Search found 642 matches

by bobsmith
Sun Jan 22, 2023 8:15 am
Forum: Personal Finance (Not Investing)
Topic: 529 tax questions
Replies: 67
Views: 4073

Re: 529 tax questions

Wiggums wrote: Sun Jan 22, 2023 8:00 am This IRS guide might be helpful

https://www.irs.gov/publications/p970

Expenses that don't qualify. Qualified education expenses don't include the cost of:
* Room and board,
* Travel,
* Research,
* Clerical help, or
* Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.
I'm quite certain you can withdrawl room and board costs from a 529 in cases where the student is full time living off campus.
by bobsmith
Sun Jan 22, 2023 8:07 am
Forum: Personal Finance (Not Investing)
Topic: 529 tax questions
Replies: 67
Views: 4073

Re: 529 tax questions

I think you are mostly correct everywhere. Just make sure the withdrawal checks are made out to your son, not to you. My plan was to move the amounts from the 529 to my checking account and then pay the tuition FOR HIS COLLEGE from my checking account. As I understand the rules, it's fine to do it this way without actually handing a young man a check for over 10K and telling him to pay for college. Direct payments to the Univeristy from the 529 are also acceptable. You talk about taxable scholarships. Do you mean financial aid based on family income? Or do you mean payment like a grad student might get as a teaching or research assistant? Or do you mean the income I got in college for unloading the dining hall dish washing conveyor belt? O...
by bobsmith
Sun Jan 22, 2023 7:21 am
Forum: Personal Finance (Not Investing)
Topic: 529 tax questions
Replies: 67
Views: 4073

529 tax questions

Say I own a 529 plan and my kid is the beneficiary. It's valued at $50,000. grown from a single initial investment of $10,000 many years ago, so $40,000 is earnings. Few questions. Please answer any you can. Thank you. 1. If I make a non-qualified withdraw of $20,000 for my son, $16,000 will be earning. My son, the beneficiary, will pay income tax on the $16,000 and an additional 10% penalty ($1,600). I will owe nothing in taxes or penalty. Correct? 2. I make a withdrawl from my plan on January 10th, 2023, even though the bill isn't due and won't be paid until Jan 25th. This is a qualified withdrawl. So long as the withdraw and the payment for the bill come out in the same tax year, it is a qualified withdrawl. Correct? 3. Say Tuition is $1...
by bobsmith
Sun Jan 22, 2023 6:10 am
Forum: Personal Investments
Topic: Questions about converting my old Vangaurd Mutual Fund Accounts
Replies: 16
Views: 1946

Re: Questions about converting my old Vangaurd Mutual Fund Accounts

ebeb wrote: Fri Jan 20, 2023 9:15 am There is no downside to converting to brokerage account. Only positive benefits :D
As mentioned, I currently reinvest the dividends from one fund into another and it's all automatic right now. If I switch, I'll need to have those dividends go into a settlement account and then I will have to go in and reinvest them manually each time there's a distribution.
by bobsmith
Thu Jan 19, 2023 10:42 am
Forum: Personal Investments
Topic: EZ IRA contribution question
Replies: 4
Views: 364

Re: EZ IRA contribution question

Cool. Thank you Dwickenh and WIggums. Just wanted to confirm.
by bobsmith
Thu Jan 19, 2023 8:44 am
Forum: Personal Investments
Topic: EZ IRA contribution question
Replies: 4
Views: 364

EZ IRA contribution question

Say I'm under 50 and want to max out my IRA for 2023 at $6,500 and otherwise meet all the conditions for doing so.

It doesn't matter how many times I contribute throughout the year, so long as I stay under the $6,500 limit, right?

Likewise, even though I haven't earned $6,500 in the first week in January, I could still contribute the max or some portion on Jan 1st, right? Uncle Sam only cares if by year's end, I have earned the money, right?
by bobsmith
Wed Jan 18, 2023 7:55 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Customer Service Mega-thread
Replies: 1514
Views: 169507

Re: Vanguard Customer Service Mega-thread

Do you guys remember a few (many) years ago when somehow someone started a petition with Vanguard to make some of their core funds more socially conscious? Vanguard had to send out surveys to see if changes should be made. I didn't answer mine so they called me. They didn't call me to ask me to fill it out, but to encourage me to fill it out to be against the motion. I actually agree and was against the motion, but I felt it showed a lack of integrity for the company to call people and push them to vote a certain way.

Just a little complaint for the growing list. I'm still with Vanguard, but I'm just more and more disappointed by the many losses in customer service.
by bobsmith
Wed Jan 18, 2023 7:24 pm
Forum: Personal Investments
Topic: Questions about converting my old Vangaurd Mutual Fund Accounts
Replies: 16
Views: 1946

Re: Questions about converting my old Vangaurd Mutual Fund Accounts

nps wrote: Wed Jan 18, 2023 6:30 pm
bobsmith wrote: Wed Jan 18, 2023 6:24 pm Wow, so in my taxable account alone where I hold 4 mutual funds, I would pay $80/year?

Are these fees waived if you hold enough assets like they used to do with Flagship (or whatever they called it) back in the old days? What's the threshold?
You should see these fees already charged in the last quarter of 2022 in your transaction history. If you don't, you might have enough to qualify for fee waiver.
Good point.
by bobsmith
Wed Jan 18, 2023 7:23 pm
Forum: Personal Investments
Topic: Questions about converting my old Vangaurd Mutual Fund Accounts
Replies: 16
Views: 1946

Re: Questions about converting my old Vangaurd Mutual Fund Accounts

If the mutual fund has an ETF class, converting from mutual fund to ETF is not taxable at Vanguard. The reverse is not true. You can sell shares and have them go directly to your bank. The settlement fund will be involved but it will be behind the scenes. Most transactions involve the settlement fund. For example, when you exchange funds, you will see two lines in the transaction history, one for selling and money going into the settlement fund and another for buying and money coming out of the settlement fund. Again, it's behind the scenes - you enter one exchange transaction that happens overnight (for mutual funds). You can have dividends sent to the settlement fund, which is the Fed MM fund. For fee waiver, the amount that I've heard i...
by bobsmith
Wed Jan 18, 2023 6:24 pm
Forum: Personal Investments
Topic: Questions about converting my old Vangaurd Mutual Fund Accounts
Replies: 16
Views: 1946

Re: Questions about converting my old Vangaurd Mutual Fund Accounts

Rkhusky, thanks for the reply... Conversion to brokerage is not a taxable event. Even if I convert to brokerage AND covert to ETFs? You will have a settlement fund in each account. So that's like a MM fund? So I can't sell funds directly and move it to my bank without first going to a "Settlement Fund"? Same for doing exchanges inside my IRAs or my 403b? You cannot send dividends to a different fund, like in the mutual fund accounts. But I could still direct dividends to reinvest into a MM/Settlement Fund? And then later I could just manually do a transaction to invest them where I want them to go? The fee is $20/fund, not $20/account (although technically each fund is a separate account on the mutual fund platform). Wow, so in my...
by bobsmith
Wed Jan 18, 2023 6:09 pm
Forum: Personal Investments
Topic: Advice to Help Loved Ones Navigate Finances After Our Death?
Replies: 10
Views: 1332

Re: Advice to Help Loved Ones Navigate Finances After Our Death?

Hi everyone, Recently, at the age of 28, I was able to marry the love of my life. :sharebeer: In regards to day to day finances we're on the same page and have similar thrifty habits with the tendency to save and use budgeting software like YNAB. However I am the one in the relationship that is most interested in how investing works and it's put me on a path to manage my own portfolio in a tax and fee efficient manner. My bride is confident in contributing to their own retirement through Betterment, but not much beyond that. In some of my research I've discovered that it would be relatively easy for her to transfer my (pre Bogleheads) Betterment holdings to her Betterment account upon my death, and that it would be held in funds that I tru...
by bobsmith
Wed Jan 18, 2023 5:57 pm
Forum: Personal Investments
Topic: Most of my money is in a taxable account. Is this bad?
Replies: 35
Views: 7021

Re: Most of my money is in a taxable account. Is this bad?

Keep in mind that your income tax bracket is used to judge your capital gains tax. If your income + realized capital gains leaves you below the third bracket (22%), then you're actually paying 0% taxes on your realized gains. If you income is low enough you may be able to move money from taxable accounts to IRAs with no (federal) capital gains tax, provided you meet the conditions to contribute to IRAs... State tax laws are different so you could still be hit with those.
by bobsmith
Wed Jan 18, 2023 5:46 pm
Forum: Personal Investments
Topic: Most of my money is in a taxable account. Is this bad?
Replies: 35
Views: 7021

Re: Most of my money is in a taxable account. Is this bad?

HomeStretch wrote: Wed Jan 18, 2023 2:54 pm Consider rolling over your traditional IRA balance into your Solo 401k or employer 401k (whichever is lower cost)..... Does your new 401k have reasonable costs and good fund choices?
That's a very very important question that might not be so easily answered by someone who, by the nature of their question, seems to be just starting out. With so many IRAs available from reputable companies (vanguard, Fidelity) I would be hard pressed to be convinced to move my assets into an employer's 401k where anyone can be a vendor or manage your money and hide fees as I have seen many many times in different people's accounts. Some aren't even fiduciaries.
by bobsmith
Wed Jan 18, 2023 5:27 pm
Forum: Personal Investments
Topic: Questions about converting my old Vangaurd Mutual Fund Accounts
Replies: 16
Views: 1946

Questions about converting my old Vangaurd Mutual Fund Accounts

I've been with Vanguard since 2001 so I have one of the older Mutual Fund accounts. Two IRA accounts and one taxable which I think means I'll be paying $60 extra year. I also have a 403b held with Vanguard, but not exactly because they farmed the service out a few years ago. I guess that's also a Mutual Fund account. Does that mean they will charge me another $20 even though they don't even manage that account? Are Mutual Fund fees applied regardless of how much you have invested with Vanguard across all accounts? I found the letter confusing. (Yes, I still get the snail mail). If not, what's the threshold? A million bucks? Whatever the threshold, would they look only at my holding with them or would they consider my wife's holdings as well...
by bobsmith
Wed Jan 04, 2023 8:32 am
Forum: Personal Investments
Topic: RMD Secure Act 2 Question for Inherited IRA
Replies: 8
Views: 893

Re: RMD Secure Act 2 Question for Inherited IRA

Tom_T wrote: Tue Jan 03, 2023 2:23 pm My understanding is that the RMDs are not changed for any IRA inherited prior to 2020. My wife has such an IRA. But you are right in that it will take some time for the changes to percolate throughout the various Web resources.
Thanks Tom. I'm gonna go with that understanding.
by bobsmith
Tue Jan 03, 2023 4:12 pm
Forum: Personal Investments
Topic: RMD Secure Act 2 Question for Inherited IRA
Replies: 8
Views: 893

Re: RMD Secure Act 2 Question for Inherited IRA

mbres60 wrote: Tue Jan 03, 2023 3:23 pm Why is the RMD not on your wife’s life expectancy? Why her older sister’s?
I'm not sure. Something was setup wrong or mishandled. It's been of little consequence at the end of the day so I didn't question it.
by bobsmith
Tue Jan 03, 2023 1:16 pm
Forum: Personal Investments
Topic: Sell taxable to fund tax deferred accounts?
Replies: 7
Views: 640

Re: Sell taxable to fund tax deferred accounts?

I asked the same question a week ago and got good advice... https://www.bogleheads.org/forum/viewtopic.php?p=7031612#p7031612 I'm not the person to answer specific questions, but there are many well informed posters here who can and will help you. That said, you're only talking about a 3% unrealized gain. I'm currently in my 50s and cashing out investments with 30% gain just to fund Roth and by my math it's totally worth it. Remember also that in a taxable account you can't prevent a small percent of dividends churning and realizing gain each year. Of course, be aware that money you put in a Roth must stay until you hit a certain age, so be careful if you have health issues and think you might need the money sooner than you think. Thanks, ...
by bobsmith
Tue Jan 03, 2023 1:10 pm
Forum: Personal Investments
Topic: RMD Secure Act 2 Question for Inherited IRA
Replies: 8
Views: 893

Re: RMD Secure Act 2 Question for Inherited IRA

I'm still looking for a confirmation to my OP, but I did find this calculator which I think is updated for Secure Act 2 due to the fact that it first asks the question: "Did IRA owner die before January 1, 2020?"

https://www.tdameritrade.com/retirement ... lator.html

I ran it and it seems like the RMD I expected unless I missed a rules change.
by bobsmith
Tue Jan 03, 2023 12:50 pm
Forum: Personal Investments
Topic: Sell taxable to fund tax deferred accounts?
Replies: 7
Views: 640

Re: Sell taxable to fund tax deferred accounts?

I asked the same question a week ago and got good advice...
viewtopic.php?p=7031612#p7031612

I'm not the person to answer specific questions, but there are many well informed posters here who can and will help you. That said, you're only talking about a 3% unrealized gain. I'm currently in my 50s and cashing out investments with 30% gain just to fund Roth and by my math it's totally worth it. Remember also that in a taxable account you can't prevent a small percent of dividends churning and realizing gain each year. Of course, be aware that money you put in a Roth must stay until you hit a certain age, so be careful if you have health issues and think you might need the money sooner than you think.
by bobsmith
Tue Jan 03, 2023 10:34 am
Forum: Personal Investments
Topic: RMD Secure Act 2 Question for Inherited IRA
Replies: 8
Views: 893

RMD Secure Act 2 Question for Inherited IRA

My wife has been taking the non-spouse RMD from an inherited IRA since 2018 when her mother died (born in 1939). My wife was required to base the RMD payments on the lifetime of her older sibling who was born in 1961. We've managed do the calculation each year without issue. My only question is, with regards to the RMD, has Secure Act 2 changed the formula?

Also, does anyone know of an online calculator (updated for Secure Act 2)? I just spend some time over at the IRS site and it's a bit overwhelming.

Thank you

EDIT: Before editing my post inaccurately stated "older sibling who was born in 1952".
by bobsmith
Thu Dec 29, 2022 6:32 pm
Forum: Personal Investments
Topic: Back door Roth... couple questions.
Replies: 9
Views: 864

Re: Back door Roth... couple questions.

I'm not trying to argue with you here, but why work so hard to persuade me to avoid calling a spade a spade? Neither am I trying to argue with you; you have repeatedly said there is a "limit to the amount one can contribute to an IRA" without making a distinction between the type of the IRA (Traditional or Roth). All I was saying is that's not true; for tIRA there is no income limit to make a non-deductible contribution. Oh come on, I never qualified IRA contributions by saying "non-deductible" IRA contributions. When people talk about IRA contributions here or elsewhere they for (almost) all intents and purposes are talking about pre-income tax contributions to IRAs. Give me a break. For 99% of the people not intereste...
by bobsmith
Thu Dec 29, 2022 5:16 pm
Forum: Personal Investments
Topic: Back door Roth... couple questions.
Replies: 9
Views: 864

Re: Back door Roth... couple questions.

On this particular statement, however -- there may be a misunderstanding. 1) There IS an income limit on being able to contribute to Roth IRA, approximately $203,000 for MFJ (too lazy to look up the exact figure right now) 2) There IS an income limit on being able to DEDUCT the contribution to Traditional IRA (approximately $110,000 for MFJ, again too lazy to lookup the exact figure) But there is NO income limit on being able to make a contribution to Traditional IRA. Only after making the contribution, will the taxpayer has the choice of making it a deductible contribution or non-deductible contribution. For those folks who are above the income limit to deduct the contribution, the choice is already made for them. The Form 8606 that would...
by bobsmith
Thu Dec 29, 2022 4:14 pm
Forum: Personal Investments
Topic: Realizing gains to fund retirement accounts (revisited)
Replies: 9
Views: 946

Re: Realizing gains to fund retirement accounts (revisited)

In either case, the only investments are Vanguard TSMI and Vanguard Int'l SMI. As a calculation in my rough estimate, to account for dividends would it be fair to assume a 1.5% realized annual gain each year? Does 1.5% sound about right? That's in the ballpark. Might be low, based on S&P 500 Dividend Yield (I don't have the Int'l numbers handy). Great. I'm only looking for a rough method to make a judgement call. I''ve held the S&P500 for over 20 years paired with the Extended Market. I don't touch those other than to reinvest the dividends elsewhere. MY SP500 hit 1.71% in 2022, the Xtended 1.17%. I'll make the spreadsheet dymanic and run it a few ways. Doubt it will matter much for my purposes... or maybe I'll be surprised. Anyway...
by bobsmith
Thu Dec 29, 2022 4:12 pm
Forum: Personal Investments
Topic: Back door Roth... couple questions.
Replies: 9
Views: 864

Re: Back door Roth... couple questions.

I've never done a Trad IRA, but I just assumed that if I did I would declare it on my tax form, thus getting the deduction of my pay for that year. When someone does a backdoor Roth IRA, is it usually done all in one swoop such that they wouldn't even bother to try to claim the t-IRA on their taxes? I was of the mindset they would make the "mistake" in one tax year, then have to "correct" it the next year or something like that. I'm surprised it's so out in the open when it's clearly a violation of the tax code. I always assumed the reason the IRS allowed for the correction (converting to Roth) was simply because it would be too much a headache to take it out and calculate for the income taxes and cost basis, etc. When ...
by bobsmith
Thu Dec 29, 2022 12:58 pm
Forum: Personal Investments
Topic: Realizing gains to fund retirement accounts (revisited)
Replies: 9
Views: 946

Re: Realizing gains to fund retirement accounts (revisited)

grabiner wrote: Wed Dec 28, 2022 1:42 pm ....because you will pay dividend tax every year,...
As mentioned, I've run a few hypotheticals on a spreadsheet comparing Roth investments made by cashing out investments with moderate to high unrealized gains against scenarios where it was left in the taxable accounts, all weighed against my longevity and passing it on to heirs.

In either case, the only investments are Vanguard TSMI and Vanguard Int'l SMI. As a calculation in my rough estimate, to account for dividends would it be fair to assume a 1.5% realized annual gain each year? Does 1.5% sound about right?
by bobsmith
Thu Dec 29, 2022 12:46 pm
Forum: Personal Investments
Topic: Back door Roth... couple questions.
Replies: 9
Views: 864

Re: Back door Roth... couple questions.

lakpr, Thanks for the reply and clearing this up. I'll never need to use one as my income has and never will hit the ceiling, but I do hear the term thrown around a lot and was curious about it. There is no taxing the money twice. Deductible contribution to t-IRA means you did not pay the tax when contributing. When you convert that money to Roth, you pay tax. Sum: You paid tax once. [ This situation is what IRS assumes as the default ] I've never done a Trad IRA, but I just assumed that if I did I would declare it on my tax form, thus getting the deduction of my pay for that year. When someone does a backdoor Roth IRA, is it usually done all in one swoop such that they wouldn't even bother to try to claim the t-IRA on their taxes? I was of...
by bobsmith
Thu Dec 29, 2022 12:06 pm
Forum: Personal Investments
Topic: Realizing gains to fund retirement accounts (revisited)
Replies: 9
Views: 946

Re: Realizing gains to fund retirement accounts (revisited)

I'm a little confused by how you use the term "marginal tax rate," .... Simply put, the marginal tax rate on something is the change in tax for a change in that something. E.g., (change in tax)/(change in income), or (change in tax)/(change in contribution), etc. In most cases all the above considerations matter by only a few percent. Again, maybe I'm not following you and need to look at your links in detail, but certainly there's a big difference in terms of funding a Roth when it comes to cashing out investments at 90% unrealized gain verses cashing out investments at 30%... Your situation may not be one of "most cases". ;) In general, "it depends..." on the particulars for an individual's situation. Hopefu...
by bobsmith
Thu Dec 29, 2022 11:46 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

If the friend is using average cost basis, then all shares have the same effective purchase price. So, if sold at the same time, all shares will either have a gain or all shares will have a loss. I agree with this ^^^, but I wonder how the short/long holding periods are handled. In other words, wouldn't the short term shares be subject to different income tax rates? Regards, Yes. Short term gains are taxed at income tax rates, which would likely not be at the 0% rate of the long term capital gains. Thanks for the post Rkhusky as well as your other clarifications in this thread. First, if anything he'd generate at short term loss, given how bad the market was, so point is probably moot. But even if a short term capital gain was generated an...
by bobsmith
Wed Dec 28, 2022 5:33 pm
Forum: Personal Investments
Topic: Realizing gains to fund retirement accounts (revisited)
Replies: 9
Views: 946

Re: Realizing gains to fund retirement accounts (revisited)

To add to grabiner's post, having to incur tax in order to pay tax on a Roth contribution (or conversion) shifts the break-even marginal tax rate for the traditional vs. Roth choice. The “Traditional plus taxable” vs. Roth wiki section introduces the topic. In short, if you can pay the tax from cash on hand, Roth can be favorable even if the withdrawal tax rate is "somewhat" less than the contribution tax rate. I'm about out of time tonight, but I appreciate the links and will check them and post back probably not until tomorrow. Thanks again for your further help on this, FiveK. If one doesn't have "cash on hand" but instead needs to sell appreciated stock and thus incur capital gain tax to raise the cash for the tax, ...
by bobsmith
Wed Dec 28, 2022 5:13 pm
Forum: Personal Investments
Topic: Realizing gains to fund retirement accounts (revisited)
Replies: 9
Views: 946

Re: Realizing gains to fund retirement accounts (revisited)

It is almost always worth realizing capital gains to fund a retirement account, assuming that you won't need the money until you are eligible to retire. Grabiner, thank you for the long response. It's the " almost " part of the "almost always" that I'm focused on. While I will be able to tap into 25%-30% unrealized gain next year, I'll soon have to tap into the stocks with 70-75% unrealized gain in a year or two. The other factors are how long my wife and I will live, and the idea that my heirs will be able to hold the Roth for 10 years without being compelled to cash out any of it. https://www.bogleheads.org/forum/viewtopic.php?t=392838 One scenario is I cash out 75k and realize the gain to put in a Roth, but then the ...
by bobsmith
Wed Dec 28, 2022 1:22 pm
Forum: Personal Investments
Topic: Realizing gains to fund retirement accounts (revisited)
Replies: 9
Views: 946

Realizing gains to fund retirement accounts (revisited)

I've never done this before, but I'm hoping someone will look at a post I did a week ago. FiveK did a good job answering my questions but at the end I had one big follow up question I think he probably missed simply because of the holidays. (Imagine someone not checking Bogleheads forums every day even during Christmas!) I was going to BUMP on the same thread, but the thread was long enough I doubt anyone would bother looking at it. And... I'd like to do a trade before year's end. So instead I'm linking to the previous thread and asking someone to help me answer only the last question I asked at the end of it. Basically, I did a few spreadsheet calculations which I don't need anyone to check. I just want to know if my thinking is sound and ...
by bobsmith
Wed Dec 28, 2022 12:12 pm
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

If he liquidates all of his investments in his taxable account, RIGHT NOW, and puts them in a money market, then buys them all back tomorrow [. . .] This is a *lot* more minor than the health insurance concerns, but ... If by "stocks" you mean stock mutual funds (which you mentioned in a later post), be aware that some of them have frequent trading restrictions that make you wait a certain number of days before you can rebuy the same fund..... Ah, that's right. Good point. I think it would still be worth it even if he had to sit out the market for 30 days (Or buy ETFs or keep them instead as you say). I hadn't thought of this but was aware of it. An obvious oversight I thank you for correcting. Back to the health insurance concer...
by bobsmith
Wed Dec 28, 2022 11:24 am
Forum: Personal Investments
Topic: Back door Roth... couple questions.
Replies: 9
Views: 864

Back door Roth... couple questions.

I read the Bogleheads link but does the person doing the backdoor Roth end up paying income taxes TWICE on the amount contributed? So if I make too much money and contribute to a Traditional IRA, then the IRS lets me correct that and convert it into a Roth IRA. I assume I pay taxes on that money in order to make the IRS correction. However, do I also lose the deduction from contributing to the IRA that I filed for? If so, that would be paying income tax twice, right? Also, say I incorrectly contributed to a Trad IRA during my last year working, then next year when I retired and made far less income, I tried to do the IRS correction. Would I pay income taxes on the conversion accord to the year in which I made the error or pay them according...
by bobsmith
Wed Dec 28, 2022 11:11 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

I'll try to answer the questions in order... Yes, if he's using any income related government services, then this level of income could potentially disqualify him. It would depend on the particular assistance program he's enrolled in. Regards, Thanks for the spoon feed. I'll need to talk to him. I think he might have gone on Medicaid last year which would means he needs to stay under something like 10.5k income for the year. But he's not on any assistance, housing, foodstamps, etc. No other welfare. But that 10.5K certainly would change the whole calculation and yet he might still be able to move a few thousand over and pay 0% tax while still keeping on medicaid. The big question would be what the Medicaid ceiling is and whether or not tha...
by bobsmith
Wed Dec 28, 2022 11:10 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

If the friend is using average cost basis, then all shares have the same effective purchase price. So, if sold at the same time, all shares will either have a gain or all shares will have a loss. I agree with this ^^^, but I wonder how the short/long holding periods are handled. In other words, wouldn't the short term shares be subject to different income tax rates? Regards, Yes. Short term gains are taxed at income tax rates, which would likely not be at the 0% rate of the long term capital gains. Thanks for the post Rkhusky as well as your other clarifications in this thread. First, if anything he'd generate at short term loss, given how bad the market was, so point is probably moot. But even if a short term capital gain was generated an...
by bobsmith
Wed Dec 28, 2022 11:00 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

If the friend is using average cost basis, then all shares have the same effective purchase price. So, if sold at the same time, all shares will either have a gain or all shares will have a loss. I agree with this ^^^, but I wonder how the short/long holding periods are handled. In other words, wouldn't the short term shares be subject to different income tax rates? Regards, So if the IRS handled it differently, it could be he generated a big number for long term capital gain, but a small number for short term capital loss. By liquidating and repurchasing he would break the 31 day rule and not be able to harvest that loss. I guess if he had specID now, it might be worth putting off the short term and trying to harvest that loss, but he doe...
by bobsmith
Wed Dec 28, 2022 10:45 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

I'll try to answer the questions in order... Yes, if he's using any income related government services, then this level of income could potentially disqualify him. It would depend on the particular assistance program he's enrolled in. Regards, Thanks for the spoon feed. I'll need to talk to him. I think he might have gone on Medicaid last year which would means he needs to stay under something like 10.5k income for the year. But he's not on any assistance, housing, foodstamps, etc. No other welfare. But that 10.5K certainly would change the whole calculation and yet he might still be able to move a few thousand over and pay 0% tax while still keeping on medicaid. The big question would be what the Medicaid ceiling is and whether or not tha...
by bobsmith
Wed Dec 28, 2022 9:40 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

Nate79 wrote: Wed Dec 28, 2022 9:29 am Don't forget to check his state tax situation as well.
Good point.
by bobsmith
Wed Dec 28, 2022 9:31 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

Re: EZ Question about resetting cost basis

You're on the right track. More details on this procedure are in the wiki under the tax gain harvesting page. Regards, Great. Thanks Retired@50, I read the link you provided and it was helpful! Few follow ups... My friend uses cost-averaging-basis which I haven't used for years. Does that mean he won't be able to separate long term from short term gain when selling shares? However, does it even matter considering that he'll be showing a LOSS on all his stocks over the last year due to the bad market? Again, though, because he's selling EVERYTHING, the overall sale will show a gain. Maybe I missed it, but when considering the income after which capital gains taxes are applied, is that income first adjusted by the standard deduction? Making ...
by bobsmith
Wed Dec 28, 2022 8:59 am
Forum: Personal Investments
Topic: EZ Question about resetting cost basis
Replies: 17
Views: 994

EZ Question about resetting cost basis

Friend of mine has about 100k in a taxable account, all stocks. Of that, his unrealized gains are about 35%, or 35k. No holding, if realized will generate a loss. He currently is out of work and has been for all of 2022. Filing as Single, his capital gains tax rate doesn't start until 41K. Say his stocks churned a little though the year generating 1K in capital gains dividends, reinvested. As a result, his only income (which itself is capital gains) is 1K. If he liquidates all of his investments in his taxable account, RIGHT NOW, and puts them in a money market, then buys them all back tomorrow, he will generate 35K in capital gains. 1K +35K = 36K, still under the 41K (3rd) bracket. Therefore, he will pay ZERO taxes on the now realized gain...
by bobsmith
Wed Dec 21, 2022 11:47 am
Forum: Personal Investments
Topic: Help w/ plan to move income into 403/457
Replies: 5
Views: 707

Re: Help w/ plan to move income into 403/457

FiveK, First, it's so great to get informed help on these matters. I always find tax code intimidating and confusing. Thank you. Different limits. See the links under Roth IRA contribution limit. Ah, okay. Thanks for the spoon feed link. Looks like my 2023 ceiling for income is 218K. I won't have any problem staying under that. Correct - in your situation you have no need to use the backdoor Roth process, because you can simply make a direct contribution to your respective Roth IRAs. Okay, I clearly misunderstood what it meant to do a backdoor Roth. Thanks for the correction. It is based on adjusted gross income (AGI), but that comes before the standard deduction is subtracted to get taxable income. Actually, it's not AGI but Modified AGI: ...
by bobsmith
Tue Dec 20, 2022 5:19 pm
Forum: Personal Investments
Topic: Help w/ plan to move income into 403/457
Replies: 5
Views: 707

Re: Help w/ plan to move income into 403/457

FiveK, Thanks for the reply. While it's certainly possible I'm mistaken and confused, I thought the phase-out had to do with how much you could contribute to a Roth IRA which is the whole justification behind the idea of a "back door Roth," which I thought just meant contributing to a traditional IRA and then converting it into a Roth IRA at a later time. That said, I believe what you said is still correct with regards to Traditional IRAs. I'm not sure why you'd want to put after tax money in a traditional IRA only to pay tax on it again later when you take it out. I'm sure there are reasons but none come to mind in my situation. If that was my only option I think I would opt to just contribute less. As your income increases, howe...
by bobsmith
Tue Dec 20, 2022 7:44 am
Forum: Personal Investments
Topic: Help w/ plan to move income into 403/457
Replies: 5
Views: 707

Help w/ plan to move income into 403/457

My wife and I are near retirement and earn about 109k in income each year. We are compelled to take an RMD from an inherited IRA which amounts to another 4k, bringing us to 113k each year in income. I'm older and not currently working and earning income. She works for the state and has a pension plan from the job she's worked at for almost 30 years. We have about 400k invested in a taxable account w/Vanguard where we hold only Total Stock Market Index and Total International Stock Market Index. We are 100% index investors, so there's not too much realized gain generated each year. We have one kid in college and the other will turn 18 next year. We always take the standard deduction and our taxes are pretty straight forward. Our intention is...
by bobsmith
Sun Apr 10, 2022 10:47 am
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

Thanks everyone for the advice. :happy
by bobsmith
Fri Apr 08, 2022 3:46 pm
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

The point is, at some point in the future, your son will probably open a new taxable brokerage account to go with his Roth IRA. That's not a concern right now. Ok, a taxable account. I see what you mean then. In a Roth IRA, there is zero tax considerations. Choosing FSKAX vs FZROX is a choice between two different indexes, one of them being proprietary. I personally use FSKAX, but I do have FZROX (and the other zero funds) in my HSA. It was an experiment when the funds were created, and honestly, I can't see a difference. So yeah, go for whichever you like best. So long as they are both real index funds and not some kind of active fund hybrid pretending to be passive, then I guess I would just go with the "zero" EO, FZROX if I en...
by bobsmith
Fri Apr 08, 2022 3:40 pm
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

by exodusNH » Fri Apr 08, 2022 12:49 pm ETFs are more easily portable across brokerages. Fidelity is great now, but who knows 30 years from now. If you had to transfer a mutual fund to a different brokerage, you might incur fees for buying or selling. But you're not talking about IRAs here, right? Your talking about if a taxable account was setup. by exodusNH » Fri Apr 08, 2022 12:50 pm bobsmith wrote: ↑Fri Apr 08, 2022 12:44 pm I thought about that too. Why not FZROX over FSKAX? Also, is there any reason I should care about MF vs. ETF? In an IRA it doesn't matter because you don't have to worry about taxes. Just to restate this, for now all I'm talking about is working inside and IRA. That's what my kid has setup and that's all he's buyin...
by bobsmith
Fri Apr 08, 2022 11:44 am
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

rkhusky wrote: Fri Apr 08, 2022 11:38 am For only $500, put it all into FSKAX. Once it gets above $10K, start thinking about Int'l.
I thought about that too. Why not FZROX over FSKAX? Also, is there any reason I should care about MF vs. ETF?
by bobsmith
Fri Apr 08, 2022 11:41 am
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

by PersonalFinanceJam » Fri Apr 08, 2022 12:29 pm bobsmith wrote: ↑Fri Apr 08, 2022 12:07 pm … Again with the 80%..... To my understanding index funds are typically fully invested with little to nothing in MM. Are these managed funds or do I just have the wrong idea about how Vanguard's Index Funds work? You have the wrong idea here. You will find the same 80% verbiage in the prospectus for the Vanguard total stock market index fund. The funds are fully invested but they give themselves some leeway should they need it. The real question is how they track against their index . Last I checked Fidelity’s total index funds tack just as well as Vanguard. Okay that's what I wanted to know. Again, the idea is to hold these for the very long term....
by bobsmith
Fri Apr 08, 2022 11:35 am
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

by pasadena » Fri Apr 08, 2022 12:28 pm bobsmith wrote: ↑Fri Apr 08, 2022 12:22 pm I'm still not getting the concern about taxable inside an IRA. Is it that VIT/VXUS pay taxes according to their internal functioning in a way FSKAX/FTIHX does not? I do the same thing, because having different funds in taxable and tax-advantaged avoids wash sales when tax-loss harvesting. Oh, okay. I don't really bother with tax-loss harvesting, but I understand why you need to have different kinds of shares to swap out and harvest tax loss while still staying in the market. Is that only reason people here are talking about "taxable" funds/shares inside Roth IRA accounts? If so, can I assume it's something I shouldn't worry about unless I decide to...
by bobsmith
Fri Apr 08, 2022 11:31 am
Forum: Personal Investments
Topic: Recommend Fidelity Index Funds?
Replies: 36
Views: 6477

Re: Recommend Fidelity Index Funds?

by mervinj7 » Fri Apr 08, 2022 12:14 pm bobsmith wrote: ↑Fri Apr 08, 2022 12:11 pm Post by Doc7 » Fri Apr 08, 2022 12:02 pm within the roth you can also utilize FZROX, FNILX, FZILX, etc at 0 expense ratio. most recommend not using in taxable as they would need to be sold with tax consequences if you ever decided to change to a new brokerage. Doc, but there shouldn't be any tax consequences inside a Roth IRA, right? Ditto question for if my son ever decides to transfer this Roth IRA into a Vanguard Roth IRA. That's correct. He can always sell the Zero funds before an account transfer. For the last 20 years I've been a humble simple MF index investor... My concern for my son is to get him into simply no frills low cost index shares that accu...