4791

Re: How massive of Roth conversions, given lopsided holdings post-retirement?

Starting to plan on retiring in a couple years at 62. Tried i-orp and it only recommended some modest conversions the first two years.... When one is still working, conversions would be taxed on top of work income and thus at higher marginal rates relative to conversions when no W-2/pension income ...
by FiveK
Thu Jun 10, 2021 9:03 pm
Forum: Investing - Theory, News & General
Topic: [Roth IRA vs Traditional IRA]
Replies: 12
Views: 1085

Re: [Roth IRA vs Traditional IRA]

The first article is better than the second.

As the BH wiki on this says, Neither is inherently better, as either one may be a better choice in different situations.
by FiveK
Thu Jun 10, 2021 5:53 pm
Forum: Personal Finance (Not Investing)
Topic: How massive of Roth conversions, given lopsided holdings post-retirement?
Replies: 63
Views: 4791

Re: How massive of Roth conversions, given lopsided holdings post-retirement?

Starting to plan on retiring in a couple years at 62. Tried i-orp and it only recommended some modest conversions the first two years.... When one is still working, conversions would be taxed on top of work income and thus at higher marginal rates relative to conversions when no W-2/pension income ...
by FiveK
Thu Jun 10, 2021 5:33 pm
Forum: Investing - Theory, News & General
Topic: Question About Retiring in 1966
Replies: 81
Views: 6763

Re: Retiring in 1966 on 2% SWR

Given a 4% withdrawal ratio "just barely" succeeding or failing, a 2% withdrawal ratio would have been fine.
by FiveK
Thu Jun 10, 2021 5:17 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

I still feel like we have a duty to readers who are looking for that last few percent optimization in their portfolios to give them the tools to make the best decision for themselves. We can do that, but a) that's probably a smaller fraction than those who just want to know the basics, and b) tryin...
by FiveK
Thu Jun 10, 2021 5:04 pm
Forum: Personal Investments
Topic: Results of my modeling out Roth conversions
Replies: 238
Views: 14924

Re: Results of my modeling out Roth conversions

But the first paragraph reminds me why I asked that question above, in the first place. The information up-thread suggested that the IRS only accepts WITHHOLDING as the source for safe harbor, and not estimated quarterly payments. The IRS gives preferential treatment to withholding, but it does acc...
by FiveK
Thu Jun 10, 2021 2:41 pm
Forum: Personal Investments
Topic: Results of my modeling out Roth conversions
Replies: 238
Views: 14924

Re: Results of my modeling out Roth conversions

The one thing that I did not understand about your post is the line: This mid-December withholding distribution is considered by the IRS as withheld evenly throughout the year. Why is this considered as being withheld evenly through the year when all of the taxes are paid in December? Because that ...
by FiveK
Thu Jun 10, 2021 2:17 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

[As percent of gross income, it would be 30% for the single, 35% for the couple. The limit is about 100k mfj, 2x 19,500 + 2x 6500 = roughly fifty thousand = half of gross by my napkin math. Yes, if gross income is $100K. If gross income is $144K the $39K 401k contributions make adjusted gross incom...
by FiveK
Thu Jun 10, 2021 2:11 pm
Forum: Personal Investments
Topic: Results of my modeling out Roth conversions
Replies: 238
Views: 14924

Re: Results of my modeling out Roth conversions

I am now about to begin some Roth conversions and wondering how, if needed, I will pay some of the taxes. In my case, it seems like this inherited IRA makes alot of sense as a potential source to pay conversion taxes as I get the extra benefit of depleting the higher RMD tax-deferred account. Assum...
by FiveK
Thu Jun 10, 2021 1:49 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

I think such cases are edge cases as in so unlikely there's no broad answer we can give. Such a couple would be saving more than half their gross income. While possible, I don't think you'll find more than a handful of such couple's in the USA. As percent of gross income, it would be 30% for the si...
by FiveK
Thu Jun 10, 2021 1:35 am
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

Deductible IRA is an odd and unusual circumstance to be in. You’d have to have no employer based retirement option or have a very small income. Perhaps small is relative but a single filer putting $19.5K into a t401k could have a gross (i.e., before 401k deduction) income of $85.5K, and MFJ with tw...
by FiveK
Thu Jun 10, 2021 12:35 am
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

What about combining #2 and #3? They are both along the same lines, namely splitting contributions in some reasonable way. How about: Splitting contribution in a reasonable way, such as 50/50, or traditional in an employer plan (eg. 401(k)) and Roth in an IRA, to get exposure to both account types ...
by FiveK
Thu Jun 10, 2021 12:04 am
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

I'm not nuts about the appeal to "feels right" but I can live with it.... Neither am I, but the "traditional 401k and Roth IRA" is a common and not unreasonable suggestion in many forum threads. Very open to using a different rationale to support it. Good to see convergence so f...
by FiveK
Wed Jun 09, 2021 11:38 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

Made a few edits toward the beginning of the article. Sincerely hope they are well received, or at worst acceptable.... :)

Revision history of "Traditional versus Roth" - Bogleheads
by FiveK
Wed Jun 09, 2021 5:41 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

Edit: Two other pages went live in parallel with this update: https://www.bogleheads.org/wiki/Retirement_plan_analysis https://www.bogleheads.org/wiki/Tax_analysis They don't add any new content, but rather collect analysis and formula derivations from this page and also elsewhere on the wiki, the ...
by FiveK
Wed Jun 09, 2021 1:22 am
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 181
Views: 14270

Re: Traditional versus Roth wiki update

I'll clean up a few things over the next few days, but will make the edits a little bit at a time to make it easier on anyone who wants to compare.
by FiveK
Tue Jun 08, 2021 5:23 pm
Forum: Personal Investments
Topic: Roth conversion question
Replies: 6
Views: 754

Re: Roth conversion question

Tom_T wrote: Tue Jun 08, 2021 10:29 am I have a lot in traditional....
Might be worth using one or both of the tools mentioned in the Using a spreadsheet section of the Roth IRA conversion wiki to guard against "unexpected" marginal rate jumps.
by FiveK
Tue Jun 08, 2021 5:10 pm
Forum: Personal Investments
Topic: 401k Roth or not? 25 years old
Replies: 3
Views: 336

Re: 401k Roth or not? 25 years old

HomeStretch's response covers it well. Either option is defensible. Get out your most accurate coin and flip away....
by FiveK
Tue Jun 08, 2021 4:45 pm
Forum: Personal Investments
Topic: Pay off mortgage vs bonds in taxable (after maxing out other retirement)
Replies: 33
Views: 3019

Re: Pay off mortgage vs bonds in taxable (after maxing out other retirement)

It may be easier to understand the comparison by considering pairs of options of the same risk. C. Keep the mortgage unchanged, and move money from your current allocation to a bond fund. D. Sell your current allocation to pay down the mortgage. Likewise, D is better than C. So, regardless of how m...
by FiveK
Tue Jun 08, 2021 12:09 am
Forum: Personal Investments
Topic: Pay off mortgage vs bonds in taxable (after maxing out other retirement)
Replies: 33
Views: 3019

Re: Pay off mortgage vs bonds in taxable (after maxing out other retirement)

It may be easier to understand the comparison by considering pairs of options of the same risk. Rather than comparing A versus D, you can compare A versus B, and C versus D. A. Leave everything unchanged. B. Sell a bond fund to pay down the mortgage. Since your mortgage rate is much higher than you...
by FiveK
Mon Jun 07, 2021 11:57 pm
Forum: Personal Investments
Topic: Extra $ to invest for early retirement: Roth space or taxable?
Replies: 5
Views: 645

Re: Extra $ to invest for early retirement: Roth space or taxable?

Our marginal tax rate is 32%; no state tax. ...we are agnostic about our future tax rates. Understood about the inability to predict future tax law. Nonetheless, given that even reverting to inflation-adjusted 2017 brackets would require >$4.5 million in traditional accounts in today's dollars to r...
by FiveK
Mon Jun 07, 2021 11:22 pm
Forum: Personal Finance (Not Investing)
Topic: Can I contribute $19,500 and 20% SMLLC and $6,000 to Roth in the same tax year?
Replies: 11
Views: 1290

Re: Can I contribute $19,500 and 20% SMLLC and $6,000 to Roth in the same tax year?

The SE tax is the amount on line 12 of Sch. SE. The amount you get to deduct on Sch. 1 is line 13 of Sch. SE, calculated as 50% of line 12. That's all - don't over-complicate it. ;) FWIW, the 2020 version of the personal finance toolbox spreadsheet gets the same $14,129 for SE tax and $38,087 for SE...
by FiveK
Mon Jun 07, 2021 3:23 pm
Forum: Personal Investments
Topic: American Funds 403b
Replies: 7
Views: 412

Re: American Funds 403b

This adds another question on how much do I really need since expenses are nearly covered without any investment accounts..............question for another day just to keep this post clean. If you have Roth options in the 401k or 403b, see Traditional versus Roth - Bogleheads . If that doesn't answ...
by FiveK
Mon Jun 07, 2021 2:51 pm
Forum: Personal Investments
Topic: American Funds 403b
Replies: 7
Views: 412

Re: American Funds 403b

See Expensive or mediocre choices for some guidance on whether those expenses are "too high" or not.
by FiveK
Mon Jun 07, 2021 2:49 pm
Forum: Personal Investments
Topic: Let's say I want to retire - what are my expenses?
Replies: 32
Views: 3504

Re: Let's say I want to retire - what are my expenses?

Yes, for 25X (the inverse of the 4% "rule") taxes count as an expense, but given your assumptions of $0 tax and other expenses as listed, your calculations are correct.
by FiveK
Mon Jun 07, 2021 1:55 pm
Forum: Personal Investments
Topic: Tax Loss Harvesting Question
Replies: 30
Views: 1306

Re: Tax Loss Harvesting Question

What would you be selling in the Roth account to provide the funds needed to buy stock there? I have just transferred into my control a Roth held at a traditional brokerage that had me invested in 9 different high expense ratio mutual funds including bonds. I plan to sell them all to mostly invest ...
by FiveK
Mon Jun 07, 2021 1:30 pm
Forum: Personal Investments
Topic: Pay off mortgage vs bonds in taxable (after maxing out other retirement)
Replies: 33
Views: 3019

Re: Pay off mortgage vs bonds in taxable (after maxing out other retirement)

Given that the "correct" answer will be known only in hindsight, it appears you understand the issues well. :) The usual trade-off is between a lower but guaranteed return (paying the mortgage) vs. a "higher expected" but not guaranteed return (stock investing). There is no way t...
by FiveK
Mon Jun 07, 2021 1:18 pm
Forum: Personal Investments
Topic: Tax Loss Harvesting Question
Replies: 30
Views: 1306

Re: Tax Loss Harvesting Question

What would you be selling in the Roth account to provide the funds needed to buy stock there?
by FiveK
Mon Jun 07, 2021 12:19 pm
Forum: Personal Investments
Topic: 401K+ extra Roth IRA or taxable account?
Replies: 27
Views: 1179

Re: 401K+ extra Roth IRA or taxable account?

Hmm, I clearly didn't get this part... I thought that when you contribute to Roth, you pay taxes first and what's left gets invested. So if someone gives me $1000 and I want to put it in a Roth Ira, I would have to pay 24% taxes on it, and only 760$ went on the investment account and grow tax free....
by FiveK
Mon Jun 07, 2021 11:43 am
Forum: Personal Investments
Topic: 401K+ extra Roth IRA or taxable account?
Replies: 27
Views: 1179

Re: 401K+ extra Roth IRA or taxable account?

That means even if I open a Roth IRA now, I could only contribute $6000 +$6000 and that's is. That is not nearly enough. With a taxable account I could still contribute and invest for the years to come, despite my income. Unless I am missing something (again, I am very new to all this).... In that ...