Search found 98 matches

by dvd7e
Fri Apr 15, 2022 8:39 am
Forum: Personal Investments
Topic: Investing in taxable accounts
Replies: 15
Views: 3931

Re: Investing in taxable accounts

We have a 20-year-old who, when we started talking to her about investing her money, did mention that she doesn't really want to do the rebalancing. So, a little over a year ago, and with some discussion, she/we decided to do a target date fund 2065 into taxable. After reading some of the posts about what happened and not wanting her to ever run into that situation in the future, yesterday, we had her exchange into total stock market in taxable. Her "bond" portion, as of now, will simply be the cash she holds. So you/she just bit the bullet on doing a full exchange? I have a 6 figure balance in the taxable account and a ~15-20 year time horizon so I’m not sure if it makes sense for me to exchange my current balance into a differe...
by dvd7e
Fri Apr 15, 2022 8:37 am
Forum: Personal Investments
Topic: Investing in taxable accounts
Replies: 15
Views: 3931

Re: Investing in taxable accounts

Most of the advice you have gotten so far is discounting the value of a truly hands-off investment approach. You might decide that is necessary, but there are alternatives. One is to use a different type of single fund. As I understand it, the basic issue with the Vanguard Target funds is they lowered the institutional class minimum investment, a bunch of money shifted from investor to institutional class in smaller 401Ks, and since institutional is actually structured as a separate fund, this triggered a realization of long-term gains in the investor class funds. So to avoid this sort of problem, you might want to avoid such popular 401K funds in taxable. And you might want to consider a static fund, including because those are typically ...
by dvd7e
Tue Apr 12, 2022 8:50 pm
Forum: Personal Investments
Topic: Investing in taxable accounts
Replies: 15
Views: 3931

Investing in taxable accounts

As part of my overall financial goals, I’d like to retain the *option* of retiring early (before 59 1/2), currently mid 30s, 32% tax bracket, MFJ. As part of that strategy I am trying to have a moderate taxable account in order to cover 5 years of expenses to enable a *potential* Roth IRA ladder. (And/or for other options like down payment on rental property, etc but that’s secondary) So every month over the past decade or so I’ve auto contributed some money to a taxable account. I really wanted to keep things as simple as possible, so my approach was to treat the taxable account has a separate entity from my retirement accounts in terms of asset allocation, and to invest that taxable money in a Target Date fund with a date in my mid 50s, s...
by dvd7e
Wed Nov 18, 2020 8:58 am
Forum: Personal Finance (Not Investing)
Topic: Switching Health Insurance after Birth
Replies: 7
Views: 620

Re: Switching Health Insurance after Birth

My wife contacted her HR, and as it turns out, their insurance will only let us enroll my wife and the new baby as part of the Qualifying Life Event. So our other children and myself would not be able to switch to her Low Premium High Deductible plan.

So it turns out a good amount of this conversation is moot. Given that, we're going to just go with my employer's High Premium Low Deductible plan for the entire year.
by dvd7e
Wed Nov 18, 2020 5:51 am
Forum: Personal Finance (Not Investing)
Topic: Switching Health Insurance after Birth
Replies: 7
Views: 620

Re: Switching Health Insurance after Birth

Specifically ask if this is even an option. Every year HR says we can change insurance for a qualifying event, but one year someone got them to clarify that we can only add and drop people, but not change the type of plan. I did explicitly ask HR, and yes, we are able to switch plans, as opposed to merely adding a new dependent. (Although even if that’s wrong, I’d still expect to save money with the High Premium plan for the entire year versus the Low Premium plan for the entire year, just not as much as the High/Low hybrid plan that we are contemplating) Edit: Also, are you sure you'd save money? High deductible plans are also usually good for high expense years, with traditional plans only better in a narrow range. (Edit: you are using t...
by dvd7e
Tue Nov 17, 2020 9:42 pm
Forum: Personal Finance (Not Investing)
Topic: Switching Health Insurance after Birth
Replies: 7
Views: 620

Switching Health Insurance after Birth

Hello, Normally over the past few years, including currently in 2020, we have health insurance through my wife's employer which is a Low Premium, High Deductible (LPHD) HSA plan. The effective annual premium is $2,300/yr, deductible is $5,000, and co-insurance is 20%. The health insurance through my megacorp employer is a High Premium, Low Deductible (HPLD) PPO. The effective annual premium is $5,500/year, deductible is $0,and co-insurance is 10%. Both of us (mid 30's) and our two kids (under 5) are healthy, so as long as our medical charges are less than ~5k/year, we will come out ahead by going with the lower premium LPHD option through my wife's employer. So in most years we're going to be under that threshold, and even if there are a fe...
by dvd7e
Sat Sep 05, 2020 8:51 am
Forum: Personal Investments
Topic: Need help with Nonqualified Supplemental 401k
Replies: 11
Views: 554

Re: Need help with Nonqualified Supplemental 401k

If you fill more tax-deferred space and save taxes now, you run a greater risk of ending up with too much in tax-deferred accounts later. That can be remedied if one is able to retire early as you plan...you get to start doing Roth conversions early. This strikes me as an odd thing to say, I’m not sure I’m following what you mean by having “too much” in tax deferred accounts. Can you explain? I understand that having a large pre-tax balance is still subject to taxes and therefore there will be a large tax bill when you start taking RMDs. (And that you can reduce that tax bill by doing conversions in the years leading up to RMDs.) But isn’t having a large balance and large tax bill better than a small balance and small tax bill? You don’t w...
by dvd7e
Sat Sep 05, 2020 6:53 am
Forum: Personal Investments
Topic: Need help with Nonqualified Supplemental 401k
Replies: 11
Views: 554

Re: Need help with Nonqualified Supplemental 401k

Other than a scenario where we may make A LOT more money to the point that we max out our MEGA Backdoor Roth space available and still have more left over and don’t know what to do with it, is there a conceivable scenario where it would make sense to participate in this nonqualified plan?
by dvd7e
Fri Sep 04, 2020 3:44 pm
Forum: Personal Investments
Topic: Need help with Nonqualified Supplemental 401k
Replies: 11
Views: 554

Re: Need help with Nonqualified Supplemental 401k

Sounds very similar to the 457 plans ... can you check whether the distributions will definitely commence once your wife leaves the employer, or she has the choice on WHEN to take the distributions? I’m pretty sure that it’s only *at* separation of service, not whenever you want sometime after separation. From the summary plan document: “ Section9.03 Time of Distribution. Except as otherwise provided in this Article, the time of distribution for the vested balance of a Participant’s Distribution Subaccount shall be the month of January that is in the Plan Year immediately following the Plan Year in which the Participant’s Separation from Service occurs. The actual date of payment from a Distribution Subaccount may be later than such month ...
by dvd7e
Fri Sep 04, 2020 12:53 pm
Forum: Personal Investments
Topic: Need help with Nonqualified Supplemental 401k
Replies: 11
Views: 554

Need help with Nonqualified Supplemental 401k

My wife recently became eligible to participate in a “Nonqualified Supplemental 401(k) plan” through her employer. There’s a 50+ page plan summary document that is difficult to cut through the legal mumbo jumbo, but after a few attempts I think I have the basic idea down. I have the raw information of what it is (although that can be debated), but not necessarily the wisdom of what to do with it. My question is if/how I should best take advantage of this nonqualified plan. Some background on us: * Wife and I are in mid 30s with 3 kids under 5 * Both of us each grossing in low/mid 100s * We hope to retire by early/mid 50s. * Currently maxing out both of our 401ks, generous matching, maxing out HSA, both doing backdoor Roth IRA, plus ~9k/year...
by dvd7e
Wed Aug 19, 2020 2:10 pm
Forum: Investing - Theory, News & General
Topic: Correlated Fat Tails Formula
Replies: 3
Views: 422

Correlated Fat Tails Formula

I'd like to put together a simple monte carlo spreadsheet for portfolio return. And although modeling stock market returns as uncorrelated and perfectly gaussian is very easy to do and a decent first cut, it's not very representative of actual stock market returns. Does anyone know of a formula in Google Sheets (or Excel) that can be used to come up with correlated random numbers with a fat tail distribution?

(Bonus points if you also have a reasonable estimate of what parameter values should be used to represent historical stock market returns)
by dvd7e
Tue Aug 18, 2020 1:47 pm
Forum: Personal Investments
Topic: Age of 55 Time Requirement?
Replies: 4
Views: 861

Re: Age of 55 Time Requirement?

I can't find any mention in those articles, or others online, of a requirement that you have to be in the plan for X years before you can do the Age of 55 Rule. Seems like a little bit of a loophole.
by dvd7e
Tue Aug 18, 2020 1:18 pm
Forum: Personal Investments
Topic: Age of 55 Time Requirement?
Replies: 4
Views: 861

Age of 55 Time Requirement?

To take advantage of the "Age of 55" Rule and make penalty free withdrawals from your company 401k, are there requirements on tenure/service, e.g. you have to be in the plan for X years in order to be eligible? Or could I retire at say 50, live on taxable money for 5 years, and then at age 55 get a new job and roll my previous employer's 401k into my new employer, wait a few pay periods for everything to become official and to be safe, and then leave again and get access to the money in that employer's 401k plan?
by dvd7e
Tue Aug 18, 2020 6:46 am
Forum: Personal Finance (Not Investing)
Topic: Rule of 55 eligibility when current company is being acquired
Replies: 4
Views: 697

Re: Rule of 55 eligibility when current company is being acquired

scoaste wrote: Mon Aug 17, 2020 6:03 pm My understanding is that to qualify for the of Rule of 55 in a given 401(k) offered by a given company, one must:
[*] Be in the plan for at least 5 years (I have).
I was not aware that the rule of 55 required that you had to be in the plan for at least 5 years. Is that an IRS rule, or something that your company's specific plan required? Can you point me to any documentation on that?
by dvd7e
Mon Aug 17, 2020 8:24 pm
Forum: Personal Investments
Topic: Convert After Tax money to 401(k) or IRA?
Replies: 3
Views: 440

Convert After Tax money to 401(k) or IRA?

My Megacorp 401k offers the option to automatically convert After Tax contributions to their Roth 401k, which all things being equal, is easier than waiting for a non-trivial balance to accumulate and then having to manually initiate the MEGA Backdoor process to get the money into my Roth IRA. My question is: Is there any particular reason why I should think twice about taking advantage of this auto-convert feature and why I might want the money in my Roth IRA, versus my Roth 401k? Some background info on my situation: 1) The amount of After Tax money that I'd be contributing to my 401k is pretty small, probably 1 to 3k per year. This is definitely not a significant fraction of my overall savings. So for this reason, it seems like either op...
by dvd7e
Wed Jul 15, 2020 9:30 am
Forum: Personal Investments
Topic: Calculating Portfolio Uncertainty (Analytically)
Replies: 7
Views: 516

Re: Calculating Portfolio Uncertainty (Analytically)

As one of the above posters noted, the normal distribution may not be adequate to describe actual stock returns. You can propagate higher moments, but the equations get more and more complicated. That's probably why most people would switch to Monte Carlo at that point. Yes, the formulas for normal distributions give one a sense in general, but may be very approximate. It is not just the distribution but serial correlation and lack of stationarity that put real events out of range of simple assumptions. Try, for example, to explain secular bull and bear markets with 10-15 year periodicity. Remember stock returns are a time series phenomenon and not just a set of samples from a fixed distribution. That doesn't mean that time series analysis...
by dvd7e
Tue Jul 14, 2020 8:15 pm
Forum: Personal Investments
Topic: Calculating Portfolio Uncertainty (Analytically)
Replies: 7
Views: 516

Calculating Portfolio Uncertainty (Analytically)

I’m wondering if there is an analytical formula for calculating the uncertainty (ie best case and worst case) of an investment given its mean return and standard deviation? (Assuming Gaussian distribution of returns.) And possibly taking into account annual contributions? There are closed form formulas if you’re simply assuming the same return r every year, e.g. P = P0*(1+r)^n To calculate the *uncertainty* there are all sorts of tools online (or you can build your own in excel) that let you do a Monte Carlo analysis and run N cases. And assuming all of your assumptions are reasonable, you can take the worst/best case (or perhaps 10th and 90th percentile) across all of those simulations for a given slice in time to get a good estimate of wh...
by dvd7e
Fri Mar 27, 2020 10:01 pm
Forum: Personal Investments
Topic: Roth IRA Basis (Form 8606 Line 24)
Replies: 1
Views: 256

Roth IRA Basis (Form 8606 Line 24)

I have made a Roth contribution of some kind (either directly, or via backdoor) for at least the past ~10 years. I'm looking at how my tax preparer (who I have only been using for the past ~4-5 years) prep'ed my 2019 taxes, and I'm confused/concerned about the Roth IRA basis that is being reported on Line 24 of Form 8606 (The line says: "Enter your basis in conversions from traditional, SEP, and SIMPLE IRAs and rollovers from qualified retirement plans to a Roth IRA"). The basis that is reported on line 24 is only about 1/2 of the basis that I roughly estimate from my own calculations. (Part of the problem is that anything older than about 5 or 6 years, my records are not very well organized or even existent, so there's some guess...
by dvd7e
Sat Jan 25, 2020 10:26 am
Forum: Personal Finance (Not Investing)
Topic: Is Age + Service prorated for part time work?
Replies: 1
Views: 291

Is Age + Service prorated for part time work?

Most companies have a Rule of X (typically 85) where if your Age plus years of Service to the company exceeds that threshold then you get full or partial health benefits. I’m wondering if the service is prorated for part-time work or if you get full-time credit for the calculation. I’m sure this varies from company to company but I’m just wondering what is common/typical.

Thanks!
by dvd7e
Thu Jan 23, 2020 8:46 pm
Forum: Personal Investments
Topic: MEGA Backdoor Roth *401k* Question
Replies: 7
Views: 614

Re: MEGA Backdoor Roth *401k* Question

OP check to see what your plans in service withdrawal rules are. My 401k plan allows for in service withdrawals of my in plan roth converted after tax contributions. So I can roll those fund over to my roth IRA while I am still employed and before 59.5. Yes, in service withdrawals are allowed. I have done this in the past. With moving your money to a Roth IRA, conceivably you can access those funds 5 years after the date they are moved into Roth IRA (that's the date the after-tax funds are deemed to have been Roth-converted). If you do a Roth conversion within the 403b plan, they are locked until you reach age 59.5, inaccessible. They will be inaccessible if you continue working there, even if you are older than 59.5. Just make sure you ha...
by dvd7e
Thu Jan 23, 2020 7:33 pm
Forum: Personal Investments
Topic: MEGA Backdoor Roth *401k* Question
Replies: 7
Views: 614

MEGA Backdoor Roth *401k* Question

I just found out my employers 401k (well it’s actually a 403b) offers the option to automatically transfer any after tax funds to their Roth 403b. This is certainly easier than moving it to a Roth IRA (where you have to wait until it’s a decent chunk of money, then make some phone calls, wait for a check, send that check somewhere else, make some more phone calls....not that’s it’s hard, just a little annoying and it takes a few weeks and you have to stay on top of it). So I’m wondering if there’s any particular reason why moving MEGA backdoor money to my Roth *IRA* is worth the slight hassle, or if I should just auto move it to my Roth *403b* employer plan. For reference, investment options in the employer plan are great, all Vanguard fund...
by dvd7e
Thu Jan 23, 2020 7:19 pm
Forum: Personal Investments
Topic: How to maximize available headroom in tax bracket
Replies: 4
Views: 599

How to maximize available headroom in tax bracket

If I would like to convert money from my Traditional to Roth incrementally over the years in order to minimize my future RMD down the road, what’s the best way to know how much available “headroom” I have in my current tax bracket before bumping into the next one?

Is there a way that I can wait until the year is over, get my actual MAGI so I know exactly how much headspace in my tax bracket I have, then somehow withdraw money in the current year but for the *previous* tax year? (I doubt it, but here’s hoping...)

Or do I just have to get my best prediction of MAGI and make the withdrawal in, and for, the same tax year? And hope I don’t miscalculate.

Or is there another way?
by dvd7e
Sun Mar 24, 2019 11:43 am
Forum: Personal Investments
Topic: Quick Questions on Withdrawal Rates
Replies: 1
Views: 304

Quick Questions on Withdrawal Rates

I think I know the answer to these already, but would like to confirm.

1) How is the dollar amount to withdraw in year 2 and onwards decided? If my withdrawal rate is 4% does that mean I withdraw 4% of my portfolio balance every year regardless of how high/low it is? Or do I take 4% of the first years balance and adjust for inflation from there, regardless of how high/low my portfolio balance is?

2) Thr only thing that really matters is After Tax money right? So if my SWR is 4% and my before tax balance reaches that 25x threshold, then I’m not really there since after taxes I’d only have (maybe 18x?). I really should wait until my before tax balance reaches the point where it can generate 25x in After Tax money, correct?
by dvd7e
Thu Sep 27, 2018 9:56 pm
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

A little off topic, but now that you mention it...what’s the preferred strategy for HSAa when I actually have a qualified expense and am able to pay out of pocket: a) use the HSA or b) pay out of pocket, invest as much as I can and try to maximize the growth in that account? And should my allocation in the HSA mirror my overall allocation? (85/15 now at 33, sliding to 50/50 by age 55) I would use the HSA now, which instantly locks in a 20-30% tax savings (depending on your tax bracket). Saving receipts until retirement has two risks: 1. You don’t actually remember to file for reimbursement 30 years from now, or you are too lazy to bother with the hundreds of receipts that have piled up (are you really going to type in every single $10 cond...
by dvd7e
Tue Sep 25, 2018 7:34 am
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

Hi, OP: Try this calculator: www.i-orp.com. On this page, click the 'Extended ORP' tab, and have at it. This calculator takes taxes into account, and has a glide path option. The learning curve is long, but once you have it set up, it's easy to experiment with different retirement ages, savings amounts, asset allocations, Roth vs tax deferred vs taxable savings, and so on. As far as you are from retirement, and given how hard it is to predict the future, you can't take any of these calculators as gospel. However, it can help you make reasonable decisions based on what we know today. Good luck! Thanks for passing this along, it looks like it has some good stuff. Yes, it definitely looks like there's a bit of a learning curve to it. Is there...
by dvd7e
Sat Sep 22, 2018 7:11 am
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

I have used Monte Carlo simulations in my professional life and had decisions running into billions of $ based on those simulations. Yes, you do get surprises, but the decisions made almost always turn out sound. When used sensibly the simulations are great! But then you decided that you can predict the future better than history and slapped a -3%. Obviously you'll get worse results with -5% and better results with 0%. I suggest that you just stick to history since we know no better. Then pay attention to the results range between 25 percentile and 75 percentile. Too long to explain here why Monte Carlo simulations, because they ignore sequence of returns, end up with overly fat tails (i.e. excessively optimistic at 90 percentile and exces...
by dvd7e
Fri Sep 21, 2018 11:10 pm
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

On paper I would probably have enough to retire sooner, but to me the biggest constraints seem to be 1) access to funds in a retirement account and 2) health insurance. To address the first issue, I am saving some money in a taxable account to give me some flexibility. (And I'm aware of the Roth IRA conversion ladder). But if I delay retirement until 55 then I get both issues taken care of at once....I'll be able to withdraw money from my employer's 401k penalty free, and I'll have access to the company group health insurance (I have to carry 100% of the premium, there's no subsidy, but presumably it would be cheaper than getting coverage on the open market. Tough to say what will happen in 20+ years though.) If I retire before 55 then I l...
by dvd7e
Fri Sep 21, 2018 7:33 pm
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

So first, I think you're doing great, keep it up! I think you're either a lot closer to the finish line than you realize or you will finish with a lot more than you realize. Either way, you're doing great. You seem pretty risk-adverse. One thought, price out a $60k annuity at your current age, in 2 years, 7 years, etc. I'm guessing it would run in the $1M to $1.5M range. At your current pace you should hit that in like 7-10 years, so you really don't have much to worry about! Note I'm not actually suggesting buying the annuity right now, but using that as a "cash out" benchmark and maybe adjust your goal up from there. I dont actually have a 50/50 portfolio, I’m actually at 85/15. I used 50/50 in the calculator because I had to g...
by dvd7e
Fri Sep 21, 2018 11:41 am
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

The financial calculators are fun, but they're only good for telling you if you're on track. There are no certainties. Markets are variable. You'll get there when you get there. The schedule will not be precise. At your savings rate and current asset value, you should get there sooner than 55. On paper I would probably have enough to retire sooner, but to me the biggest constraints seem to be 1) access to funds in a retirement account and 2) health insurance. To address the first issue, I am saving some money in a taxable account to give me some flexibility. (And I'm aware of the Roth IRA conversion ladder). But if I delay retirement until 55 then I get both issues taken care of at once....I'll be able to withdraw money from my employer's ...
by dvd7e
Thu Sep 20, 2018 8:51 pm
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

bb wrote: Thu Sep 20, 2018 8:42 pm If you continue to be a decent saver and not a big spending I don't see how you won't make out ok unless there is a doomsday scenario. But if that happens how exactly do you think you could protect yourself?
Well.....If your “doomsday” scenario is a long sequence of bad returns leading up to target retirement age then you could protect yourself by working longer. But the real Doomsday scenario is when that long sequence of bad returns happens when you’re already committed to retirement and “past the point of no return” (if there were such a thing; maybe for medical reasons you couldn’t return)....only hope is dog food while you wait for the powerball

(Or an annuity, or real estate, or a big inheritance from your rich uncle)
by dvd7e
Thu Sep 20, 2018 8:44 pm
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Re: Im going to die somewhere between Bankruptcy and $20 million

Does anyone know of a tool that lets you have more dynamic/realistic “decision making” in a portfolio simultation? For example...

* work until get 25-40x desired retirement income and then retire, rather than retire at a fixed age no matter what
* Sprnd more/less in retirement if portfolio is particularly large/small, but with realistic upper and lower bounds
* “Glide path” on retirement spending...I hear you typically spend less as you get older, as opposed to a fixed value throughout
* Glide path Stock/Bond allocation instead of fixed

I know portfoliovisualizer.com does some of these, but not all
by dvd7e
Thu Sep 20, 2018 8:28 pm
Forum: Personal Investments
Topic: Im going to die somewhere between Bankruptcy and $20 million
Replies: 46
Views: 11271

Im going to die somewhere between Bankruptcy and $20 million

I enjoy using online portfolio simulation tools like www.portfoliovisualizer.com and https://www.retirementsimulation.com/. But I entered some data for a scenario that is between conservative and realistic at this second site.....and it says that by the time I hit about 70 years old my portfolio will be somewhere between $0 (worst case) and $19 million dollars (90th percentile). That is....quite the spread to say the least. I feel like I’m a pretty agggressive saver (tough competition within the bogleheads community tho) so I initially felt like i was in good shape. But here’s the thing....these results still show a 30% chance of being broke if I have a long life, which taken at face value suggests I need to be saving even more. How much we...
by dvd7e
Sat Sep 15, 2018 9:01 am
Forum: Personal Investments
Topic: What if I exceed the 55k 401k limit?
Replies: 4
Views: 1072

What if I exceed the 55k 401k limit?

If I exceed the $18500 limit on 401k contributions then they are automatically set to After Tax money. But if I plan on doing a MEGA backdoor Roth IRA and contribute a bunch of After Tax money, what happens if I miscalculate and accidentally exceed the 55k plan limit (including employer match $)? Will I be automatically prevented from doing so? Or will I be “allowed” to but then have to pay some sort of penalty?

Similar question on RMDs....if I fail to take an RMD manually will it be automatically done? Or I just get hit with penalties later? is there any way to automate an RMD? Would I get an “official” statement on how much the RMD is supposed to be, or is it up to me to calculate it correctly?
by dvd7e
Fri Sep 14, 2018 4:19 pm
Forum: Personal Investments
Topic: Reasonable Asset Allocation / Financial Picture
Replies: 6
Views: 485

Re: Reasonable Asset Allocation / Financial Picture

Adding an 8% “tilt” to small value is not really a tilt at all. You’re probably better off putting that money in Total Market if you’re not willing to go at least 20-30% small value. If I were to reduce the portfolio down to the closest 3 fund equivalent by getting rid of the small caps, then the result would be: 64% Total US Stock 21% Total International 15% Total Bond 25 25 27 6 6 6 2 2 2 as opposed to the original: 22 21 19 8 8 8 6 5 3 I don't really know what I'm talking about, but on the face of it that seems like a non-trivial (but hopefully moderate) tilt towards small caps. Are you saying that's not the case? The original idea was to include a little bit more small caps, under the assumption (hope?) that I would have enough assets ...
by dvd7e
Fri Sep 14, 2018 4:10 pm
Forum: Personal Investments
Topic: Reasonable Asset Allocation / Financial Picture
Replies: 6
Views: 485

Re: Reasonable Asset Allocation / Financial Picture

ruralavalon wrote: Fri Sep 14, 2018 4:02 pm
dvd7e wrote: Fri Sep 14, 2018 3:57 pm
ruralavalon wrote: Fri Sep 14, 2018 3:55 pm In my opinion your asset allocation is within the range of what is reasonable.

What I see as missing is own occupation disability insurance.
Ahhh, yes, forgot that. The wife and I both have disability insurance at 2/3 of our current income, offered through our employers. The life insurance is from the private market. I'll edit the original post to include that
That's an excellent benefit, you are fortunate.
Well, we are paying for it, it's not free. But either way, yes it is nice.
by dvd7e
Fri Sep 14, 2018 3:57 pm
Forum: Personal Investments
Topic: Reasonable Asset Allocation / Financial Picture
Replies: 6
Views: 485

Re: Reasonable Asset Allocation / Financial Picture

ruralavalon wrote: Fri Sep 14, 2018 3:55 pm In my opinion your asset allocation is within the range of what is reasonable.

What I see as missing is own occupation disability insurance.
Ahhh, yes, forgot that. The wife and I both have disability insurance at 2/3 of our current income, offered through our employers. The life insurance is from the private market. I'll edit the original post to include that
by dvd7e
Fri Sep 14, 2018 3:32 pm
Forum: Personal Investments
Topic: Reasonable Asset Allocation / Financial Picture
Replies: 6
Views: 485

Reasonable Asset Allocation / Financial Picture

Hi, I'm specifically wondering if the following is a reasonable Asset Allocation, but also more generally wondering if there's anything in our financial picture that looks like it could use some attention: 52% Vanguard Total Stock (VTSAX/VSMPX) 0.02% 18% Vanguard Total International Stock (VTIAX/VTSNX) 0.09% 15% Vanguard Total Bond Market (VBTLX/VBTIX) 0.04% 8% Vanguard Small-Cap Value (VSIAX/VSIIX) 0.06% 7% Vanguard FTSE All-World ex-US Small Cap (VFSVX) 0.25% which has the following Morningstar 3x3 box: Value Core Growth Large 22 21 19 Mid 8 8 8 Small 6 5 3 I am intentionally tilting a little bit towards Small Cap and towards Value, but I also don't want to be unintentionally over-tilting. Not sure if this is doing more harm than good 85%...
by dvd7e
Sat Sep 08, 2018 7:43 pm
Forum: Personal Investments
Topic: windfall
Replies: 22
Views: 2603

Re: windfall

Watty wrote: Sat Sep 08, 2018 9:42 am A few things that I suggest doing in this situation though;

2) Review your car insurance and umbrella policy to make sure that you have plenty of coverage. Now that you have more assets you are more likely to be sued.
Why is this the case? If I get into an accident with someone, how do they know how many assets I have?
by dvd7e
Sun Sep 02, 2018 6:16 am
Forum: Personal Investments
Topic: Multiple Mega Backdoors?
Replies: 8
Views: 1074

Re: Multiple Mega Backdoors?

megabad wrote: Wed Aug 22, 2018 4:57 pm I agree with your interpretation of the limits. I would even suggest that a 457 would also have an additional separate limit. For high income employees of non profit organizations (aka doctors), this can be valuable. Of course, many plans have their own contribution limits as well (typically 25%) and HCEs have further restrictions in some accounts so the window for the benefit can be small.
I’m assuming that a 457 is only available through my employer? Or is this something I can set up independently? Because I don’t believe my employer offers a 457, only the 403b + 401a
by dvd7e
Sun Sep 02, 2018 5:53 am
Forum: Personal Investments
Topic: Fully maxed out
Replies: 70
Views: 9979

Re: Fully maxed out

AlphaLess wrote: Sat Sep 01, 2018 11:56 pm
dvd7e wrote: Sat Sep 01, 2018 9:38 pm Just curious..,.

Is there anyone out there that has fully maxed out all tax advantaged accounts in a single year (assuming MFJ). Super high income (>300k/yr?) doesn’t count

18.5k 401k x2
Extra 5k/year for catchup contributions x2
Mega Backdoor Roth x2
Backdoor Roth 5.5k x2
IRA catch-up contributions (1k?) x2
Max out HSA ~7k
529 (no limit so I’ll say >10k)
Others? FSA?
Bonus: Taxable Accounts

My math is super approximate but that’s like 150k/yr plus taxable
How about we make it even harder.

More than $50K income doesn't count.
That would be really impressive with only 50k of income. To fully max out everything (for 2 people) takes ~150k (give or take)
by dvd7e
Sun Sep 02, 2018 5:50 am
Forum: Personal Investments
Topic: Fully maxed out
Replies: 70
Views: 9979

Re: Fully maxed out

MotoTrojan wrote: Sat Sep 01, 2018 9:40 pm Strange question if you rule out high income. $150K of savings requires substantial earnings.
Ya, I figured someone who’s a big executive earning 600k/year, well it’s not that impressive or interesting that they max everything out. It wouldn’t necessarily take much discipline or sacrifice to do so, nearly anyone in the same position could do the same. But if you’re maxing out everything and making a lot less....that’s much harder/interesting/impressive.

Are there any other tax advantaged accounts I forgot to list?
by dvd7e
Sat Sep 01, 2018 9:38 pm
Forum: Personal Investments
Topic: Fully maxed out
Replies: 70
Views: 9979

Fully maxed out

Just curious..,.

Is there anyone out there that has fully maxed out all tax advantaged accounts in a single year (assuming MFJ). Super high income (>300k/yr?) doesn’t count

18.5k 401k x2
Extra 5k/year for catchup contributions x2
Mega Backdoor Roth x2
Backdoor Roth 5.5k x2
IRA catch-up contributions (1k?) x2
Max out HSA ~7k
529 (no limit so I’ll say >10k)
Others? FSA?
Bonus: Taxable Accounts

My math is super approximate but that’s like 150k/yr plus taxable
by dvd7e
Sat Sep 01, 2018 12:06 pm
Forum: Personal Investments
Topic: What about Earnings in MEGA Backdoor?
Replies: 4
Views: 495

What about Earnings in MEGA Backdoor?

When doing a MEGA Backdoor Roth IRA, do you only convert the After-Tax Contributions to a Roth IRA, or Contributions & Earnings? If the former then I assume there are no forms or anything I would have to do at tax time. But if the latter, then do I get a (1099?) saying what taxes I owe on the Earnings? Are there any other tax forms needed for the MEGA Backdoor?
by dvd7e
Sat Aug 25, 2018 10:29 am
Forum: Personal Investments
Topic: Do I have to keep track of contributions?
Replies: 29
Views: 2565

Re: Do I have to keep track of contributions?

I think they solidified the rules if you wait a certain amount of time after contributing to the Traditional before converting to Roth. But it’s unclear what that period is 1 month, 1 year, or longer. And you can’t explicitly tell your tax preparer that you are doing a backdoor What is your source for this belief? Hmmm so I can’t find much on this online so maybe I’m just wrong. But the belief came from an email exchange with my tax preparer when filing our 2016 taxes, who said this: “If I am understanding the transactions correctly, you contribute to the Traditional IRA one day and then shortly thereafter, convert to a Roth IRA. There are risk in doing the conversion in a short timeframe. It is suggested that the traditional contrition in...
by dvd7e
Sat Aug 25, 2018 7:02 am
Forum: Personal Investments
Topic: Do I have to keep track of contributions?
Replies: 29
Views: 2565

Re: Do I have to keep track of contributions?

PFInterest wrote: Sat Aug 25, 2018 6:48 am you should have been documenting the basis of the conversions on form 8606.
what are you talking about? the recent laws have only solidified the backdoor rIRA.
I think they solidified the rules if you wait a certain amount of time after contributing to the Traditional before converting to Roth. But it’s unclear what that period is 1 month, 1 year, or longer. And you can’t explicitly tell your tax preparer that you are doing a backdoor

Is there anything outside of my history of 8606 forms that I would need to keep track of?
by dvd7e
Sat Aug 25, 2018 6:31 am
Forum: Personal Investments
Topic: Do I have to keep track of contributions?
Replies: 29
Views: 2565

Do I have to keep track of contributions?

I’m wondering if I have to diligently keep track of, and being able to “prove” via statements, what % of my money in my Roth IRA is a contribution vs conversion vs growth, and when and where it came from etc OR if Vanguard will automatically track this for me.

Im in my early 30’s and has contributed directly to a Toth IRA for a few years, then got phased out of it due to income limits so had a few years of Backdoor Roth IRA (normal, not MEGA) but recent laws have made this more of a grey area so I stopped but have done 1 and plan to do more MEGA Backdoor Roth IRA conversions.

If I waited until after 59 1/2 then I don’t think it would matter but I am hoping to retire befor that and trying to explore early withdrawal options
by dvd7e
Thu Aug 23, 2018 5:47 am
Forum: Personal Investments
Topic: Traditional vs Roth if Roth conversions are limited
Replies: 6
Views: 580

Re: Traditional vs Roth if Roth conversions are limited

PFInterest wrote: Wed Aug 22, 2018 9:14 pm whats your current marginal rate?
most ppl are best suited to t401k + rIRA.
for example, to reach the 32% bracket, one needs 8.6MM in taxable income.
so once you get around there, then you may switch everything to Roth (or whatever your break even point is).

so in summary, probably just do 100% t401k.
How do you figure 8.6 million of income to reach the highest tax bracket? For 2018 I’m seeing > $600,000 for married filing jointly to reach the 37% bracket.

For 2018 I’ll be in the 28% marginal federal tax bracket, plus another 9% in State & Local income taxes plus FICA tax.
by dvd7e
Wed Aug 22, 2018 8:31 pm
Forum: Personal Investments
Topic: Traditional vs Roth if Roth conversions are limited
Replies: 6
Views: 580

Traditional vs Roth if Roth conversions are limited

So I know I the question of Traditional vs Roth is a loaded question with all sorts of caveats, subtleties etc and everyone has an opinion. I’m aware of that, sorry if this question has been discussed elsewhere. For reference, I urrently i split mine and my wife’s contributions 50/50 between the Traditional vs Roth, for tax diversification, and max out our contributions. I know some sites like https://www.madfientist.com/traditional-ira-vs-roth-ira/ advocate 100% Traditional because you get the tax break now, and then if you retire early you have many years of small/no income where you can convert that money to Roth at a low tax rate which will allow you to withdraw it tax free (after 5 years) as well. So, great. But here’s my question: Doe...
by dvd7e
Tue Aug 21, 2018 8:37 pm
Forum: Personal Investments
Topic: Multiple Mega Backdoors?
Replies: 8
Views: 1074

Re: Multiple Mega Backdoors?

The annual addition limit (2018 = $55K) applies separately to each individual. So your wife's limit(s) do not interfere with yours, but that does not mean you can triple your limit. They are her individual accounts. There is a separate annual addition limit for each unaffiliated employer. I think it is unlikely that you have two 403b plans at the same employer. It more likely that the second account is a 401a as suggested by @PFInterest or a 401k. A 403b account is considered controlled by the participant and is not aggregated with other plans of the employer. If the second plan is a 401a or 401k, you do have two separate annual addition limits. If you have two 403 plans (likely at affiliated employers rather than one employer), you have o...
by dvd7e
Tue Aug 21, 2018 5:32 pm
Forum: Personal Investments
Topic: Multiple Mega Backdoors?
Replies: 8
Views: 1074

Multiple Mega Backdoors?

Is the $54,000 total contribution limit (or whatever the exact amount is) to a tax advantaged plan on a per person, family, or account basis?

My employer has 2 totally separate 403b accounts, one for my contributions and one for employer matching. I beliebe I can make after tax contributions and in service withdrawals from both. Plus my wife’s 401k allows the same. Does this mean I can basically triple the amount for the Mega Backdoor Roth?