Bogleheads.org

Sounds like an advisor at Fidelity is looking for some money to manage...for the financial benefit of the advisor.

Moving might or might not be a good idea and is definitely not required unless the plan itself is terminated. Moving to an advisor who is soliciting business is likely not a good idea.

I don’t quite understand why if we’re 99% sure of not outliving our money, we should move our money to a less risky allocation that’s so expensive. So they can make some money. Simple as that. There is no benefit to you. In fact, by paying them the 1%, you are reducing what you can safely spend yourself...thereby INCREASING your risk. The generally accepted "safe" withdrawal rate has historically been 4%. That includes all your expenses...including what you pay for investment advice. If you are spending 4%, then paying them 1% leaves you with only 3% to spend on yourself. Go figure out how that is a good thing for you. If you feel the need to reduce your risk, just increase your bond allocation. However, there is no indication in...

Welcome to the forum.

Yes, a CD in taxable would have to return 7.69% in order to get the same return as 5% in Roth IRA. I do not know if CDs are subject to the NiTT, but it seems like that could make it even higher.

Many people here like to avoid putting bonds or other "low paying" investments in Roth IRA because the earnings in Roth IRA are tax free if you wait long enough. So many people here would not put a CD in Roth IRA. However, if it suits your needs for the overall portfolio, I don't see a problem with it myself (although I would not put a large portion of my Roth IRA into CDs).

bslice wrote: ↑Sat Mar 25, 2023 4:37 pm

Dottie57 wrote: ↑Sat Mar 25, 2023 3:52 pm

MrJedi wrote: ↑Sat Mar 25, 2023 3:19 pm 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?

Because you know you will be able (have the money) to contribute to both. There is no reason to do one and then the other. It might also be a way to get a full employer match (depending on the plan) while contributing to both.

Have you gotten a refund since then...for some other tax year? If not, I would wonder if your next refund will trigger the $7 to get unstuck or trigger your next refund to get stuck. I'm guessing the former, but it is just a guess. However, if it is the latter, maybe it would take the same effort to fix then as now. Both 2021 and 2022 I had overpayments fully applied to the next year without problem. I can even, already, see my 2022 overage applied to 2023. In that case, I don't see a problem or a downside (but that is mostly a guess). I'd probably write a letter, not wait on the phone, and hope to get the tax year closed. Someone said recently they got a real person on the phone when they called a local IRS office to make an appointment. ...

Have you gotten a refund since then...for some other tax year?

If not, I would wonder if your next refund will trigger the $7 to get unstuck or trigger your next refund to get stuck. I'm guessing the former, but it is just a guess.

However, if it is the latter, maybe it would take the same effort to fix then as now.

The rules have not changed. The rules for your plan have changed. This is actually more flexible.

In the situation you describe, you do not "re-characterize" to Roth IRA. You are "converting" to Roth IRA.

For your 2022 taxes, you report a non-deductible contribution to IRA on form 8606. This will leave a basis of $6k on line 14 for you to use in the future. You did not do a Roth conversion in 2022 so there is no Roth conversion to report.

For your 2023 taxes, you report both a non-deductible contribution for 2023 (if you do one) and a Roth conversion of $12k (or whatever gets converted).

Here is a thread about an Allan Roth article on direct indexing.

viewtopic.php?t=400137

My favorite part...."The 1099 tax form on my little $5,000 direct indexing experiment is 86 pages!"

I try to keep between $5k and $10k in the credit union - pretty low rates for sure.

I have very little cash other than that - just what is sitting in settlement accounts, and I try to keep even that invested.

Long time follower, posting for 1st time. During the last few years, I tried my hand at diversifying the portfolio and now have unwieldy portfolio. One of the goals for 2023 is to simplify and eventually towards an 80/20 VTI-BND portfolio. However, I do not want to do all of them overnight in one go and structurally move them in a meaningful way. Which of these would you recommend targeting to sell for 2023. Tax bracket: 32% Holdings are in a taxable brokerage account Cost basis: SpecID Symbol - Description - Quantity - Gain/loss BND - Vanguard Total Bond Market ETF - 104.237 - ($1,408.32) BNDX - Vanguard Total International Bond ETF - 68.084 - ($576.51) IVOO - Vanguard S&P Mid-Cap 400 ETF - 205.282 - ($1,610.04) MGK - Vanguard Mega Ca...

OldSport wrote: ↑Sat Mar 25, 2023 11:18 am

retiredjg wrote: ↑Sat Mar 25, 2023 11:16 am Do you have an active 401k or similar plan at work that you could roll the pre-tax portion of your IRA into?

No. My plan does not allow this. It's a pain. Spent a lot of time looking into it. They only allow 401k direct rollovers into the plan. They do not permit rollover into the plan from a rollover IRA, pretax or otherwise. Spent A LOT of time trying to do this unsuccessfully last year.

Sorry, you already told us that. I just didn't go back and refresh my memory before posting.

Well, you are already "into" the pro-rating quagmire at this point. Apparently it was worth it to you to do that first backdoor. Maybe you can just clean up the rest of this over 2023 and 2024 and move on and not worry much about it.

Leesboro will be our "test case".

Do you have an active 401k or similar plan at work that you could roll the pre-tax portion of your IRA into?

I think the math works out to be the same whether pro rata 2022 after tax is 6/(6+19.5) plus an additional $18k fully taxable or 6/(6+37.5) after tax ratio applied across the full $24k converted. It just asks me my basis at end of 2021, which is $0 and basis at end of 2022, which remaining non-converted TIRA balance was $19.5k. Neither of those is the calculation that the form uses to determine how much of your $24k Roth conversion is taxable. That is because the value of the IRA at the end of the year is part of the calculation - but not included in your thinking above. I think you are using the term "basis" correctly in some places and incorrectly in some places. When talking about tIRA, basis means "already taxed dollars&...

Pinacoladapopsicle wrote: ↑Sat Mar 25, 2023 9:14 am A series of innocent mistakes and now I'm in a total mess.

It may seem like a total mess, but this is completely fixable by using the "pour out" method mentioned above. And doing the 8606 for the year in question awhile back. Then convert the remaining amount to Roth and start your backdoor contributions after that. Try to keep the backdoor contribution and conversion in the same tax year because it is easier to understand, remember, and document.

This can be put behind you in a few weeks. A lot of people have been in your shoes and done this.

I contacted Empower Retirement to rollover my Roth 457 plan to my Vanguard Roth IRA. They informed me that some screwup has all my 457 in a Roth except for about $1,400. Since I'm only eligible for non deductible IRA, can I rollover this $1,400 to a non deductible IRA and somehow backdoor convert it a Roth or will it count towards my 2023 contribution limit which I've actually already hit so I'd have to let the money sit there till 2024. Your $1,400 will rollover to traditional IRA as pre-tax dollars. Your "eligibility" does not affect a rollover. You can leave it there or convert it to Roth IRA if you are willing to pay the tax on $1,400. It is also possible to just roll it directly into Roth IRA. Some people prefer not to do th...

stargazerlily03 wrote: ↑Fri Mar 24, 2023 6:32 pm Form 1099-R (OK, not a WKS) under Rollovers, Roth Conversions, Roth Rollovers, Recharacterizations. Item B4 states the total amount of his pension as amount of this distribution that may be rolled or converted to a ROTH IRA. Is the key word "May?" The amount is the total pension although I checked the box that they were monthly payments rather than a lump sum.

I'm sorry but I don't know what/where Item B4 is. Can you be more specific?

Are you sure this is a pension?

It is possible he is just getting monthly distributions from a 401k type account? That could be rolled into IRA or converted to Roth IRA.

What is in box 7 of the 1099R?

Here is an example of what a simple portfolio could look like. Portfolio = $286k Brokerage - $65k. 22.7% 22.7% Total Stock Index 401k $41k[. 14.3% 6.7% 500 index 7.6% bonds Roth IRA - $53k 18.5% 18.5% 500 index Rollover IRA - $127k. 44.4% 32% Total International 12.4% bonds This is not a suggestion of what you should do and it does not take into account the cost of liquidating the taxable account. There is not enough information to make a suggestion based on those things. It also assumes that all of the accounts you have told us about are intended for retirement, not short term goals. If/when you decide you want to manage this on your own, specific details about your situation would be needed to help you decide how to set this up.

See if the instructions here help you figure out how to enter this into TT. https://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html Doing taxes, the $18k is a taxable distribution without penalty, as expected. And the $6k conversion is subject to pro-rata, so that would be (19.5/25.5) x $6k in taxable, as expected. I don't think you have this part right. The entire $24k is converted and pro-rated. My question becomes what happens in future with 2023 $6k after tax TIRA contribution & subsequent conversion? There is a (19.5/25.5) x $6k that was taxed on the 2022 conversion from pro rata, even though the entire $6k was after tax TIRA contribution. Every time you take money out of IRA to spend or to convert, it will be pro-r...

The earnings are pre-tax, so they can be "poured off" as well. The only thing that MUST remain in the IRA is an amount at least equal to the basis (your non-deductible contribution).

Or if you prefer, leave the earnings (or any amount you want) in the IRA. When you convert to Roth, you will pay tax on only the earnings or extra (assuming you do Form 8606 properly).

Thank you so much! I used Turbo Tax once again for our tax return and noticed for the first time on the worksheet that the entire amount was eligible for a rollover. Maybe you should tell us more about this. What worksheet? Usually, a pension can be rolled over to tIRA as a lump sum before starting monthly payments. I don't think rolling over to tIRA after starting monthly payments is common. I'm not even sure it is possible. I suppose it could be rolled to Roth IRA as a lump sum, before starting payments, but the taxes on that would be enormous. As we do not need it, any re-investment into a taxable account will be double taxed again unless we opt for a tax free muni-bond fund? No. The money will be taxed one time - as you receive it. If ...

Your questions are impossible to answer without context. The type of account(s) you have, your tax bracket, and other things need to be known before reasonable suggestions can be made.

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.

Welcome to the forum.

Your questions are impossible to answer without context. The type of account(s) you have, your tax bracket, and other things need to be known before reasonable suggestions can be made.

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.

Welcome to the forum.

This is how you can legally separate the cream from the coffee. You have a traditional IRA that contains a mix of pre-tax contributions and at least 1 non-deductible contribution. The 401k is not allowed to accept the non-deductible contribution ("basis"). This is the same for all 401ks. The IRS has a special rule that allows you to "pour off" all the pre-tax money into the 401k, leaving behind the non-deductible contribution. Then what is left can be converted to Roth IRA with little to no tax. What is required is to leave behind an amount at least equal to the basis (your 1 non-deductible contribution). You can leave more if you want. Since there could be a delay between your request and the actual transfer, it is sugg...

Rollover? No. But if one of you is still working, it might be possible to make Roth IRA contributions (yours and his) using that money.

Oh yes. Most people concerned about IRMAA are over 65...and do have a higher standard deduction. Good catch!

If you want an example of what your portfolio could look like, you need to post information about your spouse's accounts as well. Once you learn to see your portfolio as an accumulation of all your accounts, the portfolio is easier to understand.

Let us know what you find out on Monday. However, I would think you can look up the unrealized gains and losses on your account without talking to the advisor.

You do get notification when you get your annual SS statement of what your payment will be for the next year. But the switch back to basic costs happens on its own. You don't have to do anything.

I am not sure I understand how IRMAA works. For 2023 the IRMAA threshold MAGI is 194,000 for a married couple filing a joint return meaning if our 2021 income was over 194,000 we would be subject to the penalty (higher premium for Part B). It wasn't. We are doing Roth conversions potentially up to the top of the 22% bracket which is 190,750 for 2023. If for example I made a mistake and our 2023 income was 195,000 the relevant lookback would be from 2025. Are IRMAAs inflation adjusted? They weren't and they currently are but I don't know if that is written into law. If the IRMAA for 2025 was adjusted for inflation up to 200,000 then my look back to 2023 of 195,000 would not subject us to the IRMAA penalty? Is that how it works? I hope that ...

Welcome to the forum.

The SIMPLE IRA means she will have to pro-rate the backdoor Roth process with the SIMPLE IRA. Most people want to avoid this and stop using the backdoor Roth.

If she as already done both steps of the backdoor Roth process this year (contribute and convert to Roth) and the SIMPLE IRA starts this year, she is going to have to pro-rate - at least for this year. That will leave some "basis" in the SIMPLE IRA.

It that is the case, she will have to consider whether she wants to use the backdoor in the future.

Looks fine if the funds are spread over several accounts. A bit of odd overlap going on if all of this is in one account. Does it suit you?

8301 wrote: ↑Thu Mar 23, 2023 10:37 am Is it safe to assume that there may be no drastic price upswing of CA munis?

It is not "safe" to assume anything financial, but this seems like a pretty good bet to me. For bond values to go up, interest rates need to go down. It does not seem like anyone is thinking of lowering interest rates in the near future (the next 30 days).

I'm really enjoying all of the comments, and thank you all for your thoughts. For the Rollover, would this make sense? VTSAX 65% VTWAX 25% (or VTIAX) VBTLX 10% And for the Roth, would I do the same or something different? I'm trying to understand whether I should have the same funds in both accounts or if I should split it differently. Thanks to all who share perspectives! You need to decide what you want in your portfolio. What percent US stocks? Foreign stocks? Bonds? Once you decide and tell us that, plugging in the funds takes about 5 minutes. But we don't know things like your tax bracket? Married or single? Age? Other accounts (like one at work)? The tax cost of fixing the taxable account? All of those things factor into this decisio...

I have a down payment to make and would appreciate help/advice regarding using IRAs for the payment...and then re-funding the IRA within 60 days after. This can be done, but is risky. Are you willing to pay tax on the withdrawal if you miss the 60 day deadline? Delays are common and could be quite costly. First question: earlier this year I did a Backdoor Roth IRA conversion (eg funded an IRA and then converted those funds to Roth the first available day). Does that "count" as my once-per-year IRA withdrawal/repayment without penalty? No. Second question: Assuming the answer to the 1st question is the Backdoor Roth is a non-factor for the IRA withdrawal/repayment option: both my wife and I have IRAs. Can we both withdraw from our...

Vanguard's PAS is the only advisory firm that I'm comfortable recommending and this portfolio makes me wonder if that comfort is misplaced. I have to say I'm completely boggled by this portfolio. The number of funds is just astounding for Vanguard's PAS - especially putting a small sum like $65k into 15 funds. :shock: And what is the point of having 1 or two shares of a bond fund? Don't take this comment wrong though - they don't have you invested in anything "bad" or "expensive". They have just used way too many funds and the result is unnecessarily complex and confusing. The funds don't care, but it seems that you do. If you decide to do this yourself, reducing the number of funds in the rollover IRA and Roth IRA can b...

Hi, I have a rollover IRA with only funds from a cashed-out 401a retirement plan. Is there any reason not to commingle these funds with traditional IRA contributions from a Roth recharacterization from the current tax year? If you cannot contribute to Roth IRA directly, then the contribution to tIRA (via the re-characterization) would be non-deductible. That means that you will have "basis" (already taxed money) in your tIRA even if the two IRAs are separate. That means that whatever you do with your IRA from now until the IRA is empty will have to be pro-rated between the pre-tax money and the after-tax money. Is that something you want to deal with? If not, you may want to have your custodian completely remove the contribution ...

Hi, I have a rollover IRA with only funds from a cashed-out 401a retirement plan. Is there any reason not to commingle these funds with traditional IRA contributions from a Roth recharacterization from the current tax year? If you cannot contribute to Roth IRA directly, then the contribution to tIRA (via the re-characterization) would be non-deductible. That means that you will have "basis" (already taxed money) in your tIRA even if the two IRAs are separate. That means that whatever you do with your IRA from now until the IRA is empty will have to be pro-rated between the pre-tax money and the after-tax money. Is that something you want to deal with? If not, you may want to have your custodian completely remove the contribution ...

I think people who are "driven" to the RV life don't really need the rental "try-out". These people know who they are.

For people who have never considered it before, like our original poster, I'm not sure that jumping in feet first with a large outlay of money is a good choice. Now, if original poster said "I've been mulling this over for months and just can't get it out of my mind", I'd say "go buy something and give it a whirl".

Regarding the rent suggestions, I would say that kills a good part - maybe more than half - of the advantage of owning an RV, so you might not feel the same benefit as you would from owning. To me, renting an RV is something to do a few times to be sure you like the lifestyle. Or to accomplish a certain goal on a certain trip. Either you enjoy the RV lifestyle or you don't. Renting is a way to find out. If you do enjoy the lifestyle, renting is not going to be as satisfying as owning in my opinion. But only a part of the RV lifestyle will be available if you rent. A big part, maybe the biggest for a lot of people, is having all your "stuff" ready to go in the RV at all times, so you can just take off for a day or a week with virt...

tibbitts wrote: ↑Tue Mar 21, 2023 3:01 pm Regarding the rent suggestions, I would say that kills a good part - maybe more than half - of the advantage of owning an RV, so you might not feel the same benefit as you would from owning.

To me, renting an RV is something to do a few times to be sure you like the lifestyle. Or to accomplish a certain goal on a certain trip.

Either you enjoy the RV lifestyle or you don't. Renting is a way to find out. If you do enjoy the lifestyle, renting is not going to be as satisfying as owning in my opinion.

Kelly, it appears you have moved your accounts over to Fidelity. You have a taxable account, a traditional IRA and a 401k at NetBenefits. And your spouse also has a 401k at NetBenefits. You have been busy buying some of the "right funds". What you do not seem to have yet is a plan and I think that is what you are starting to work on now. Your plan should be looking at all 4 of these accounts (and any others we don't know about) as one portfolio. Your first decision, other than how much to save, is what you want your stock to bond ratio to be. The portfolio as a whole needs to reflect that ratio. You do not need (or want) each account to reflect that ratio. Have you decided on a stock to bond ratio? And how much of your stocks (if ...

Would a contribution to tIRA be deductible for you? This depends on your total income. It has nothing to do with where the money comes from.

Why are you considering a "reverse rollover" into your 401k?

You have picked up on the elegance of the G fund quickly. :happy Thanks for the perspective. I will get the right stock/bond mix my matching Vanguard or the MD 529 target date funds, and just pick something for the international equity fraction, something like the 30-40% that seems to be common. For international, suggestions range from 0% to about 50% of your stock. Jack Bogle said that none is needed. Vanguard likes 40%. I think the TSP is a little less. Many say that 20% as low as one should go if you want to hold international. Some make the moderate choice of about 1/3rd. Obviously, there are a lot of "right answers" in the range between 0% and 50%. :happy The important thing is to pick a number and stick with it rather than ...

Perhaps there is a dollar amount, under which they do not have to send a form?

I would not report this on my taxes - it rounds down to $0 - so there is nothing to report.

steve321 wrote: ↑Mon Mar 20, 2023 2:55 pm I saw some to rent for a week or so: would you agree that it's best not to rent a long one for the first time? That's what my friend said, to ideally find one say 5 or 6 meters long at the maximum.

If you are not accustomed to driving long vehicles, this is good advice. They do not maneuver like a car or truck. In particular, you will need to learn to swing out wider and longer on turns.

Chances are you won't have losses in Wellesley since you have not been buying it recently. But you may have losses in other funds. You could sell the losses and offset the gains on a similar amount of Wellesley.

If you are a charitable donor, you could donate some appreciated shares to charity and pay no tax.

fsrph wrote: ↑Mon Mar 20, 2023 1:31 pm Yes, I contributed to the company 401k till April 2022. After that I did not have access to the plan.

If either you or your employer contributed any time during the year, you were "covered by a plan at work". So the ordinary rules of deduction apply to you.

sal14 wrote: ↑Mon Mar 20, 2023 7:36 am I initially thought the main reason for buying bonds was that they moved in opposite direction as stocks so it brings some stability to your portfolio but it looks like they been moving the same way for the past few years.

This is a common misunderstanding. Stocks and bonds do not go in the opposite directions. What one does is not highly correlated with what the other one does.

That means there is a possibility that bonds will done well when stocks don't do well. But anything can happen. There are even times (even decades) when bonds return more than stocks.

Ii would use Fidelity® U.S. Bond Index Fund (FXNAX) or a combo with stable value (half and half). It depends on what the stable value fund is paying at the current time.