New job, new 401k options, plus an update on our plan

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Posts: 48
Joined: Sat May 25, 2013 11:51 am

New job, new 401k options, plus an update on our plan

Post by cdogg44 » Tue Jul 23, 2013 9:15 pm

First, HERE is my thread from two months ago. A LOT has changed. I have successfully switched brokers, blew up my Roth, and have begun tearing into my taxable account. My goal of zero capital gains taxes for 2013 is still within reach. I have opened up a traditional IRA for my wife and am contemplating a one for myself as well to lower our taxable income.

My first go of allocating my Roth IRA seems to have worked well, although I am not opposed to tweaking it.

On August 1st my wife will start a new job which we are excited about. It is less money initially, but it gets her out of awful retail hours at Verizon and into an 8-5 M-F job at an excellent company with a lot of growth potential. The 401k is only a 3% match (6% @ Verizon), but they will let you contribute up to 67% of your income up to the limit each year (although that much plus IRA's may not be feasible for us to survive on). Below are her options for the new 401k. Please review my asset allocation and let me know what you think.

30% Fidelity Spartan 500 FUSEX ER .09%
20% Fidelity Spartan Ext FSEMX ER .10%
35% Fidelity Spartan Intl FSIIX ER .20%
15% Vanguard Infl Prot VIPSX ER .11% *I'm not opposed to the Vanguard Tot Bd fund, but figure with their similar ER and performance the hedge against inflation going forward is worth it

What do you think? Also, should I be rolling her old 401k over into an IRA?


Here is our current updated financial picture. Any advice is always appreciated.

Emergency funds: $39k total cash savings ($25k is emergency fund)
Debt:~$105k @ 2.75% house, $17.5k @ 2.44% car loan
Tax Filing Status: Married Filing Jointly
Tax Rate: 15%, 7% State
State of Residence: Arkansas
Age: 29
Desired Asset allocation: 80/20 equities/bonds
Desired International allocation: 60/40ish


Fidelity (cost basis in parenthesis)


McDonalds MCD $5225($1509)
Oracle ORCL $2630 ($694)
Pepsico PEP $11982 ($4015)
Wal-Mart de Mexico WMMVY $4202 ($1009)
Wal-Mart WMT $7776 ($2045)
Yum Brands YUM $3240 ($419)
Cash $47879 (I sold all of my American Funds mutual funds yesterday and the funds are still settling)

Total: $82934

Roth IRA at Fidelity (Current asset allocation was set on 7/11/13)

iShares Core Total US Bond Market AGG $1722 ($1708) ER .08%
iShares Trust Core MSCI EAFE IEFA $4512 ($4404) ER .14%
iShares Core MSCI Emerging Markets IEMG $2723 ($2645) ER .18%
iShares Core S&P Small Cap IJR $1747 ($1718) ER .16%
iShares Core S&P 500 IVV $7143 ($7043) ER .07%
Cash $81

Total: $17930

My wife's 401k with her employer, 6% matched, managed by Fidelity, currently 25% contributed but last day of employment is 7/23/13

US Large Co Index $14976 ER .02%
Intl Company Index $8970 ER .10%
PIM Real Return Inst $5701 ER .47%

Total $29646
Last edited by cdogg44 on Sat Jul 27, 2013 12:21 pm, edited 1 time in total.

Bob's not my name
Posts: 7347
Joined: Sun Nov 15, 2009 9:24 am

Re: New job, new 401k options, plus an update on our plan

Post by Bob's not my name » Wed Jul 24, 2013 3:34 am

cdogg44 wrote:Tax Rate: 15%, with $8-10k @ 25% most likely Federal, 7% State
In your prior thread you posted that your gross household income is under $100,000, so I don't see how you're in the 25% bracket at all. This is a key issue, since (1) if you are under the 25% bracket your long term gains are taxed at 0% federal, and (2) the huge difference between the two brackets is a key consideration in choosing between pre-tax (traditional) and post-tax (Roth) tax-advantaged savings.

$100,000 gross income
- $2,500 pre-tax health, dental, and disability insurance premiums withheld from your pay (guess)
- $1,000 FSA contributions (guess, since you have a young child)
- $10,500 her 401k contributions (guess based on the information you provided)
$86,000 AGI --> both eligible for deductible traditional IRA contributions
- $11,700 three personal exemptions
- $12,200 standard deduction (looks like you probably don't itemize)
$62,100 taxable income --> in the 15% bracket with $10,400 of headroom for realizing long term capital gains at the 0% federal rate (still have to pay state tax)

Look at your own 2012 tax return to see how your real numbers work, and adjust for 2013 (including the inflation adjustments in the brackets, personal exemptions, and standard deduction -- here's a handy guide: ... r-changes/ ).

Posts: 48
Joined: Sat May 25, 2013 11:51 am

Re: New job, new 401k options, plus an update on our plan

Post by cdogg44 » Sat Jul 27, 2013 12:22 pm

Good catch there Bob. I was using gross numbers for last year there and NOT taxable income and have adjusted accordingly.

Anyone else have any thoughts on the new 401k allocation or our plan in general?

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