Search found 2630 matches

by nolesrule
Mon Jun 12, 2023 10:58 am
Forum: Personal Investments
Topic: Contribution to 401k vs taking loan for kids college
Replies: 72
Views: 5161

Re: Contribution to 401k vs taking loan for kids college

55k per year sounds like zero financial aid, other than loans. Why not split the $300k in brokerage account into two, transfer the $150k to the child's name (he/she is now legally an adult, right?), then have them use the $150k to pay for the school tuition on their own? Should cover 3 years worth of college. With little to no other expected income, they will be able to realize up to $40k in capital gains and pay zero tax on it. They will also be able to truthfully claim they are NOT claimed as a dependent on someone else's return (they are using their own money). No implications on financial aid, there wasn't any to begin with. YOU, will just have to file a Form 709 for the $150k gift to your child. Curious: does your user handle mean you...
by nolesrule
Mon Jun 12, 2023 9:43 am
Forum: Personal Finance (Not Investing)
Topic: Vanguard intentionally delaying fund transfer to Fidelity DAF?
Replies: 31
Views: 4838

Re: Vanguard intentionally delaying fund transfer to Fidelity DAF?

I had similar problems when I contributed Vanguard brokerage ETF shares to a Fidelity DAF about 4 years ago. Since then I have initiated at Vanguard on their form. The two additional times I have contributed it went smoothly (but still took about 7 working days). Vanguard even got the cost basis right. I posted this a few months ago and several others thought I was crazy. They thought it was fine to initiate at Fidelity. I still disagree. I think Vanguard employees are trained to handle Vanguard forms and not trained to handle Fidelity forms. I don't think they are intentionally delaying your transfer. Just a decision to keep costs low by staffing this process to a level where the people who do the work have a backlog and are never idle. H...
by nolesrule
Tue Jan 10, 2023 7:36 am
Forum: Personal Finance (Not Investing)
Topic: Tax Filing Question re UTMA Account
Replies: 5
Views: 495

Re: Tax Filing Question re UTMA Account

If they have income from investments that include capital gains from disposition of stock, then you must file a separate return.

If they have other investment income that qualifies for long term rate treatment, then filing a separate return can save some money in taxes because if it's on the parents' filing Form 8814 will have a 10% tax for all income in the first bracket, while filing separately income at the LTCG rate would be at 0%.
by nolesrule
Tue Jan 10, 2023 7:24 am
Forum: Personal Finance (Not Investing)
Topic: 401k contributions were returned!
Replies: 13
Views: 1798

Re: 401k contributions were returned!

Even though you were part time in 2022, your income from 2021 determined if your were a HCE for 2022.

At my wife's employer, they limit HCE contributions to avoid testing failures. For most HCEs it is 15%. For the ones who make real money it's a much lower percentage, but then they also have access to supplemental savings plan that they can contribute to.
by nolesrule
Fri Jan 06, 2023 1:08 pm
Forum: Personal Investments
Topic: Backdoor Roth steps at Vanguard are different this year
Replies: 56
Views: 6739

Re: Backdoor Roth steps at Vanguard are different this year

I've found there is a difference between when funds are available to trade and when they're available to withdraw. For me the former usually happens 1-2 days after transferring the money from an external bank, and this is when I'm able to convert to Roth IRA. Based on my experience with my taxable brokerage account, it usually takes longer for the funds to be available to withdraw. A bank account that has been recently added will have a longer time till a withdrawal is available, usually 5 to 7 business days. Once the account is known (has been used for previous transfers), it drops to the 2 day settlement period. What I can't recall is if you have to go through the longer waiting game on the first transfer from a bank for each Vanguard ac...
by nolesrule
Wed Dec 21, 2022 1:03 pm
Forum: Investing - Theory, News & General
Topic: Foreign tax paid on Total World Stock?
Replies: 10
Views: 1175

Re: Foreign tax paid on Total World Stock?

VT/VTWAX reports dividends net of foreign taxes on the 1099. The amount reported as dividends matches the actual dividend distributions.

viewtopic.php?p=4985564&hilit=foreign#p4985564
by nolesrule
Wed Dec 21, 2022 11:49 am
Forum: Personal Investments
Topic: 401k contributions over $20500 being automatically sent to another account?
Replies: 8
Views: 863

Re: 401k contributions over $20500 being automatically sent to another account?

Or if the plan allows in service withdrawals of after-tax contributions then you could roll it into a Roth IRA.
by nolesrule
Wed Dec 21, 2022 8:39 am
Forum: Personal Finance (Not Investing)
Topic: How much do you keep in checking?
Replies: 309
Views: 30128

Re: How much do you keep in checking (2022)?

I aim for a low of $2500 based on known future cash flow, which leaves some room when you sometimes have to write checks (I have two kids involved in lots of activities that can often only be paid by check or an electronic payment form with excessive fees).
by nolesrule
Tue Dec 13, 2022 12:44 pm
Forum: Personal Investments
Topic: 401k loan to pay off mortgage and AGI
Replies: 20
Views: 1861

Re: 401k loan to pay off mortgage and AGI

The "interest" on a 401k loan is not paying interest to yourself. It's moving money you already have and already paid taxes on into a pre-tax account . You will pay ordinary income taxes on it a second time on withdrawal, plus the earnings will be taxable at ordinary income tax rates. You'd be better off taking the 4% spread on the interest rate difference and putting it in a taxable account. Moving the money from your account into another your account is the definition of "paying yourself" - in contrast to moving the money from your account to the lender's account, which is the definition of "paying the lender". The double taxation point still applies. "Paying yourself" is a form of mental accountin...
by nolesrule
Tue Dec 13, 2022 8:25 am
Forum: Personal Investments
Topic: 401k loan to pay off mortgage and AGI
Replies: 20
Views: 1861

Re: 401k loan to pay off mortgage and AGI

The "interest" on a 401k loan is not paying interest to yourself. It's moving money you already have and already paid taxes on into a pre-tax account. You will pay ordinary income taxes on it a second time on withdrawal, plus the earnings will be taxable at ordinary income tax rates.

You'd be better off taking the 4% spread on the interest rate difference and putting it in a taxable account.
by nolesrule
Sun Dec 11, 2022 8:18 am
Forum: Personal Investments
Topic: How are you funding withdrawals from your portfolio in retirement?
Replies: 77
Views: 10041

Re: How are you funding withdrawals from your portfolio in retirement?

The number of shares you own (even over time) is not something to focus on. If you run your share balance down to zero, or close to it, through continuous withdrawals without replacing the withdrawn shares, then you've got a problem. "If you spend all your money, you've got a problem." Shares are an arbitrary unit that describes the amount of money you have invested in a specific investment. But it's still an arbitrary unit. If a stock splits, you have twice the number of shares as you used to, but the amount of money in the shares is the same. Shares themselves only matter in limited circumstances. What matters is dollars and changes in value expressed as a percentage. Thinking about share count isn't a useful exercise. if you m...
by nolesrule
Fri Dec 09, 2022 10:27 am
Forum: Personal Finance (Not Investing)
Topic: Roth vs Traditional 401k
Replies: 28
Views: 3452

Re: Roth vs Traditional 401k

See the first of Common misconceptions about this issue (the second has been addressed already by other posts). Withdrawals based on new contributions always come on top of the withdrawal amount made possible by previous contributions. Eh? I didn’t say they did not come on top of previous contributions. What I said is withdrawals start at the bottom brackets. Which they do. If I contribute at 35% my withdrawal of my first dollar is not immediately taxed at 35%. What are you saying? It's a yearly decision based on today's rates and the future rates. The marginal rate is how the decision today impacts your rates today and tomorrow. Everyone is right. Just saying things in different ways. What you contribute now to traditional will come out i...
by nolesrule
Fri Dec 09, 2022 8:53 am
Forum: Personal Finance (Not Investing)
Topic: Roth vs Traditional 401k
Replies: 28
Views: 3452

Re: Roth vs Traditional 401k

Contributions are made from the top marginal bracket. Withdrawals begin at the bottom. One needs a LOT of income in retirement to fill up all the lower brackets. Some people have it. Most don't. See the first of Common misconceptions about this issue (the second has been addressed already by other posts). Withdrawals based on new contributions always come on top of the withdrawal amount made possible by previous contributions. Eh? I didn’t say they did not come on top of previous contributions. What I said is withdrawals start at the bottom brackets. Which they do. If I contribute at 35% my withdrawal of my first dollar is not immediately taxed at 35%. What are you saying? It's a yearly decision based on today's rates and the future rates....
by nolesrule
Thu Dec 08, 2022 2:08 pm
Forum: Personal Investments
Topic: We successfully tax loss harvested - Is there a need to "use up" the losses?
Replies: 22
Views: 3335

Re: We successfully tax loss harvested - Is there a need to "use up" the losses?

tcrez wrote: Thu Dec 08, 2022 2:04 pm I guess I would hold for longer term. Maybe use them someday but not for a while.
In that case wouldn't the value of the $30k due to unchanged basis also diminish over time? And at best it would save you taxes at long term capital gains rates at a future unknown point in time rather than ordinary income rates on $3k a year for the next 10 years.
by nolesrule
Thu Dec 08, 2022 2:03 pm
Forum: Personal Investments
Topic: We successfully tax loss harvested - Is there a need to "use up" the losses?
Replies: 22
Views: 3335

Re: We successfully tax loss harvested - Is there a need to "use up" the losses?

If I tax loss harvested say 30k and I don't have any capital gain to use it up this year or subsequent years, I can deduct it against 3k of income per year. My main concern is, am I losing out big because the 30k is not inflation adjusted so by the 10th year 3,000 isn't worth very much anymore? Would I have been better not taking a 30k loss this year? If you otherwise didn't take the loss, what is the final outcome? When are you planning to ultimately dispose of those shares, and for what purpose? How much in taxes will you save on that $30k of higher basis? You could save taxes on the $30k at your marginal long term capital gains rate, or it could save you nothing, because you might be in a lower bracket, or you might donate the shares to...
by nolesrule
Wed Dec 07, 2022 12:17 pm
Forum: Personal Investments
Topic: UTMA account for child inheritance & expense withdrawals
Replies: 11
Views: 1297

Re: UTMA account for child inheritance & expense withdrawals

That's an interesting question. I haven't documented any withdrawals. I would assume that if they sue you they'd have to provide some sort of evidence of improper use of the funds.

If you're spending it on gymnastics, just make sure the kid actually wants to do gymnastics and you're not forcing it as a parent. And you may want to be clear about that in conversation. Some kids do things to please their parents and then regret it later in life. And that sort of animosity could cause issues.
by nolesrule
Wed Dec 07, 2022 11:18 am
Forum: Personal Investments
Topic: Roll IRA into 401k with pre and post tax contributions
Replies: 9
Views: 761

Re: Roll IRA into 401k with pre and post tax contributions

The problem people run into with making the 2022 contribution in 2023 is forgetting to file the 2022 8606. The 2022 8606 isn't complicated or messy. All you are doing is documenting the 2022 non-deductible contribution, so it's actually simpler than a backdoor Roth 8606. No conversions or calculations, no looking up Dec 31 balances. It's very straightforward. 2022 non-deductible contribution amount goes to Line 1. Line 2 contains the amount of any basis already in the account before the contribution (which should have been documented from the last 8606 filed). Summed on Line 3, which is entered as the new basis on line 14. Then in 2023, that line 14 amount carries over to line 2 of the 2023 form and gets added to the 2023 contribution (line...
by nolesrule
Wed Dec 07, 2022 9:38 am
Forum: Personal Investments
Topic: Roll IRA into 401k with pre and post tax contributions
Replies: 9
Views: 761

Re: Roll IRA into 401k with pre and post tax contributions

lakpr wrote: Wed Dec 07, 2022 9:32 am
You have only 3 more weeks for December. Are you sure you will be able to complete steps 1 through 3 before end of Dec?
If they can't get it done before the end of 2022, they can just hold off on doing the Roth conversion until next year to avoid pro-rata as long as they can get it done at some point next year.
by nolesrule
Mon Dec 05, 2022 7:50 am
Forum: Personal Finance (Not Investing)
Topic: 107 point credit ding from large purchase: how long to recover?
Replies: 53
Views: 6989

Re: 107 point credit ding from large purchase: how long to recover?

The credit utilization component is always based on the most recent reported balance. So it changes every time a credit account balance is reported to a credit bureau. it has no memory.
by nolesrule
Fri Dec 02, 2022 8:34 am
Forum: Personal Investments
Topic: UTMA account for child inheritance & expense withdrawals
Replies: 11
Views: 1297

Re: UTMA account for child inheritance & expense withdrawals

My kids are 15 and 13. They know about the accounts and I tell them if I will use the money to pay for something, what it is I'll be paying for and how much. Open communication goes a long way.
by nolesrule
Thu Dec 01, 2022 2:45 pm
Forum: Personal Investments
Topic: UTMA account for child inheritance & expense withdrawals
Replies: 11
Views: 1297

Re: UTMA account for child inheritance & expense withdrawals

Money in a UTMA can be used to pay for enriching activities, so yes, it could be used to pay for gymnastics. it can't be used to pay for routine expenses that children incur.
by nolesrule
Thu Dec 01, 2022 2:38 pm
Forum: Personal Investments
Topic: ibond interest rate shown on TD is confusing
Replies: 6
Views: 1199

Re: ibond interest rate shown on TD is confusing

Tejfyy wrote: Thu Dec 01, 2022 2:22 pm I bought ibonds in Oct 2021 at 3.54% and in Jan 2022 at 7.12%.

The rate displayed on the Treasury Direct website next to each purchase is currently 9.62%, the rate for this previous 6 months ending November 1. I don't understand why that rate is displayed there though. Thanks!
The rate changes every 6 months from the purchase date.
by nolesrule
Mon Nov 28, 2022 1:22 pm
Forum: Personal Investments
Topic: Exchanging Mutual Funds
Replies: 11
Views: 806

Re: Exchanging Mutual Funds

boater07 wrote: Mon Nov 28, 2022 1:17 pm [quote
I always take capital losses when I have them. They carryover forever -- well, at least until you croak.
What is the benefit of taking more losses if you only deduct 3K this year.
I can always start over next year and in the meantime hope for some recovery.
By the way, I only do this in taxable
[/quote]

You can deduct $3k every year until you run out of losses to deduct. or use them to offset future capital gains if you sell because you need the money.
by nolesrule
Mon Nov 28, 2022 12:25 pm
Forum: Personal Finance (Not Investing)
Topic: HSA Contributions but no HDHP
Replies: 14
Views: 1028

Re: HSA Contributions but no HDHP

loganvonstrangle wrote: Mon Nov 28, 2022 12:19 pm
Jane is under 35.

Jane was employed at her last job through July 30th 2021. She was uninsured until Sep 1st 2022. Through august (her last paycheck) she and her employer contributed about 3515 (about 400 of that was from her employer). The $85 was contributed in November.

Based on what you said did she over contribute by $1,200 (Sep - Dec) or would it be $1500 ( August - Dec)?
When did the insurance coverage end? That's the determining factor.
by nolesrule
Mon Nov 28, 2022 12:15 pm
Forum: Personal Finance (Not Investing)
Topic: Update-Should I claim our college daughter as dependent-ACA dilemma
Replies: 7
Views: 660

Re: Should I claim our college daughter as dependent-ACA dilemma

We receive large subsidies for ACA. I claim 3 people in our household for ACA purposes. But I can change this to spouse and I. She has school health plan and not included in coverage on ACA. However daughter had an internship this summer and made 30k. I have not yet updated ACA. If I do so its will increase our healthcare costs substantially. If I don't claim her then she'd report this income on her own return. Her grants provide her with on campus health plan which covers her until Sept and fortunately she has found a full time job that will match up with that. Earned income goes on a person's own return regardless of whether or not they are claimed as a dependent. You may be thinking of Form 8814 which sometimes allows investment income ...
by nolesrule
Sun Nov 27, 2022 8:52 am
Forum: Personal Investments
Topic: 401k administrative expense 1.5% -- high?
Replies: 75
Views: 5780

Re: 401k administrative expense 1.5% -- high?

I was with a company with fees that started like that, but went down as the total plan balance got higher. It was a smallish company that had only had the plan for a couple of yearts at the time.

I was fortunate in that because I had money in other accounts, both tax advantaged and taxable, I was able to hold only a bond fund in that 401k, which kept the growth of the fees at bay while still being able to shovel money into the account. You can't outrun a percentage fee with a growing balance, so by being only in bonds it limited the fees as a total of the overall portfolio due to slower growth. Also, I only stayed there 4 years (at which time the fee percentage was half of what it started at).
by nolesrule
Fri Nov 25, 2022 12:21 pm
Forum: Personal Investments
Topic: TLH'd and bought similar fund: should I buy original fund back after 30 days?
Replies: 33
Views: 2642

Re: TLH'd and bought similar fund: should I buy original fund back after 30 days?

I only TLH into funds I'm willing to hold onto for the long term and they need to be similar enough that in general performance is near identical.. I only switch back to the orginal fund if what I TLH'd into is also at a loss 31 days later (And I don't always do that out of laziness).
by nolesrule
Wed Nov 23, 2022 9:26 am
Forum: Personal Investments
Topic: Rollover Former Employer 401k into Individual 401k
Replies: 14
Views: 1297

Re: Rollover Former Employer 401k into Individual 401k

appleseed88 wrote: Wed Nov 23, 2022 9:18 am Regarding Vanguard's solo 401k option, I understand (at least from Google searches) that their i401k does not allow for mega backdoor roths. Does anyone know if you use Vanguard's i401k, can you still do regular backdoor Roth with my personal IRAs on Vanguard?
Yes. Because 401ks have nothing to do with the backdoor Roth process in IRAs. "backdoor" and "mega backdoor" despite their similar nicknames are 2 entirely different things. One is an IRA process and one is a 401k process.
by nolesrule
Tue Nov 22, 2022 12:02 pm
Forum: Personal Investments
Topic: Donate gains or losses to Donor Advised Fund?
Replies: 7
Views: 567

Re: Donate gains or losses to Donor Advised Fund?

Only donate lots with long-term gains.

The charitable giving deduction amount is limited to cost basis on the donation of lots with short term gains, whereas it's the Fair market Value of the donated shares when the gains are long-term, so wait for them to become long-term before donating.

And it doesn't make sense to donate lots with losses. If you really wanted to dispose of lots with losses for a charitable donation, sell them first to capture the loss and then donate the cash.
by nolesrule
Tue Nov 22, 2022 10:42 am
Forum: Personal Finance (Not Investing)
Topic: how many use buckets?
Replies: 80
Views: 7319

Re: how many use buckets?

guppyguy wrote: Tue Nov 22, 2022 10:33 am
Wish YNAB would someday be sophisticated enough to track this. Which API's are you using? I've only played around with ToolKit.
YNAB has its own API, so I can use it to get data about my budget. Accounts, categories, etc. I retrieve the ones I need and then the spreadsheet crunches the numbers. The only manual input I have is in figuring out the amount of cash I want to hold, as well as any categories I want to ignore from the cash holding (like money for my kids that hasn't been transferred to them yet).
by nolesrule
Tue Nov 22, 2022 9:50 am
Forum: Personal Finance (Not Investing)
Topic: how many use buckets?
Replies: 80
Views: 7319

Re: how many use buckets?

I have a hybrid approach. i use YNAB's envelope budget but include my investment account in the total money. I keep a specific amount in cash. This let's me see how much of my investment money is tied up for earmarked spending vs. what's available for eventual financial independence (retirement) without the need for separate investment accounts. I presume your investment accounts are set up as "tracking" in YNAB? Nope. Can't keep budget money in an investment account and be able to track amounts for each 'envelope" if the account is a tracking account. So it's a budget account. I have a category in my budget that holds the balance of funds not needed by other budget categories, and it's also used for monthly balance adjustme...
by nolesrule
Tue Nov 22, 2022 9:34 am
Forum: Personal Finance (Not Investing)
Topic: how many use buckets?
Replies: 80
Views: 7319

Re: how many use buckets?

I have a hybrid approach. i use YNAB's envelope budget but include my investment account in the total money. I keep a specific amount in cash. This let's me see how much of my investment money is tied up for earmarked spending vs. what's available for eventual financial independence (retirement) without the need for separate investment accounts.
by nolesrule
Mon Nov 21, 2022 2:06 pm
Forum: Personal Finance (Not Investing)
Topic: Finally pushed too hard at work - RETIRING!
Replies: 284
Views: 24202

Re: Finally pushed too hard at work - RETIRING!

If you liquidate (sell) shares to get your monthly income, you have fewer shares after they are liquidated. Assuming the dividend is not reduced (see my example of KO (Coca Cola) dividends), you have fewer shares X amount of dividend = less money. If you keep chipping away at your share holdings you get closer and closer to 0 shares. You've forgotten to reinvest the dividends in the case where you are selling shares instead of taking the dividend as cash. So if you get a dividend and reinvest it and then sell the equivalent number of shares equal to the amount of the dividend, you are left with the same number of shares you started with. In terms of shares, there's no difference between taking the dividend in cash vs. reinvesting the divid...
by nolesrule
Sat Nov 19, 2022 9:25 am
Forum: Personal Investments
Topic: Contribution limits for second 401(k)
Replies: 10
Views: 768

Re: Contribution limits for second 401(k)

Yes, it's important to acknowledge the 403b limitation if you do have a 403b, but I can't tell how that is relevant to the thread. TSP is not a 403b.

And yes, you would have to have ownership in the company providing the 401k for the annual addition limits to be combined with 403b.
by nolesrule
Fri Nov 18, 2022 1:10 pm
Forum: Personal Investments
Topic: Contribution limits for second 401(k)
Replies: 10
Views: 768

Re: Contribution limits for second 401(k)

The $20,500 employee salary deferral limit is aggregate across all employers. ($22,500 in 2023).

The $61k annual addition limit is per employer ($66,000 in 2023).

After-tax non-Roth contributions do not count toward the employee salary deferral limit.
by nolesrule
Fri Nov 18, 2022 11:59 am
Forum: Personal Investments
Topic: Can one have an individual 401k with no income or contributions?
Replies: 31
Views: 2015

Re: Can one have an individual 401k with no income or contributions?

Is "Backdoor Roth" really what OP wants, or are they just mis-understanding the terminology and confusing it with a normal roth conversion? I don't understand how one can "Backdoor Roth" if they have no plans to make any contributions :confused :confused :confused OP, please explain what you mean by "I do not plan to contribute anything to the new 401k" and reconcile that with a "Backdoor Roth" which implies you will be making after-tax contributions. You seem to be confusing the backdoor Roth (non deductible tIRA contributions --> Roth) with the mega backdoor Roth (after tax 401k contributions --> Roth). OP wants an empty tIRA to do the former. No, that's not my confusion. My confusion is OP explici...
by nolesrule
Fri Nov 18, 2022 11:07 am
Forum: Personal Investments
Topic: Can one have an individual 401k with no income or contributions?
Replies: 31
Views: 2015

Re: Can one have an individual 401k with no income or contributions?

JoMoney wrote: Fri Nov 18, 2022 10:55 am I think I'm missing something here.
Why not just roll the money into an IRA and do Roth IRA conversions?
OP said,
"I do not plan to contribute anything to the new 401k if I don't have to. The purpose of this new 401k is for rollover only."
Then why not use a Rollover IRA ? If you want to do Roth conversions do it from that. No contributions or earned income required.
OP wants to continue to do a Backdoor Roth, not basic Roth conversions. That's not worth it with pre-tax TIRA balances.
by nolesrule
Thu Nov 17, 2022 10:02 am
Forum: Personal Finance (Not Investing)
Topic: Fractional ETF Purchases - Logistics
Replies: 2
Views: 332

Re: Fractional ETF Purchases - Logistics

I just took a look at Vanguard for an ETF purchase. They just give you a warning that you need the funds in your settlement account by the settlement date for your purchase. it does not give you an option to pick an account to transfer from. So it would have to be done manually.

You can initiate the bank transfer and make an ETF purchase the same day as long as the transfer is from a known account that has had money transferred before and therefore gets the shorter transfer settlement time (a new bank account usually takes about a week, which would exceed the ETF purchase settlement time).
by nolesrule
Wed Nov 09, 2022 6:44 am
Forum: Personal Finance (Not Investing)
Topic: Withdraw large sum of cash from online bank
Replies: 44
Views: 3554

Re: Withdraw large sum of cash from online bank

Find out what the daily ATM withdrawal limit is and that'll tell you how long it will take to get cash. You can also call up the bank's customer service number ahead of time to have the daily limit adjusted somewhat.
by nolesrule
Tue Nov 08, 2022 9:53 pm
Forum: Personal Finance (Not Investing)
Topic: 2023 Dependent Care FSA for HCE
Replies: 9
Views: 1135

Re: 2023 Dependent Care FSA for HCE

Then the only total taxation that would make a difference is in Social Security taxes if the HCE is above the wage base since the contribution reduces SS wages. All of the non-HCE's contributions would result in less SS taxes. whereas for the HCE it'll depend on how much they make.

SS wages do effect eventual SS benefits, but trying to figure out that effect is outside my math.

Income taxes and Additional Medicare taxes are a wash since those are total income dependent regardless of withholding from individual paychecks.
by nolesrule
Tue Nov 08, 2022 2:47 pm
Forum: Personal Finance (Not Investing)
Topic: 2023 Dependent Care FSA for HCE
Replies: 9
Views: 1135

Re: 2023 Dependent Care FSA for HCE

Good point. Yes, married filing jt. I just read here: https://www.cnbc.com/2021/05/25/how-couples-can-maximize-their-dependent-care-fsa-.html that showed some numbers and mumbo-jumbo that the deduction should be taken on the non-HCE. I am not sure how much of a difference it would make putting the full $5k on my wife's paycheck vs. $2100 on mine and then $2900 on my wife's paycheck. Reading that link, it sounds like there would be some savings: "Medicare tax (1.45%) applies to all income, with an added .09% for those making over $200,000." However, isn't it a wash if the full deduction is on hers vs. split? In that case, won't I'd face higher taxes, she'd face less VS. we'd both have an equal reduced amount. Is the HCE making mor...
by nolesrule
Tue Nov 08, 2022 2:25 pm
Forum: Personal Finance (Not Investing)
Topic: 2023 Dependent Care FSA for HCE
Replies: 9
Views: 1135

Re: 2023 Dependent Care FSA for HCE

bbrock wrote: Tue Nov 08, 2022 1:02 pm I am circling back on this moleman1349 as I am reviewing/editing the open enrollment elections.

Come to think of it, wouldn't it be better to at least split the dependent care contribution, and/or the HCE, to contribute as much as he/she could into the dependent care FSA to reduce his/her tax load? You are saying that it if the non-HCE has access to a dependent care FSA, then it is usually better for him/her to max that out. The non-HCE would have a lower tax burden vs. the HCE.
There is no individual tax load if you are married filing jointly.

The only point it might make a difference is with the Social Security taxes, if the HCE is also over the wage base.
by nolesrule
Tue Nov 08, 2022 12:24 pm
Forum: Personal Investments
Topic: How to Earn (or Get) Less Income?
Replies: 136
Views: 12763

Re: How to Earn (or Get) Less Income?

Do you say anywhere how old you are? For us, we were self-employed starting at age 62, and just paid the going rate for 3 years. You've got so much money and income, it probably makes the most sense to optimize the overall picture, and not overemphasize this one expense. edit-- I noticed you are eligible for Social Security, given that, this problem is for less than three years, then your expense should go down a lot. Another reason to focus on your overall picture, and not make sub-optimal moves to reduce this one expense. I’m 45. My wife is 43. What I meant when I said that I was eligible for social security is that, presuming it is still there went I get to 62 or older, I should receive something from it. That said, I am not relying on ...
by nolesrule
Mon Nov 07, 2022 9:19 am
Forum: Personal Finance (Not Investing)
Topic: First time Backdoor Roth IRA - confirming my understanding
Replies: 16
Views: 1907

Re: First time Backdoor Roth IRA - confirming my understanding

Thanks everyone, So I recently completed these process, even though the funds were only in my Traditional IRA for a few days while I was waiting for them to clear, this morning I noticed that 13 cents of interest was generated in the Traditional IRA. So now I appear to have a choice to make: 1. Should I convert this 13 cents to Roth now? 2. Or should I leave it there until next year? Would either create more or less of a headache? If I convert the 13 cents, for a total of $6,000.13, wouldn't it just be rounded down to $6,000 anyway on the 8606 tax form? So it shouldn't matter if I convert it? For future reference is there a way to configure accounts with Schwab to have non-interest bearing cash sweep accounts to avoid this situation in the...
by nolesrule
Sun Nov 06, 2022 12:13 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional 401k vs Roth
Replies: 14
Views: 1424

Re: Traditional 401k vs Roth

skor99 wrote: Sun Nov 06, 2022 12:03 pm I agree with all of the above approach , but my question remains of getting deduction now vs a promise in the future. Also, one can contribute to a Roth IRA along with traditional 401k, but believe there is a gross income limit above which one cannot contribute to the Roth IRA
There are ways to get money into a Roth IRA.

Once you start speculating about changes that will happen in the future, you can get any result you want in your simulation, but it's less likely to have any basis in reality than using currently available information. When things do change, you can adjust your plan accordingly.
by nolesrule
Sun Nov 06, 2022 11:39 am
Forum: Personal Finance (Not Investing)
Topic: Tax Loss Harvesting VTI & VXUS Strategy?
Replies: 5
Views: 705

Re: Tax Loss Harvesting VTI & VXUS Strategy?

It's not clear in the way you worded the question if those 15 shares purchased were also part of the 100 shares sold. if those 15 new shares were part of the 100, the net effect is that the whole loss can be claimed because you also sold the new shares that got adjusted. This is what is meant by an irrelevant wash sale. If those 15 new shares are not part of the sale of 100 shares sold, then 85 shares sold will not be adjusted, and 15 shares will have their loss disallowed. The amount of the disallowed loss will be transferred to the 15 new shares by an increase in the cost basis of an equal amount. When you later sell those 15 shares, the cost basis will be higher than what you actually paid for them and so the loss will be recovered. You ...
by nolesrule
Sun Nov 06, 2022 9:00 am
Forum: Personal Finance (Not Investing)
Topic: Tax Loss Harvesting VTI & VXUS Strategy?
Replies: 5
Views: 705

Re: Tax Loss Harvesting VTI & VXUS Strategy?

You seem to really want to make this complicated when it's not. Don't overthink it. It's not about when you sell the shares for a loss, it's about when you buy new shares relative to selling other shares for a loss. You can sell shares for a loss at any time. Shares can't cause their own wash sale, so you don't have to hold shares for 30 days in order to sell at a loss. But if you buy new shares 30 days before or after selling shares for a loss, that's when you have a wash sale. If you have already bought new shares, you can wait 30 days before selling the old shares for a loss to avoid a wash sale. Or you can also sell the new shares so that any disallowed loss from the wash sale is recovered. If you haven't bought new shares in the 30 day...
by nolesrule
Sat Nov 05, 2022 9:19 am
Forum: Personal Finance (Not Investing)
Topic: Retirement accounts when both die at the same time
Replies: 26
Views: 2592

Re: Retirement accounts when both die at the same time

Thank you are right, I am looking at this through old person lens. when my taxes are higher. What about having to deal with kids suddenly having a ton of money. Part of my goal is to impact financial knowledge to my kids. I teach my kids good financial principles by giving them income (allowance) and having them use a budget with it. My oldest also has a very tiny part time job for some extra money, and we have a deal on Roth IRA contributions. My kids are also aware of the assets that I hold for them as a custodian, and I take the time to talk to them about what to do with those assets when they take ownership of them. Also the Bogleheads wiki has a good article on dealing with windfalls. https://www.bogleheads.org/wiki/Managing_a_windfall
by nolesrule
Fri Nov 04, 2022 2:19 pm
Forum: Personal Finance (Not Investing)
Topic: Retirement accounts when both die at the same time
Replies: 26
Views: 2592

Re: Retirement accounts when both die at the same time

I don't worry about the taxes, because it's just money they otherwise wouldn't have had. if you don't plan your life around getting a windfall, then anything you do get is a bonus.
by nolesrule
Fri Nov 04, 2022 2:11 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Loss Harvesting VTI & VXUS Strategy?
Replies: 5
Views: 705

Re: Tax Loss Harvesting VTI & VXUS Strategy?

The VTI and VXUS shares you bought yesterday will cause a wash sale. if you sell them, it may just be an irrelevant wash sale.


Note you don't have to wait 30 days to do option 3. You'd only have to wait 30 days to do option 1. But if you do wait 30 days to do Option 3, you might as well go back to the original ETF at that point.

Also, the wait is 30 days after the date you sell for a loss, not 30 days after yesterday's purchase. The date you sell for a loss determines the +/- 30 day window for purchases (which is why yesterday's purchases would cause wash sales).