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grabiner

This is a great consideration but not sure how to quantify the value of the step-up in basis for my future heirs. Can anyone run numbers if there is a break-even point where the $22,800 would ever catch up to what the value of the $30,000 would be over time with the higher fee and RMD. The break-ev...

grabiner

I'd surrender now, pay the taxes, and invest in Total Stock Market taxable account. I think that's a better alternative than investing in Total Stock Market (or something similar to it) within variable annuity. Two reasons to do so - (1) Avoid future excess annuity fees (2) Reduce future taxes. Tax...

grabiner

I tend to be one of the stronger advocates of paying off debt in preference to investing, but not at 1.18%. You can put the money you would be using to for the loan payoff into a savings account or bond fund, and then use it to make the payments as they come due. You will earn more interest than you...

grabiner

and it also allows you to raise your collision and comprehensive deductible. I have $1000 deductible on 3 cars. Only 1 is paid off. I have never heard of limiting the deductible if the car wasn’t paid off. How high of a deductible are you thinking? Is it state-specific? In most states, the insurer ...

grabiner

Very unusual to have standard and high deductible plans with the same premium, in my experience. So now you have to try and determine if the standard plan is a bargain or not. And don't forget to factor in the likely company contribution to an HSA. It is that company contribution ($1200, as mention...

grabiner

CA Long-Term Tax-Exempt is OK for a ten-year time horizon; because of the callability of most muni bonds, it has long-maturity bonds but a duration of only six years. If you are a CA resident in a 32% or higher tax bracket, CA Long-Term Tax-Exempt is probably the best bond fund for a taxable account...

grabiner

Paying it off might make sense if you are maxing out your tax-favored accounts and the mortgage interest is not deductible. A risk-free 3.25% return with an 8-year duration is a good deal, and eliminating the mortgage payment allows you to keep a smaller emergency fund and thus get more money inves...

grabiner

[Non-transfer of a dividend is only an issue on bond and money-market funds] Why so? Stock funds and blended funds have distributions. I didn’t look to see if 2045 will have distributions, but they have in the past. Link to 2045 distribution 2018 (0.48 dividend per share in 2018) https://investor.va...

grabiner

What is your mortgage rate? 3.25% 20 yrs fixed. About 3 years completed Do not pay that off. Paying it off might make sense if you are maxing out your tax-favored accounts and the mortgage interest is not deductible. A risk-free 3.25% return with an 8-year duration is a good deal, and eliminating t...

grabiner

CA doesn't recognize HSAs; for CA tax purposes, an HSA is just a bank or brokerage account. Therefore, you pay CA tax on any income (except Treasury interest) earned within the HSA. You pay no CA tax on withdrawals from the HSA, even if the withdrawal is not qualified for federal tax purposes. But ...

grabiner

I would suggest keeping the inherited annuity. You are paying 0.36% extra expenses by holding the annuity at 0.40% rather than an alternative investment at 0.04%. However, keeping the money in a taxable account will cost you more than 0.36%; while the dividend tax on Total Stock Market is slightly l...

grabiner

Thanks very much for the info. Now I am really confused. I understand that you can't deduct CA state tax when contribute money to HSA as an employee. But I thought that money in the HSA account (including capital gain part) can be used for any medical expense without paying any tax. Did I miss some...

grabiner

At current yields, even if the mortgage interest is fully deductible, paying it off is likely a better deal than refinancing it. If you could refinance to 15 years at 3.25%, that would be 2.45% after tax in your 24% tax bracket. Not taking out that loan would be a risk-free return of 2.45% with a 7-...

grabiner

Are you sure GEHA HDHP will still serve your needs in retirement? It is certainly a good option when paired with an HSA, but you won't be able to do that after you stop working. You can still contribute to the HSA after retiring (until you start Medicare). You can't contribute by payroll deduction ...

grabiner

It doesn't matter much where you get the pre-approval (or better, a pre-qualification, which says that, based on the information you gave, the bank will lend you X dollars). You can always shop for a mortgage from multiple lenders once you get approved. But it does make sense to get a pre-qualificat...

grabiner

Thank you for the prompt and helpful responses. My state's tax rate is 6% and my federal tax rate is 33%. Please check your tax rate. There is no 33% tax bracket under the current tax laws; the old 33% bracket is now a 32% bracket. Munis are still better than taxable bonds in the 32% bracket, but I...

grabiner

I don't understand the misconceptions of no benefit in taxation and 529 plans. This is the 2nd or third thread from posters where I've seen this . :confused My state's 529 plan charges 0.3%+ per year, so that seemed like a bad deal. That gave me the impression that 529 plans in general would charge...

grabiner

Good to hear! So the gov't puts in $1,800 into your HSA account each year? How does that work? I was recently informed, FWIW, that the $1800 is deposited by the insurer, not the govt employer. You notify your insurer of the account number for your HSA, and it will deposit $150 every month. If you d...

grabiner

Even if a preferred stock works as intended, it has the problem of an infinite maturity and thus very high interest-rate risk. If you buy a five-year bond and its yield rises by 1%, you will lose less than 5% of your investment. If you buy a preferred stock yielding 4% and its yield rises to 5%, yo...

grabiner

We are estimating that we will be in the 24% tax bracket 4.9% state We could pay the $18000 out of pocket from investments if necessary, and would be investing the max $7100 in a boglehead three fund 70/30 assets allocation which we would plan to leave to grow tax free if we went the HSA route. Tha...

grabiner

The way to check this is to look in the prospectus for "acquired fund fees and expenses". This is the fee of the underlying funds. At Vanguard, the entire expense is the expense of the underlying funds. Some other fund companies charge an extra fee for the fund-of-funds, which appears as a separate ...

grabiner

Thanks to all who replied. I suppose that following my current thesis (that a big downturn and recession are imminent) will mean I should stay in cash or cash equivalents now, rather than move to ETFs. A stop order won't help with this, even if it works, unless you sell at the stop point and never ...

grabiner

Even if a preferred stock works as intended, it has the problem of an infinite maturity and thus very high interest-rate risk. If you buy a five-year bond and its yield rises by 1%, you will lose less than 5% of your investment. If you buy a preferred stock yielding 4% and its yield rises to 5%, you...

grabiner

I have huge carryover losses, and there is some cost for me, both in time and sometimes in spreads, for harvesting losses in ETFs. (The ETF I have harvested most often is VSS, Vanguard FTSE All-World Ex-US Small-Cap, which sometimes trades at non-trivial spreads, and often takes half an hour for the...

grabiner

If you aren't spending the RMD, you don't have to sell anything. You can take the RMD from a fund in your IRA, and buy the same fund in your taxable account. Thus you can make the RMD independent of the decision of what to hold in the IRA. (In your taxable account, you want an index fund you can hol...

grabiner

Currently I have about 6% of my holdings in REITs split between my Roth IRA and my HSA. I would like to get it up to 10%, but is there any problem with having my REITs taking up such a chunk of those two accounts? Nothing wrong unless you live in CA or NJ; the high dividend yield on REITs gives the...

grabiner

Since you are investing for health care expenses in retirement, you should invest the HSA as if it were part of your IRA; both accounts serve the same purpose. You could invest both accounts in target-date funds for the benefit of simplicity, or allocate across individual funds, but it doesn't matte...

grabiner

I add new money every month. I usually use it and dividends, to nudge my portfolio back to "center". Using this method I almost never have had to rebalance as my portfolio typically doesn't drift outside my rebalance bands (5%). Seems to work. Somebody else can chime in and tell me I'm all wet.... ...

grabiner

I try to replicate VTWAX with my TSP (while realizing the I fund isn't a complete Int'l fund yet). You can finish the allocation by holding Emerging Markets Index (and possibly FTSE All-World Ex-US Small-Cap) in your Roth IRA to fill the parts of the international market which the I fund misses. Th...

grabiner

Good to hear! So the gov't puts in $1,800 into your HSA account each year? How does that work? I was recently informed, FWIW, that the $1800 is deposited by the insurer, not the govt employer. You notify your insurer of the account number for your HSA, and it will deposit $150 every month. If you d...

grabiner

You can start a Roth IRA at Vanguard with $1000 in a Target Retirement fund, which is a great fund for getting started with investing because it is a diversified portfolio on its own.

grabiner

Invest tax efficiently in a joint taxable account. I don't know if it is still true or not, but I think something like VEA / VMTGX actually has a negative tax cost to me since I claim the foreign tax credit for it and don't pay tax on the qualified dividends. That is, the FTC exceeds the tax I pay ...

grabiner

5) Health Savings Accounts (HSAs) - The estate planning value of HSAs is inferior to taxable accounts and IRAs, so spend HSA money next. First, on current medical expenses, then on prior medical expenses for which you've saved receipts, and then taking taxable withdrawals like a traditional IRA if ...

grabiner

You are able to contribute for month X if you are enrolled in an HDHP for the 1st of the month in question. If you are only a member on the 1st day of 6 months of the year, then your contribution eligibility is $FULL_AMOUNT * 6 months eligible / 12 month total = 50% . You can just plug in however m...

grabiner

I don't have any bonds nor cash in my taxable account and I am retired. I have 100% equities in my taxable account. I have bonds in my tax-deferred accounts, so why would I want them in my taxable account? Why would I want to pay more income taxes? Aren't bonds more reliable from an income standpoi...

grabiner

- Most compelling, we wanted to move, so selling the house and buying elsewhere for cash was much more attractive with a much lower mortgage balance at the time of the sale. We lowered our mortgage balance by over 100k in less than a year before selling. Zero capital gains was appreciated. This sho...

grabiner

I have an investment product thru an insurance firm, whereby at the end of the commitment (now), I can either cash it out or turn it into a single payer annuity with a death benefit. According to the terms, the payout is 5% per year. But if I look at current annuity quotes, for exactly the same ben...

grabiner

Don't use Portfolio Watch for tracking your fund allocations. Even within Vanguard, funds are not properly characterized; most Vanguard funds are placed in a single box. (A check of my own portfolio confirms this; Vanguard REIT Index is treated as 100% mid-cap, and Vanguard Value Factor ETF as 100% ...

grabiner

As with any other insurance, a higher deductible means that you pay less in premiums, so you might come out ahead or behind depending on how much you use, and on how your employer subsidizes the plans. (If you have very high medical expenses, you might wind up paying less under the high-deductible p...

grabiner

I split 50/50 between US and international, and I do that with REITs as well. I hold 10% of my portfolio in REITS, split evenly between Vanguard REIT Index and Vanguard Global Real Estate (Admiral shares of both). This is my least tax-efficient holding, so it is in my IRA.

grabiner

My general preference is not to put retirement money into bonds in taxable if all the bonds will all fit in tax-deferred accounts. However, grabiner has made a good argument to use state muni funds in a few states that have high taxes (like CA), especially if there is no low cost bond selection in ...

grabiner

Hi everyone. Stupid question. It's 1AM so I'm not thinking clearly too... Tax harvesting ... Isn't that when your stock goes down you sell it, lock in the loss, then purchase a similar equity (eg SP500 goes down, sell it and buy VTSAX at the current level), then you've locked in a loss (but you own...

grabiner

And I will add my thanks as well. As a member of the Advisory Board, I sometimes get a chance to see a bit of what is going on behind the scenes to keep the Bogleheads working, and to appreciate how much more is being done that I never see.

grabiner

I think much will depend on IRS guidance when they produce it. I had been assuming I could use the HSA money at will using past medical receipts, but I'm not so sure about that now. There is official IRS guidance which permits this. IRS Notice 2004-33 , question 39: Q-39. When must a distribution f...

grabiner

I had this fund since Feb 2015 and it is on my list to sell right now I am waiting for the ex dividends and Dec 2019 and March 2020, my only lost is down to $1200. What is the point of waiting for the "ex dividends"? I don't see why that would have anything to do with this decision. Even in a taxab...

grabiner

Also my insurance agent told me that I could not contribute an amount greater than the deductible to the HSA but I have not been able to confirm this either with Google or perusal of IRS publication 969. Is this true? That was the rule years ago; I think it changed in 2007, so that you can contribu...

grabiner

This comes up fairly often at the DC Bogleheads meetings. Given the way the Government subsidizes health plans (it costs GEHA $1800 to contribute $1800 to your HSA on a family plan, but you pay only $450 for that and the Government pays the other $1350), and the tax savings on your HSA contribution,...

grabiner

I have $15K sitting in HSA account. Markets are up and I keep reading they will correct/fall/come down in 2020. Should I wait or should I invest now? If this was retirement money in an IRA that would not be needed for decades that would be a lot different than a HSA. With HSA money I would assume t...

grabiner

I had this fund since Feb 2015 and it is on my list to sell right now I am waiting for the ex dividends and Dec 2019 and March 2020, my only lost is down to $1200. What is the point of waiting for the "ex dividends"? I don't see why that would have anything to do with this decision. Even in a taxab...

grabiner

You've asked 2 questions, but also stated that there is a "rule" that Roth's should be all stocks. So, I'm wondering about this "rule". Where did that come from? It comes from the understanding that stocks are likely to have the highest gains, and that you want those gains to be tax-free. However, ...

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