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retiredjg

Appreciate the help here! I'll look at changing those bonds in blue to tax-exempt versions. The second one is already tax exempt so I think I'll just need to change the first one. Sorry, I misread the name of the second fund. In the 24% bracket, the taxable bond fund and a tax exempt bond fund prob...

retiredjg

You will not need to pro-rate unless there is something in tIRA (including Rollover IRA, SEP IRA, and SIMPLE IRA) at the end of the year. So don't accidentally roll a 401k into rollover IRA in December or something along that line.

retiredjg

I believe the Wells Fargo information in incorrect for the scenario "you are covered and your spouse is not". The limits given are correct for the uncovered spouse, but not for you. Your limit would be lower. Both 2020 and 2021 appear wrong to me. They seemed to have missed the fact that y...

retiredjg

Welcome to the forum. :happy You didn't mention a tax bracket and that matters. Here are a couple of small things to consider changing. Assets Tax-Deferred - IRA/401K/HSA Fidelity® U.S. Bond Index Fund Premium Class Fidelity® Real Estate Index Fund Premium Class Fidelity® U.S. Bond Index Fund Premiu...

retiredjg

Question: Is my tax preparer correct? Or do I need to amend return, or at least attach 8606? Partially. The return will not be changed other than adding the 2020 Form 8606 to document the 2020 non-deductible contribution. So no amendment is necessary, but the Form 8606 is necessary and it can be ma...

retiredjg

1. Correct, no 8606 was done 2. I was not taxed on the 12k (just the initial tax in the income) 3. I will have to check when I get home tonight Depending on what you find on line 4, the fix for this might be as simple as filling out two Forms 8606 (his and hers) and mailing as described by the prev...

retiredjg

(3) Use a fee-only advisor I spoke with here in St. Louis for a couple months to clean things up (they charge 1%) and then take it from there (I can tell them exactly what I want to do and how I want my accounts set up); Do you assume you can tell them exactly what you want to do? Or is this someth...

retiredjg

Thank you! I can't find any advisor who charges hourly. They're all 1%. I'm willing to do that for a couple months to help me sort this out though. I did see the Harry referral guy, but he charges for the referral as well, and how do I know if the referral will be worth it? Harry is a well respecte...

retiredjg

Even if you have it figured out, will your spouse know how to avoid the pitfalls if something happens to you? That would be my concern. Where to take money from would be easy to write instructions for, but I'm not sure than any amount of good written instructions would help someone figure out how fi...

retiredjg

I feel very turned off to Schwab just because of my current advisor, so would like to switch to Vanguard but that depends on the costs involved. I'm going to call them today. Take note that there is a difference between a Schwab advisor and an advisor who places clients investments at Schwab. Don't...

retiredjg

It appears to me you did the process right (assuming there were no other IRAs except Roth IRA). It also appears to me you did a Roth conversion, not a re-characterization. And I think your 1099 is correct as well. It is one of the great mysteries....lots of tax-preparers don't know what to do with t...

retiredjg

Thank you yog for continuing to explain this to me. I get it now. It was certainly a head scratcher at first, especially the idea of putting Roth IRA into a SEPP (whether you withdraw from it or not).

I suspect that you may actually enjoy the balancing act on a knife's edge.

retiredjg

Advice from Vanguard would not be free. You would have to move your money to Vanguard and pay 0.3% for their Advisor Service. There is no contract so you could stop at any time you feel ready to do it yourself. And whatever they set you up with is a portfolio you could leave at Vanguard or transport...

retiredjg

I'm the person who suggested Vanguard's PAS earlier, if only for a limited time to get you going (like training wheels). It's a good idea. Doing it all on your own is a good idea as well. I'm not sure I could suggest one over the other for someone who is willing and able to do it. Maybe someone else...

retiredjg

I have one more question about the pro-rata rule though. Let's assume I have tIRA with $16k where $10k is pre-tax money and $6k is after-tax money. Do I have to pay taxes if I transfer $16k from tIRA to Roth IRA and on December 31 I will have tIRA with zero balance? It looks like the pro-rata rule ...

retiredjg

5) To the end of the year I will have trad IRA with zero dollars, Solo 401(k) with after-tax money (10k), and Roth IRA with after-tax money (6k). Will pro-rata rule be avoided if I do 1)-5) in one year? You will avoid pro-rating, but the Solo 401k money will not be after-tax. It will still be pre-t...

retiredjg

Currently I have their Vanguard IRA accounts in roughly 70/30, VTSAX(USA stock) and VTIAX(Intl Stock)+VWO (emerging mkts). Personally I feel some pressure to "catch up" because their gains were suppressed under their old advisory. Catch up is not your job. Your job is to preserve what the...

retiredjg

Thank you for posting in the format we use to help people with portfolio questions. It makes it so much easier to answer your questions. Put on your seat belt. :happy If you want a simple low cost portfolio, you will need a complete liquidation. It will take some time but the results will be worth i...

retiredjg

Are you talking about doing a SEPP on a tIRA and converting the withdrawals to Roth IRA? I must say I still don't get it. If yes, why do you want to convert huge amounts of the tIRA when it is only $1 million? I can understand doing some limited conversions on $1 million to keep it from growing too ...

retiredjg

A re-characterization is a do-over. It is like you contributed $7k to the tIRA in the first place. You can deduct the full amount....to the extent that it is deductible in your situation. You do not need to make up the difference.

retiredjg

Now the Traditional IRA AGI/MAGI limits for my spouse in our situation, "Married filing jointly with a spouse who is covered by a plan at work" for 2021 is $198,000 or less to be able to contribute the maximum 6K amount. It appears you are confusing contributing and deducting. . This limi...

retiredjg

I don't know if you are missing anything because I cannot figure out what you are considering. :shock: It appears to me you only have $1 million in a tax deferred account. The $3 million in Roth does have a tax-advantage, but it is not tax-deferred. When you say 72t plan, do you mean substantially e...

retiredjg

Yes. Your understanding is correct. And there is that $3k exception for public safety officers.

retiredjg

Thank you all for your helpful responses. Now if I were to do a direct rollover of these 401K accounts into a brokerage account would it be possible to consider the Roth portion of the 401K as my Roth contribution for the year? My understanding is that I am eligible to contribute additional $6500 t...

retiredjg

I don't have a good sense of how much these little details affect things. This is an insightful observation. One of the things you have to remember about Bogleheads' is that there is a lot of "optimizing" going on here. We can talk endlessly about things that are of little importance. It ...

retiredjg

Hi @retiredjg, I recently found out about this forum post ( https://www.bogleheads.org/forum/viewtopic.php?f=1&t=342995 ) in which the linked spreadsheet suggests that for someone in the 32% tax bracket, international is not as tax efficient as total stock (comparing VXUS and VTI in spreadsheet...

retiredjg

Thank you! It looks like the information asked for is only the specifics of my portfolio. I'm not shy about providing more numbers if it would help, such as net worth, income, and expenses. Do people provide that info or is that too much and unnecessary? You can add more if you want. But please fol...

retiredjg

Thank you so much!! I will work on getting all that information together to post ASAP! I also really appreciate the advice to look into Vanguard's services. Will post all my financial details as soon as I can get them put together. No rush. Take your time. Doing it right is more important than doin...

retiredjg

Welcome to the forum. :happy If you wish to simply your portfolio, move to ETFs, and eventually take the portfolio over to manage yourself, you cannot do better than Vanguard's Personal Advisor Service. They charge .3% instead of the 1% your are considering. They will move your money to a simple por...

retiredjg

If you do this for enough years, you will not have an RMD problem. If you plan to do it for 2 or 3 years, you need to do conversions as well if you want to avoid high RMDs. I was thinking age 66-70. But I was also thinking that if the market/our portfolio returns an average of 5% it would be mostly...

retiredjg

yadbugee, it is not clear from your post that you even need to use the backdoor in order to contribute to Roth IRA. Are you over the limit? If yes, you have the right idea, but there are dozens of ways that people manage to do this wrong and fixing it can be gruesome. So do some thorough research be...

retiredjg

If you do this for enough years, you will not have an RMD problem. If you plan to do it for 2 or 3 years, you need to do conversions as well if you want to avoid high RMDs.

retiredjg

Thanks, this makes sense. Hypothetically lets say a few years down the line my kid finds a small part time job like in a store or something and he makes small amounts of money. Does he need to contribute to this IRA from his own earned money. My point is if the kid makes some money he will surely s...

retiredjg

The limit for "elective deferrals" is $19.5k. That can be traditional 401k and/or Roth 401k and includes whatever goes into the new plan.

retiredjg

Thank you. This makes sense. One hypothetical question about earned income though. What about people who have no "income" but live off inheritance or something like that. Can they have a Roth IRA and invest in that? Like trust fund kids we keep hearing about :-D They can "have" ...

retiredjg

Would that act technically as a Roth conversion if we use some of that money up before our RMD's kick in? No, it would not act as a Roth conversion. But it would accomplish the same thing as a Roth conversion in that it would reduce your tax-deferred accounts. Whether it reduces your tax-deferred a...

retiredjg

Some kids actually earn income. The most common example is child model or actor for the very young ones. Maybe lawnmowing, babysitting, or dog walking for the older ones. I doubt that mowing the family yard or babysitting the younger sibling or walking the family dog will do. I think some people may...

retiredjg

Ordinary income is taxed using 1 set of tables. Long term capital gains and qualified dividends are taxed using a different table. Would that explain it?

Or is there a tax credit?

retiredjg

If you are in a very low tax bracket, you might be able to sell some of the total stock and pay 0% on long term capital gains. In order to do this, your taxable income (not AGI) including the LTCG would need to be less than $80,800.

retiredjg

JPM, this is what I think is happening. From the Forms 8606, it appears to me that your tax person has been (more or less) doing the form correctly each year. But she was not doing what you thought she was doing. In other words, she was entering the 1099's for the right year even though you thought ...

retiredjg

I had a couple years where I accidentally contributed to my t-IRA when my wife and I were in the phase-out income limits. I corrected our tax returns, but that now leaves a non-deductible portion mixed in my account. Instead of endless proration, I was told I could unmix the deductible and non-dedu...

retiredjg

Periodically, you should nudge your allocation back to or toward its target. Otherwise, there is no reason to have a target. Also it gives you the opportunity to take some gains and buy an asset class that is lagging (which also means it is cheap). Right now, your small cap is too high and your inte...

retiredjg

Here is a little more clarification. A 401k can accept 3 different kinds of contributions from an employee (although not all plans have all options): -tax-deferred -Roth -after tax that is not Roth The first two buckets on the list are where your contributions (elective deferrals) go each year. It i...

retiredjg

Heya, So, I've legit never noticed this option in Vanguard, because it is so subtle. But when I'm setting my allocation from my paycheck there is a small button above the funds that says "allocate by source." It seems like I can pick where the company match goes vs my actual money. From w...

retiredjg

What would be your advice for getting these available funds into the market, specifically with respect to the timing of doing it and where the market is today. I'd suggest you buy enough fixed income/bonds to get you to 64/36. If there is anything left, invest it at 64/36. Asset allocation is not s...

retiredjg

If you want 60% stocks and 40% fixed with about 40% of your stocks in international, it is perfect. :happy Some people would use some F Fund or even all F fund, some would use less (or more) international. Some would use a different ratio of C Fund to S fund. None would necessarily be any better or ...

retiredjg

Gains harvesting can be a definite plus if you actually spend money from taxable and if you eventually move out of the 0% bracket (or it goes away). If the money in taxable goes to heirs or charity, there is no benefit I can think of. Heirs get a stepped up bonus. Charities don't pay the tax anyway....

retiredjg

I don't know what happened, but both links now required permission.

retiredjg

The link works. It will take some time and brain power to figure out what has been done, so be patient.

Do you have any records of the dates these contributions were made?

Is there an answer to my question above?

retiredjg

JPM, your link requires a reader to ask for access. I doubt that many will do that. If you cannot figure out a way to make it available without asking for permission, you could just report the numbers here. A hassle but do-able. As I mentioned, I've always done the 6000 or 5500 non-deductible contri...

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