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What do you mean by "even contributions I had not made yet before the rollover"? I'm a bit baffled by that.

Why do you think her IRA contained basis?

Raven9 wrote: ↑Sun Mar 19, 2023 4:07 pm No. Just wondering if it would be more advantageous to take advantage of some of the decent online high-yield savings accounts while the gettin's good! Close to 5%.

You don't want to take money out of Roth IRA and put it in a savings account. It needs to stay in Roth IRA unless you want to use it.

The question is whether to leave it where it is or roll it into the Roth IRA you have at Vanguard. Either way, it should be invested, even if only "invested" in a high paying money market account.

What you should invest in depends on what you want your portfolio to hold and what you hold already. We don't know either of those things.

If you want something cash like, what is available where the money is now?

Doing the form by hand, this is what I get.

1. 6000
2. 6000
3. 12000
4. 2000
5. 10000
6. 0
8. 9876
9. 9876
10. 1
11. 9876
13. 9876
14. 2124
16. 9876
17. 9876
18. 0

I think if you use software, it will be the same except line 14 will be $0.

My taxes are not hard. Can usually do them with TurboTax in an hour. Let it marinate a month or so. Check again and send. Make notes for the next year, figure out what my withholding needs to be to get to a safe harbor....forget it for 10 months. Figure out in December how much to convert to Roth without triggering IRMAA.

A lot of this is because i have intentionally kept my financial life simple.

steve321 wrote: ↑Sun Mar 19, 2023 3:06 pm

quantAndHold wrote: ↑Sun Mar 19, 2023 2:36 pm You’re always going to be tinkering, and things will always be breaking.

You mean the engine too is less reliable?

In my experience, it was not the engines being unreliable. But there is almost always something to fix. Sometimes it is a major something to fix. More often, just a lot of little things to fix.

When it goes, the growth of basis is taxable, so if I convert it wont I have to pay tax on the growth portion anyways? I'd have to find the ratio of basis to total and that's the amount of basis that would be converted tax-free, while the rest would be taxable right? I'm not sure what your question means. Your contribution can grow. Or shrink for that matter. But basis does not grow or shrink. Think of "basis" as "credit" for having paid tax instead of dollars on which you have already tax. If you would prefer to avoid all this, just wait until your tIRA has recovered its original value and then do the conversion. You may have to pay tax on a few dollars if the contributions grows to more than the original amount. Yes I...

So if I contribute $6000 to a tIRA, it declines in value to $5,500, and I convert the entire thing to Roth, then my IRA still has basis even though there is $0 in it? Good question! Depends on who you ask. :D If you do the Form 8606 by hand, yes...you still have $500 basis showing on line 14 even though there are no dollars in the account. If you do the form with some software, it eliminates the $500 in basis and puts $0 on line 14 (the basis going forward). It has been suggested by at least 1 person to always leave $1 in the tIRA. This is not enough to change your taxable amount calculated by the 8606 (because of rounding), but it does cause software to show a basis on line 14 instead of $0. So it is difficult to know for sure if there is...

A motorhome is a bit like a boat. For many, the happiest days in your life are the day you buy it....and the day you sell it.

Unfortunately, the only way to know if you want to do this is to actually do it and see how you like it and if you want to continue.

I'd suggest renting a motorhome or travel trailer and giving it a try for a few weeks. Or go on a trip with your friend.

In my opinion, if you are likely to get into the 12% bracket, that is the time to do Roth conversions.

sagan23 wrote: ↑Sat Mar 18, 2023 9:08 pm 20k expenses includes an HVAC replacement during that time (but not a roof). The 10k buffer is to help account for those kinds of expenses, some extra travel, and healthcare. Even if my expenses double I would just then hit 4% withdrawal rate.

Hitting 4% every once in awhile could be just fine. However, you do not want to be draining your portfolio using a 4% rate year after year.

Remember that 4% was only shown to be "safe" for 30 years. Retiring at 45ish, you may need a lot more than 30 years.

Also keep in mind that the 4% includes both state and federal income taxes. And investment expenses if you are paying an AUM advisor.

So if I contribute $6000 to a tIRA, it declines in value to $5,500, and I convert the entire thing to Roth, then my IRA still has basis even though there is $0 in it? Good question! Depends on who you ask. :D If you do the Form 8606 by hand, yes...you still have $500 basis showing on line 14 even though there are no dollars in the account. If you do the form with some software, it eliminates the $500 in basis and puts $0 on line 14 (the basis going forward). It has been suggested by at least 1 person to always leave $1 in the tIRA. This is not enough to change your taxable amount calculated by the 8606 (because of rounding), but it does cause software to show a basis on line 14 instead of $0. So it is difficult to know for sure if there is...

So if I contribute $6000 to a tIRA, it declines in value to $5,500, and I convert the entire thing to Roth, then my IRA still has basis even though there is $0 in it? Good question! Depends on who you ask. :D If you do the Form 8606 by hand, yes...you still have $500 basis showing on line 14 even though there are no dollars in the account. If you do the form with some software, it eliminates the $500 in basis and puts $0 on line 14 (the basis going forward). It has been suggested by at least 1 person to always leave $1 in the tIRA. This is not enough to change your taxable amount calculated by the 8606 (because of rounding), but it does cause software to show a basis on line 14 instead of $0. So it is difficult to know for sure if there is...

You apparently have enough time with the Fed govt to get a pension. Are you not also able to use FEHB health insurance? Much cheaper than ACA and likely better coverage.

Even with the updated information on spending, it is unclear if the numbers listed refer to what you pay each year for expenses or what you two together pay for expenses.

Welcome to the forum.

Yes, it is messy. And not the usual we see from Vanguard's PAS. Have there been a number of different advisors or just one over the years?

I'm going to guess that your advisor has been very aggressive at tax loss harvesting and that is one reason why you have ended up with so many funds.

If you are now willing and able, I see no reason you should not take over portfolio management yourself. This could be simplified considerably and with the market down, there may not even be a large tax cost to do it. Some time and effort would be involved. Are you interested?

The good news is that the Advisor has you in good investments. Criticisms are that you are in a lot of funds and you are paying 1.1% Assets Under Management. The Advisor picked good, low cost investments. Vanguard, Dimensional Fund Advisors, iShares (Black Rock), State Street, Wisdom Tree, and Avantis are all excellent providers. I am not going to run all of this through portfolio X-Ray at Morningstar, so I can't speak to portfolio construction. I can see that you didn't get ripped off. I do think he used too many funds. It looks a lot like a Paul Merriman portfolio. So taken as a whole, it was probably tilted towards Small Cap and towards Value. So it is a classic factors portfolio. Without doing the X-Ray, can't say with 100% certainty, ...

A lawyer could perform some duties, but that could get very expensive. I've heard of "geriatric case managers" and there apparently is a certification for it. Might be something to consider.

It could be as simple as this 2 fund portfolio.


First IRA 700K45%
30% Total Stock Index (or 500 index)
15% Total Bond Index

Second IRA 25.8%
10.8% Total Stock Index (or 500 index)
15% Total Bond Index

First Roth 300K19.4%
19.4% Total Stock Index (or 500 index)

Second Roth 150K9.7%
9.7% Total Stock Index (or 500 index)

If you want to hold international stocks, replace some of the US stock with a Total International. You could add a bit of REIT or value stocks if you wanted. If you are retired and concerned about unexpected inflation, replace some of the Total Bond with a TIPS fund. The possibilities are endless, just depending on what you want. None of them need to be complex.

CKMAN wrote: ↑Sun Mar 19, 2023 10:57 am First IRA 700K
Second IRA 400K
First Roth 300K
Second Roth 150K
Desired allocation is probably 70 stocks/30 bonds
Thank you

There is no taxable account? It's not impossible, but most people with that much in IRA/Roth IRA also have a taxable account. If you do, that needs to come into the planning as well.

Is 70/30 what you think you have now?

I think there is definitely a playbook at Vanguard.

Since people under a certain amount of assets are assigned to a pool of advisors rather than a specific advisor, there would have to be some kind of playbook to provide continuity.

Maybe those folks who have enough money to be assigned to a specific advisor are able to get more flexibility in how their money is invested?

Actually, I don't know for sure about this "pool" vs an assigned advisor, but that is how I interpret what I have read hear from other posters.

I don't think exchanging to taxable bonds makes sense because of the 27% marginal rate. Putting some bonds into Roth IRA might make sense but that is unthinkable by many members of this community (I don't happen to be one who thinks that). But these things are hard to visualize with so little information. What are the relative sizes of each account....taxable/tax deferred/Roth? Did you see my question about the taxable income from the portfolio? Is it really under $44,625 (plus deductions)? Even if it is, have you considered that doing Roth conversions now (and being in a higher bracket for a few years) might be better than letting your tax deferred account grow for decades and then being taxed at higher rates than we have for the next few ...

I have no idea what most of those funds are, but it does not matter. The portfolio is just beyond ridiculous. Sorry, that is the nicest description I can think of :happy There are way too many funds. There is no way for you to know what you actually own. There is no way to know how to rebalance. And it causes a continued and unnecessary dependence on the services of someone who does not have your best interests in mind. "Fiduciary" does not always mean what people think it means. This is a classic "baffle them with bullstuff" portfolio. You can do way better. The good news is that this is all in IRA - which can be sold and replaced without triggering taxes. Consider if you want to restructure and maintain your portfolio ...

vchiu25 wrote: ↑Sat Mar 18, 2023 6:25 pm Thanks for the feedback

To give more context. I’m 42, single no state tax. I have 3.5m portfolio that looks like this

1.2 million in bond (500k in 401k and 600k in taxable)
2.3 million in stock (70/30 US and intentional)

By my calculations my dividend will put me on the cusp between 12-22% tax bracket

I’m wondering if I should keep 500k in tax exempt or change to total bond when I retire next year

Are there any action I can take to make it more tax efficient when I have no salary?

With these numbers, it is hard to see how your total taxable income could be less than $44,625 (this year's number to stay under) even if all of the bonds in taxable are tax exempt. Is that what you are telling us?

Welcome to the forum. :D 1. What recommendations do you have about my (His) TSP allocation plan? There is nothing wrong with how you are doing this, but why not just use the L fund instead? 2. For His TSP, I’ve been doing the traditional contributions. Should I be doing any Roth contributions instead? Some fraction of traditional/Roth? I think you should be using Roth - because of the pensions. With 2 pensions and. at least 1 SS income, you will probably need very little from a tax deferred account in retirement. Having a very large tax-deferred account is more likely to become a burden than an asset. I suggest putting at least half of future savings (both of you together) into Roth accounts rather than tax-deferred accounts. 3. The E.R. se...

GaryA505 wrote: ↑Sat Mar 18, 2023 6:24 pm 1/2 US-only, 1/2 global.

Actually, Wellesley does have a little international stock - about 9% of the stocks last I looked. But the combo averages to a number I could be happy with.That is one of the reasons I'm considering doing this.

Welcome to the forum.

Nobody here is going to suggest that you invest in 2 or 3 stocks. But maybe you meant 2 or 3 stock funds and there would be a lot of support for that.

In order to get reasonable suggestions, you should consider posting your information in the format we use to help people with their portfolio questions. See the link at the bottom of this message for how to do that.

If you both want to give the baby your real family last name, I would do it. Yes, there will be some minor aggravations, but schools and governments are already faced with similar situations everyday due to marriage, divorce, blended families, adoptions, etc. I suspect this is not nearly as awkward or difficult now as it was in 1950.

While traveling abroad, I'd carry a birth certificate which should clearly show all 3 names on the same document.

Have any of you older Bogleheads had any experience with VWIAX? (Wellesley Income Fund) No experience yet, but I've been looking at Wellesley a lot lately. I'm considering simplifying my portfolio to a mix of Wellesley and Lifestrategy Moderate Growth, half and half. I don't want the Lifestrategy alone because of the high percentage of international and the lack of a value tilt which I currently have. This mix would come close to what I currently have with fewer funds and little need to rebalance. I don't want Wellesley alone because I don't want a 100% actively managed portfolio. When I put the two portfolios into Portfolio Visualizer earlier this week, the 2 fund portfolio had a tiny bit more return with a little less risk and a tiny bit...

Rogue advisors. Interesting. Looking forward to what you find out.

If you still have a good sum in taxable, you can buy the house from taxable and exchange some of the bonds in the IRA to stocks to replace the stocks you no longer have. This would avoid paying tax on a $500k withdrawal from IRA in a single year.

vchiu25 wrote: ↑Sat Mar 18, 2023 5:27 am My qualified stock dividend is in 12% bracket but if I add bond dividend it will put me a little bit over. Would I then have to pay 15% tax on all the qualified dividend?

No. But numbers are needed to know how much.

The marginal rate on some of those dollars would be 27%, not 15%. But any qualified dividends "below the line" are still taxed at 0%. With some numbers, this could be explained better.

Ps for 60/40 I don’t have enough room in tax advantage for my bond

Ok. If you switch to taxable bonds, some of that bond interest will be taxed at 27%. This makes the tax-exempt bond more attractive than one would think if you didn't know that.

Somewhere along the line, you have to tell your software that you made the IRA contribution(s). It appears you have not done this.

OP here, thank you all. The plan document language can be somewhat confusing with some admitted uncertainty. Like @scophreak, my 401k custodian is Fidelity and I'm hoping what he/she states is essentially my situation. The one caveat is my current Roth IRA is held at Vanguard, and if I go forward with this, I may open a Roth IRA account at Fidelity just to simplify any transfer mechanisms (Fidelity to Fidelity sounds like a straightforward process). I'm also hesitant to simply call someone at Fidelity and ask what is allowed - quite frankly, I trust the collective wisdom of Bogleheads over someone who may (or may not) know the ins and outs of this topic. You absolutely should open a Roth IRA at Fidelity so that you can do this in 5 minutes...

Mega-backdoor Roth should NEVER go through a traditional IRA because that would trigger the conversion step being pro-rated with all of a person's IRAs (other than Roth IRA).

An In-service distribution should always go 401k ---> Roth IRA. An in-plan Roth rollover goes directly to Roth 401k.

Agree that in-plan Roth rollover could be in a section not mentioned yet. My guess is there is no such option, but it is certainly worth looking for.

This is a quick suggestion of how simple your portfolio could be without paying any tax to make changes. It is about 75% stocks and 25% bonds with 20% of stocks (15% of portfolio) in international. Taxable (47.2%) 23.2% Vanguard Total Stock Market VTI (currently at Merrill Edge) (.03 expense ratio) 15% Total International Stock Index 3.0% Ibonds (planning on buying another $10,000; probably split between now and May) 6.0% in 1 year CDs (4.65% and 5%) 401k (12.9% + 21.6 + 10.3 = 44.8% ) 20% Company Proprietary Large Cap Equity (06% expense ratio) 6% Company Proprietary Mid Cap Equity (.06% expense ratio) 2.8% Company Proprietary Small Cap Equity (.07% expense ratio) 8% Stable Value at 2.4% 8% Company Proprietary Bond Fund (.08% expense ratio...

Welcome to the forum. :happy Desired Asset allocation: 75% stocks / 25% bonds. [Too aggressive?] This strikes me as too aggressive if you intend to retire in the next 10 years. I'd suggest 35% in bonds. It is time to start thinking about preserving what you have. Desired International allocation: 20% of stocks. Nobody knows what will be "best". Recommendations range from 0% to 50%. 20% is seen by many to be the lowest percentage to use if you do want to have international. 1. I'm unclear of the pro-rata rule and how that may affect my taxes. I did a backdoor Roth IRA this year and last year. What are the implications of transferring my former company 401ks to an IRA? If you move those old accounts to IRA, you should stop using the...

You can convert now or later. It does not matter because you are converting shares, not dollars. You have not lost any shares.

In spite of what has been said above, we've been told that some software will not carry over the unused basis...so don't be surprised if that happens. Again, you will not have lost anything that was actually yours to begin with.

w5000 wrote: ↑Sat Mar 18, 2023 9:43 am

retiredjg wrote: ↑Sat Mar 18, 2023 7:26 am Withdraw means "take out of the plan", so this means you can do an in-service (while working) distribution....i.e. roll/convert to Roth IRA, twice a year. That is one of the ways to do mega-backdoor Roth.

So this sounds like it would be an indirect rollover, i.e. OP withdraws from the after-tax sub account of the 401(k), receives a check made out to him/her, and deposits into Roth IRA within 60 days?

From my reading here, I'd say that few people do this as an indirect rollover. And I don't see any reason it would need to be indirect. The trustees apparently handle this easily.

Changing from tax-exempt bonds to taxable bonds would be a common thing to do when entering retirement if one's income goes down. I think you are understanding it correctly. Taxable interest will increase your taxable income and that can change the tax rate on your qualified dividends. But...In the long run, tax-exempt bonds should return less than taxable bonds. So in order to keep the 0% rate on your qualified dividends, you actually also have to make less money. The best solution is to remove the bonds from your taxable account. Can you achieve the portfolio you want without bonds in taxable? If not, it might be worth keeping the tax-exempt bonds because of the 27% marginal rate (sometimes called a shadow rate) that will occur on part of...

Valdeselad wrote: ↑Fri Mar 17, 2023 6:50 pm Am I overlooking anything? When the language says "withdraw" does that mean the same thing as in-plan conversion or in-service distribution?

Withdraw means "take out of the plan", so this means you can do an in-service (while working) distribution....i.e. roll/convert to Roth IRA, twice a year. That is one of the ways to do mega-backdoor Roth.

I do not see any wording that suggests you can do an in-plan Roth rollover (IRR).

If I'm following this correctly, the problem is not the code G. I think the problem is that the poster is calling this a rollover but it was actually a conversion. I think the problem is that HRBlock's online software has a glitch. It says (per OP above): "Code G indicates a direct transfer; therefore, box 2a should be zero. If there is an entry greater than zero in box 2a, contact your plan administrator. Please verify the code entered." Since a direct transfer does not necessarily mean non-taxable and since box 2a does not have to be zero using code G, the software is wrong. Agree. But I think what the poster is saying is that is the response that occurs after the poster has told the software that s/he has done a rollover. That...

If I'm following this correctly, the problem is not the code G. I think the problem is that the poster is calling this a rollover but it was actually a conversion.

This would be consistent with what suemarkp says.

1) Should I still contribute to the MBR in my circumstances even though I don't have the option to do in service distribution to IRA? What are the pros/cons? Yes. Roth is better than taxable. 2) Once I leave my company in 5-10 years, should I still roll that money to an IRA even if taxed on the earnings? Yes, you should do this rollover. No you will NOT be taxed on the earnings at the time of the rollover. If you leave the earnings in Roth IRA long enough, you will not be taxed on them at all. 3) Is the main benefit of rolling to Roth IRA versus 401k so that I don't have RMDs? Is that the main benefit? Not the main benefit. There is no downside to rolling to Roth IRA. The main benefit is that Roth IRA has more favorable rules for withdrawi...

yosemite_mountain wrote: ↑Fri Mar 17, 2023 1:58 pm

stvman2 wrote: ↑Fri Mar 17, 2023 11:23 am I did a Roth conversion this year and was also a bit confused by the tax software. After a bit of research I found that I was confusing Conversion with Rollover! In the H&R Block software it asks "Did you, or will you, roll over this distribution?" Note that this page says in small print "A rollover occurs when...except a Roth IRA." I select NO. In my previous confusion I mistakenly chose yes. The very next question is now "Did you convert your distribution?" I select YES and I am good.

I did not do a conversion though; I did a rollover from a after tax 401k to a Roth IRA

The money was not in a Roth account and now it is. Yes, you did do a Roth conversion, part of which was taxable.

I would not hold REITs in taxable myself. Since you already have REITs in taxable, the question becomes whether to sell them and when.

If you can sell at a loss or only a small gain, that is what I would do. Or if you have banked losses you could use to offset the gains. If not, I don't know what I would do - depends on the whole picture. At the very least, you could turn off reinvestment of dividends so the "problem" does not increase.

P.S. I had no idea until ten minutes ago that the Vanguard Intermediate-Term Bond ETF include some foreign bonds. I just stumbled on the same thing while looking at my "US vs International" bond ratio on my Vanguard webpage. Between Total Bond and Intermediate Term Bond, 10% of my bond allocation is international bonds. I had no idea. I wonder if they have been there all along or if this is a recent development. Further to my comment about the change in Portfolio Watch regarding the classification of international bonds and the 10% increase in my allocation this week, although I made no trades: Portfolio Watch now determines a bond's region by currency. Portfolio Watch previously determined bond regions by country of origin, so y...

nisiprius wrote: ↑Fri Mar 17, 2023 8:35 am P.S. I had no idea until ten minutes ago that the Vanguard Intermediate-Term Bond ETF include some foreign bonds.

I just stumbled on the same thing while looking at my "US vs International" bond ratio on my Vanguard webpage. Between Total Bond and Intermediate Term Bond, 10% of my bond allocation is international bonds.

I had no idea. I wonder if they have been there all along or if this is a recent development.

Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off? I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios. The term "lazy portfolio" means different things to different people. Whatever one's definition, I don't think "completely hands off" is suggested by many. To my knowledge, Rick Ferri has never suggested such a thing. If you want to maintain a certain level of risk, rebalancing is required from time to time. There are some good lazy ways to achieve this. For example, one could use target funds or asset allocation funds (these rebalance themselves0. Or one can rebalance once a year. Even rebalancing within 5% bands takes litt...

Allan Roth wrote: The 1099 tax form on my little $5,000 direct indexing experiment is 86 pages!

Wow

Direct indexing is obviously not a good choice for someone who values simplicity.