High Income Earner Humbly Seeks Advice

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
moneywise3
Posts: 456
Joined: Mon Nov 22, 2010 6:54 pm

Re: High Income Earner Humbly Seeks Advice

Post by moneywise3 » Tue Jun 06, 2017 3:17 am

Appreciate your humility. Do you mind sharing your profession ?

mac808
Posts: 510
Joined: Mon Sep 19, 2011 8:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by mac808 » Tue Jun 06, 2017 5:10 am

grokzilla wrote:
LongTerm1 wrote:Cutterinnj- what about advertising? Like livesoft said- flyers? Say you run an HVAC company and send out information to customers, TV ads, business cards, etc. that would easily costs you $5k. Accountant said if asked it needs to be a reasonable fee for work.
LongTerm -- Just a real world reality check from a parent with a kid who is a model -- they don't make what you probably think they make. Kid models are common and the pay reflects that reality. $5.5k earnings over the course of an entire year for a kid modeling in print is a A LOT of modeling work -- and that's in a major metro working with major brands.

I'd just advise some caution there -- anything that draws the eye of the IRS gives me the heebie jeebies! Or, maybe just make sure you knock out LOTS of photoshoots! ;-)
I've paid $500 - $1000 for the right to use a single commercial stock photo before, so I'm sure some effort could be made to make the amounts seem justified. From a practical perspective the IRS might not want to waste time pursuing someone for a couple thousand dollars in potential recovery, given that the amounts are so small in these cases, when there are lots of other high-dollar evasion and now rampant identity theft issues. As long as some statute of limitations is running on the contributions, I wouldn't lose sleep over it. Although I know in this regard IRAs can be unusual. Perhaps it would be appropriate to file a form 5329 for the child? I'm not a tax expert so I'll defer to others on the forum.

soccerdad12
Posts: 370
Joined: Thu Jan 19, 2012 8:52 am

Re: High Income Earner Humbly Seeks Advice

Post by soccerdad12 » Tue Jun 06, 2017 1:07 pm

My experience re: IRS investigation into small amounts. I own a business and it wasn't the IRS that came knocking but the DOL. We are a decent sized company and after meeting with the investigator in our office (and giving him access to tons of files), he was there for $600 that was unaccounted for (out of many millions). It was accounted for and when we explained to him he said "that's what I figured" and continued to ask for different items.

Lesson learned.... they aren't there for the small amount, but for an entrance into your records to find anything and everything they can. We keep very good records and had no issues at all, but some of the things the investigator was asking for were barely tangentially applicable for his reason being there. We knew he was asking for these items b/c a lot of companies abuse them and there is money to be had by uncovering them.

Don't ever do something to potentially invite a government agency into your business. They are there to hunt for many more things than the "issue" at hand.

Topic Author
LongTerm1
Posts: 22
Joined: Thu May 25, 2017 3:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by LongTerm1 » Tue Jun 06, 2017 1:32 pm

vitaflo wrote:
LongTerm1 wrote: I really do need help with deciding on percentage & allocation for a plan in my situation. I think I will sleep better with a plan in writing. Help.
Thoughts?
If you can't decide, I would go 50/50 and call it a day. Your income vs your expenses means that whatever the market gives you will be nothing compared to what you are saving every year. You are your returns. The market isn't going to do a whole lot for you either way when you're saving 90% of your income every year.

For what it's worth, people with extreme income to expenses ratio's tend to go very aggressive. The reasoning is since expenses are so low they can live off of the low bond % just fine, and let the stocks ride and never touch them. Warren Buffet I believe set up an aggressive portfolio for his wife for this reason.

That said, the easiest way to know the answer is just to see your reaction to an AA. If you feel 50/50 is too aggressive, then go more conservative. Or vice versa if you feel the other way. The math says it really won't matter in your situation at all.
Vitaflo- thanks for your response. Yes I will continue to save and hope, depending on life and I come, put large amounts of income into the market.

After reading through posts, what are your personal views on this AA?

60% Total Stock Market
20% Total international
20% Intermediate tax exempt

I know it's important to have a balanced portfolio but international is expensive and hasn't done well when compared to Total Stock Market. Last year being the exception. I even thought about 65/15/20.

Thanks again for your time.

cantos
Posts: 262
Joined: Tue Dec 20, 2016 11:25 am

Re: High Income Earner Humbly Seeks Advice

Post by cantos » Tue Jun 06, 2017 1:44 pm

LongTerm1 wrote: 60% Total Stock Market
20% Total international
20% Intermediate tax exempt
It's time to take action, this looks good. You can fiddle with it 10% here or there but it's basically fine however you do it now.

FYI this Larry Swedroe post is excellent for your situation. In a nutshell, my take on his article is you should look at your life in terms of income streams. If you have a high paying employment income, you can probably withstand more risk from other streams; on the other hand, if your employment is going to burn you out earlier than later, then you can withstand less risk from other streams. Etc. So take a look at where your income streams are and understand the risks involved with each stream - having reached such an understanding, you should be able to reach a balance you like, including an AA that makes sense for you. http://www.etf.com/sections/index-inves ... nopaging=1

My guesses on your 3 streams:
Employment: High income, maybe not desirable/sustainable over the very long term
Commercial Building: Stable, decent income, sustainable over the very long term
ETFs: Medium-high risk; can take a high risk to last you until your employment is no longer sustainable, and have sufficient low-risk investments for as you approach the end of your employment

That said, I include the link just to give you more info. Your AA is fine, it's time to take action.

User avatar
gilgamesh
Posts: 1500
Joined: Sun Jan 10, 2016 9:29 am

Re: High Income Earner Humbly Seeks Advice

Post by gilgamesh » Tue Jun 06, 2017 1:58 pm

LongTerm1 wrote:
gilgamesh wrote:The defined benefit cash balance plan that allows you to put away $150k is a pension plan right? You are guaranteeing pension to your employees too correct? I think there's a strict rule on how much you are allowed to use from the pool. Do you understand exactly how it works?

Can you just get away from it like you've alluded to?

I am not an expert, but many in my career, at least towards the end, look to put away that much. However we were always told those defined benefit plans are not worth the trouble.

You obviously don't need any of that money, but curious whether you know the complexities involved, and if you do, can you explain a bit for me.

I hope you know it's not just another 401k with profit share...those are all defined contribution plans, yours guarantees pension to all your employees.

P.S: You mentioned residency, so assume it's a medical field.
Sure I would be glad to share what I know.

Yes- pension plan. You are only guaranteeing the plan as long as it's functional. I asked about long term and they said the plan makes sense if you can do it for at least three years.

Here's the story- I was paying an investment guy 1% to manage my money. He has discretion over my account- I ended up loosing money (shocker). During our long 10 month relationship they suggest the defined benefit profit sharing program to reduce taxes and save for the future. I ran everything by my accountant, several conference calls and then we decided to do it.

It's fairly complex. I don't as told it only makes since if you are keeping at least 80% of all contributions and had a small staff. I think our numbers came back at like 97%. The company runs lots of numbers based on hours worked, wages and employees ages (younger people get more of a benefit than older). My employees have the option to contribute toward the plan but all decided against it so this "retirement package" is just a perk to the job that I pay. The money toward each employee vests over 4 years and if the employee leaves/gets fired then left over funds can be used toward administration fees.

Two separate accounts- 401k and cash balance. 401k can be aggressive investment. I use Total Stock Market. Cash balance needs to earn around 4%- I use target date funds. You invest as you please.

It's honestly a pain. Yes I contribute $150k but it seems like the administrators are always needing something. It's also expensive.

Any way I can help. Ask away.
I wish I know enough to ask you specific questions. Yes the 80% rule is true even for 401k profit share. The age, length of employment too. So, all of that makes sense.

The guaranteed 4% itself is too much risk for me. I know it's highly likely, but I feel like I am leveraging when I do that. When I don't get the 4%, not only do I not get it, but have to make up for all other participants. I don't like that.

However the biggest issue is when you are terminating...curious how much that ends up costing you? I heard once terminated the 401h part has to be distributed, I'm curious whether at that time you will still get your 90% from the pool. I heard this is where it gets tricky.

I don't know much details, but can you please let me know how the termination went? Thanks! If you don't want to revive the thread, you can pm me...id really appreciate that. Starting in 2019 I could use a plan to put away that kind of money.

You being told of the 3 year time frame definitely doesn't sound right....I've heard 10-15 years minimum to keep these plans. 3 sounds too good to be true. However my knowledge is piece meal and murky.

grokzilla
Posts: 91
Joined: Tue Aug 16, 2011 8:25 am

Re: High Income Earner Humbly Seeks Advice

Post by grokzilla » Tue Jun 06, 2017 2:41 pm

mac808 wrote:
grokzilla wrote:
LongTerm1 wrote:Cutterinnj- what about advertising? Like livesoft said- flyers? Say you run an HVAC company and send out information to customers, TV ads, business cards, etc. that would easily costs you $5k. Accountant said if asked it needs to be a reasonable fee for work.
LongTerm -- Just a real world reality check from a parent with a kid who is a model -- they don't make what you probably think they make. Kid models are common and the pay reflects that reality. $5.5k earnings over the course of an entire year for a kid modeling in print is a A LOT of modeling work -- and that's in a major metro working with major brands.

I'd just advise some caution there -- anything that draws the eye of the IRS gives me the heebie jeebies! Or, maybe just make sure you knock out LOTS of photoshoots! ;-)
I've paid $500 - $1000 for the right to use a single commercial stock photo before, so I'm sure some effort could be made to make the amounts seem justified. From a practical perspective the IRS might not want to waste time pursuing someone for a couple thousand dollars in potential recovery, given that the amounts are so small in these cases, when there are lots of other high-dollar evasion and now rampant identity theft issues. As long as some statute of limitations is running on the contributions, I wouldn't lose sleep over it. Although I know in this regard IRAs can be unusual. Perhaps it would be appropriate to file a form 5329 for the child? I'm not a tax expert so I'll defer to others on the forum.
Totally understand, but you also did not pay the model that amount -- you paid the photographer/owner of that creative work. Again, different scale.

But totally agree, it's nothing to get too worried about -- however, why flirt with even the appearance of "unreasonable" especially in the OP's situation? Give them $28k per year and call it a day!

User avatar
JDCarpenter
Posts: 1403
Joined: Tue Sep 09, 2014 2:42 pm

Re: High Income Earner Humbly Seeks Advice

Post by JDCarpenter » Tue Jun 06, 2017 3:04 pm

cantos wrote:
LongTerm1 wrote: 60% Total Stock Market
20% Total international
20% Intermediate tax exempt
It's time to take action, this looks good. You can fiddle with it 10% here or there but it's basically fine however you do it now.

....
Yep. We can quibble all day, particularly on international. But the worst enemy of a good plan is the quest for a perfect plan. Go with this. If you decide next year that you need more (or less) international or bonds, you can fix it fairly quickly with your ongoing positive cash flow.
Edit Signature

AZAttorney11
Posts: 618
Joined: Wed Jan 21, 2015 12:12 pm

Re: High Income Earner Humbly Seeks Advice

Post by AZAttorney11 » Tue Jun 06, 2017 3:08 pm

grokzilla wrote:Totally understand, but you also did not pay the model that amount -- you paid the photographer/owner of that creative work. Again, different scale.

But totally agree, it's nothing to get too worried about -- however, why flirt with even the appearance of "unreasonable" especially in the OP's situation? Give them $28k per year and call it a day!
Because they need earned income to contribute to a Roth IRA.

killjoy2012
Posts: 1094
Joined: Wed Sep 26, 2012 5:30 pm

Re: High Income Earner Humbly Seeks Advice

Post by killjoy2012 » Tue Jun 06, 2017 3:27 pm

LongTerm1 wrote: 60% Total Stock Market
20% Total international
20% Intermediate tax exempt
OP - You've already received a lot of good advice. I'd pick an AA that'll allow you to sleep well & 'just do it'. Personally, given your income-to-expense ratio, you've already won the game. As such, if I were you, I'd be heavier in bonds. Something like age in bonds, even pushing 50%. Why risk putting 80% on the table unless you need that level of risk in hopes of hitting your retirement goals (which you clearly already have well in hand)? Just my thoughts, and there's nothing wrong with your AA above if you're comfortable with it in a bear market (think 2009).

Other than that, I'd second reviewing your insurance coverage and making sure you're adequately covered - disability, life, umbrella.

psychoslowmatic
Posts: 173
Joined: Fri Jul 19, 2013 2:34 pm

Re: High Income Earner Humbly Seeks Advice

Post by psychoslowmatic » Tue Jun 06, 2017 3:41 pm

Assuming the 2016 numbers stay the same forever, OP earns 1.8M, spends 70k, and invests 1.73M, or 24.7x expenses per year. 100x in 4 years. You probably won't even notice the difference between 100-0 and 0-100 because your contributions will dwarf market gains until the multiplier is so high that any potential market drop will still leave you with enough to retire immediately.

Let's say you're 100% stocks but haven't made any gain and it's 2025. Contributions alone give you 250x expenses. Now 1929 happens and your 100% stocks drop 80%. You still have 50x expenses or a 2% withdrawal rate, which is what most endowments that have to keep up with inflation forever use. I'd go 50/50 for simplicity but 70/30 is also reasonable, as is everything in between. The point of asset allocation is to increase risk-adjusted return but even the worst returns in history carry no risk with that high a savings rate.

User avatar
vitaflo
Posts: 1205
Joined: Sat Sep 03, 2011 3:02 pm

Re: High Income Earner Humbly Seeks Advice

Post by vitaflo » Tue Jun 06, 2017 5:39 pm

LongTerm1 wrote:
vitaflo wrote:
LongTerm1 wrote: I really do need help with deciding on percentage & allocation for a plan in my situation. I think I will sleep better with a plan in writing. Help.
Thoughts?
If you can't decide, I would go 50/50 and call it a day. Your income vs your expenses means that whatever the market gives you will be nothing compared to what you are saving every year. You are your returns. The market isn't going to do a whole lot for you either way when you're saving 90% of your income every year.

For what it's worth, people with extreme income to expenses ratio's tend to go very aggressive. The reasoning is since expenses are so low they can live off of the low bond % just fine, and let the stocks ride and never touch them. Warren Buffet I believe set up an aggressive portfolio for his wife for this reason.

That said, the easiest way to know the answer is just to see your reaction to an AA. If you feel 50/50 is too aggressive, then go more conservative. Or vice versa if you feel the other way. The math says it really won't matter in your situation at all.
Vitaflo- thanks for your response. Yes I will continue to save and hope, depending on life and I come, put large amounts of income into the market.

After reading through posts, what are your personal views on this AA?

60% Total Stock Market
20% Total international
20% Intermediate tax exempt

I know it's important to have a balanced portfolio but international is expensive and hasn't done well when compared to Total Stock Market. Last year being the exception. I even thought about 65/15/20.

Thanks again for your time.
If I was you, my portfolio would probably look fairly similar to this, especially if I was going to keep working (if I was deciding the call it quits early I would be more conservative). Just keep in mind that in a tax-advantaged account, you do not want to use tax-exempt. Just use a normal intermediate bond fund there, you already get the tax savings!

As for slightly lower International, etc, it won't matter. You would need much larger differences in US/Int ratio to really see much of a difference long term. Any major differences between AA's will be mostly mitigated with the large contributions you make every year.

Finance-MD
Posts: 316
Joined: Sun Mar 26, 2017 9:27 am

Re: High Income Earner Humbly Seeks Advice

Post by Finance-MD » Tue Jun 06, 2017 7:39 pm

Congratulations on your success in designing your life -- optimizing finances while ensuring that you spend time with your family and give back to your community.

You have received lots of great advice here. Analysis paralysis can be the worst (I can't deny I am a victim as well). Any AA you choose will be excellent...

I would advise perhaps a plan that does not requiring any rebalancing, such that there is less tinkering/second guessing to be made. Here are some options:

The simplest most straightforward plan...

The "Live off of VTSAX (Total US Stock Market) Dividends" plan

RIGHT NOW
(1) Donate all appreciated shares in taxable account to vanguard donor advised fund (DAF) (or Fidelity or Schwab; see BH forums for more on these)
(2) Sell all shares that are at a loss in taxable acount
(3) Buy VTSAX with 100% of all sale proceeds and all remaining cash/money/market in all accounts
(4) 529 x 3 kids, superfunded ($140k per child q5 years as desired) in VTSAX
(5) keep Spouse Rollover IRA in VTSMX (not enough for VTSAX)

ACCUMULATION PHASE
(1) VTSAX for all accounts
- Backdoor Roth IRA x2 ($11000 per year)
- Children's Roth IRA
- SEP IRA/401k/etc.
- consider a Coverdell ESA (can't do with vanguard)
- Cash balance plan (sorry - no recommendation from me on this one...)
(2) In December each year, donate appreciated shares to DAF to the amount you'd like for each year to fund your charitable giving for the following year; donate additional if you'd like.

GOAL: (you're a goal oriented, so I like having a simple straightforward goal...)
Grow Net worth to 5M
Continue in the Accumulation Phase until you hit this goal.
Then consider retiring at any time thereafter

"WITHDRAWAL" PHASE (Retirement)
(1) Consider paying off the mortgage of commercial property if it makes you feel better; but no need to as it's a tax deduction
(2) Spend money in following order, only moving to next level if needed
- rental property cash flow
- VTSAX dividends
- sell additional shares in taxable up to 4% of principal in any given year if needed
- if somehow taxable ever runs out, dig into the qualified accounts tax efficiently.
(3) Donate enough appreciated shares at end of each year to your donor advised fund to pay no income tax
(4) 529 (and Coverdell) to pay for kids college, grad school, etc.... can use leftover 529 money for other relatives and as an endowment for posterity

LATE WITHDRAWAL PHASE; approaching RMD's
Don't touch the Roth money ever - pass on to children
consider annual Roth conversions up to a tax bracket you feel comfortable with (e.g. 25% bracket?) to minimize RMD burden, estate tax, etc.
consider DAF contributions annually to avoid taxation
consider a trust to help avoid some estate tax issues (get an estate attorney now...)

SIMPLE OPTION #2
Everything as above, but instead of VTSAX in taxable, use a more conservative 60/40 allocation using Vanguard Tax Managed Balanced fund (VTMFX). All protected accounts can remain in VTSAX.
This would put your overall AA probably closer to 70/30

Side notes
- Dividends of VTSAX are 1.7% currently; or $85k per year if 5M; after taxes if no deductions, you're still at $70k).
- Insure yourself well (disability, umbrella, etc.)


Good luck!

Topic Author
LongTerm1
Posts: 22
Joined: Thu May 25, 2017 3:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by LongTerm1 » Wed Jun 07, 2017 5:19 pm

​Thank you all for your great advice and contributing to the conversation. It's interesting to see all the knowledge and different perspectives.

Moneywise3- I'm glad to answer your question. Doctor. I understand my situation is different in some aspects but honestly it's all basically the same. Money is money and I truly feel blessed my family has not changed their mindset with increased income. Probably because we don't let it. Having toys in excess is a distant second to being financially secure. Of course what works for my family might not work for others. I hope I'm not painting a picture we do without. We just don't like clutter and like to limit the "noise" in our lives.

Disability insurance.... it's crazy expensive. Once financially secure, which I am not, at some point it's not worth having. Term life insurance is a little different because it's so cheap.

I do need an umbrella policy in place. 2 million?

Model topic- lots of conversation around my kids "modeling" on website any photos around the office. This was my accountant suggested role and he felt we could justify to the IRS if needed. Similar to my wife's salary.

Donor Advised Fund (DAF)????? I guess Vanguard can help me set that up and I move all stocks I've made money into that account and then sell the stocks and give the proceeds to our church? So let's just say for example if I give $100K to the church through this fund, what is the deduction.... from giving to charity or I get to deduct the entire sale from my taxes? Sorry I have never done this. I don't want to look at my church tithe as "what do I get back" (reason I don't charge my tithe on a credit card) but think I should be smart about the strategy.

Finance-MD
Posts: 316
Joined: Sun Mar 26, 2017 9:27 am

Re: High Income Earner Humbly Seeks Advice

Post by Finance-MD » Wed Jun 07, 2017 7:55 pm

Yes, you can set up a donor advised fund with vanguard.

You send a letter to the vanguard charitable foundation in charge of the DAF with a list of the lots of the particular shares that you want to donate (e.g. Tell them the stock name, date of purchase, and price).

See physician on fire - he had an awesome blog post about this

Once you donate those appreciated shares to the DAF, that is your charitable donation for the sake of tax purposes

Once in the DAF, you can then keep that 'money' invested.
You do not need to do any 'selling' yourself
Literally the DAF will continue to increase in value because it's a new investment account, but not for you, for your charitable beneficiaries

Whenever you want to send money to a charitable org, you tell the DAF that you want to send the money. It can be on a regular basis or individual occurrence. It will sell off stock to make the contribution.

Minimum to start a vanguard DAF is 25000
Minimum donation from vanguard DAF is $500

If you use fidelity, minimums are like $5000 to start and $50 each donation

You can also transfer from vanguard DAF to fidelity DAF if you want to use vanguard but also make small donations.
Physician on fire's blog post goes into all of this in good detail
It's excellent

In short - donate appreciated shares to the DAF, and make donations to charity from the DAF. buy new shares with what you otherwise have used to make charitable contributions directly.

I agree, you don't make charitable donations 'for' the tax deduction. But you certainly want to get the biggest you can. If for no other reason, you could donate even more.

p.s. Umbrella policy - yeah I think 2M is probably enough. I'm assuming your physical assets (e.g. home and rental) aren't that much.

thehappycampers
Posts: 10
Joined: Sun Jun 04, 2017 1:46 pm

Re: High Income Earner Humbly Seeks Advice

Post by thehappycampers » Thu Jun 08, 2017 7:30 am

Physician on Fire link that was mentioned above:

http://www.physicianonfire.com/donoradvisedfund/

NYGiantsFan
Posts: 174
Joined: Fri Aug 17, 2012 7:59 am

Re: High Income Earner Humbly Seeks Advice

Post by NYGiantsFan » Thu Jun 08, 2017 12:30 pm

An old article you may want to research. (You are already doing Pension plan from the article).
https://www.forbes.com/sites/ashleaebel ... 31317a68be

Topic Author
LongTerm1
Posts: 22
Joined: Thu May 25, 2017 3:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by LongTerm1 » Thu Jun 08, 2017 9:50 pm

Both great articles.

I feel like I have lots of work to do. It's amazing how quickly your mindset changes from "how much can I make" to "how do I keep the money I've earned."

Thank you.

livesoft
Posts: 69587
Joined: Thu Mar 01, 2007 8:00 pm

Re: High Income Earner Humbly Seeks Advice

Post by livesoft » Fri Jun 09, 2017 11:59 am

Finance-MD wrote:Once you donate those appreciated shares to the DAF, that is your charitable donation for the sake of tax purposes

Once in the DAF, you can then keep that 'money' invested.
You do not need to do any 'selling' yourself
Literally the DAF will continue to increase in value because it's a new investment account, but not for you, for your charitable beneficiaries
My opinion is that a DAF is a conduit account and shares going in should be used to send money to charities within a year or less. Gains in the shares should happen in your own personal accounts and not in the DAF. That way you get the biggest tax deduction. So let the gains happen in your own account, then donate shares to DAF, then money from the DAF to your charity.
Wiki This signature message sponsored by sscritic: Learn to fish.

Finance-MD
Posts: 316
Joined: Sun Mar 26, 2017 9:27 am

Re: High Income Earner Humbly Seeks Advice

Post by Finance-MD » Fri Jun 09, 2017 2:30 pm

livesoft wrote:
Finance-MD wrote:Once you donate those appreciated shares to the DAF, that is your charitable donation for the sake of tax purposes

Once in the DAF, you can then keep that 'money' invested.
You do not need to do any 'selling' yourself
Literally the DAF will continue to increase in value because it's a new investment account, but not for you, for your charitable beneficiaries
My opinion is that a DAF is a conduit account and shares going in should be used to send money to charities within a year or less. Gains in the shares should happen in your own personal accounts and not in the DAF. That way you get the biggest tax deduction. So let the gains happen in your own account, then donate shares to DAF, then money from the DAF to your charity.
Hi livesoft - always enjoy your posts!

Yes - I thought i was inferring to let the gains happen in taxable, then send over to DAF.
If for example he plans to send 100,000 to charity each year, he can invest an additional 100,000 into his taxable account, then choose 100,000 worth of stocks with the most long-term capital gains to then transfer to the DAF.

I definitely appreciate your opinion on money being sent to charities within a year. e.g. if the DAF weren't there, the donation would be made already. And I have heard that some people don't end up establishing charitable organizations, etc. and not actually donating any substantial money to charitable purposes (which I certainly don't agree with).

What do you think about very large contributions? Let's pretend someone wanted to donate, say $20,000 annually while working. He wants to take advantage of the big tax deduction during very high income years and years of high market growth so decides to front-load it... and put in say $100,000. $20,000 could be paid out immediately, the other $80,000 could grow. After 6 years, now there's let's say $~500,000 in there. Now, the person has established an endowment that can pay out $20,000 annually (4%) or $15,000 (3%) potentially for perpetuity... + additional contributions while still earning money, etc.

If I'm not mistaken, I think Physician on Fire's approach is to get his DAF up to 10% of his portfolio (or something like that) and use it as an endowment over time. I hadn't thought about DAF's as an additional investment account to be used as an endowment until I read his post... but it certainly sounds appealing to me.

Finance-MD
Posts: 316
Joined: Sun Mar 26, 2017 9:27 am

Re: High Income Earner Humbly Seeks Advice

Post by Finance-MD » Fri Jun 09, 2017 2:40 pm

LongTerm1 wrote:Both great articles.

I feel like I have lots of work to do. It's amazing how quickly your mindset changes from "how much can I make" to "how do I keep the money I've earned."

Thank you.
100% with you.
Your biggest 'leakage' while working with no question is taxes.
Your biggest 'leakage' over your lifetime will be inflation (and taxes).

I've been thinking about your cash balance plan; do you mind sharing how much they've said you're allowed to put into it each year and ultimately how much it costs you?
You're paying >40% tax on every dollar that doesn't get put into a protected account. When the plan is closed down, you can roll it into an IRA or 401k and get away from the expenses. It's possible that money could get pulled out at the same marginal tax rate during the RMD phase, so there may not be a tax arbitrage; but you would get the tax protected growth, which could still be quite worth the fees. Also, you'll have a lot of time to try to mitigate the RMD problem. If given the option to avoid tax today in exchange for maybe paying the same tax later... i'd happily always pay the tax later. Of course there's a risk you could be at an even higher tax rate later in life... In the end, however, this would be money you probably will never ever need to touch; so i'd rather have a bigger portfolio now, which gives me more financial security, and worry about the worst case scenario (huge tax liability due to enormous portfolio) later, when it won't be a problem regardless.

Topic Author
LongTerm1
Posts: 22
Joined: Thu May 25, 2017 3:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by LongTerm1 » Fri Jun 09, 2017 2:50 pm

Livesoft & Finance-MD-

So I had an opportunity to speak with an accountant today on DAF. I was not paying him but his reputation is something I strive to achieve. Straight shooter.

As livesoft said before, my current accountant should of suggested this a long time ago. He didn't. He does my taxes but doesn't bring me suggestions. Basically he pushes papers.

The accountant today said that typically a DAF is to donate money in your highest income years, let it grow over time so that you can give to charitable organizations over time. Basically for people with swings in income so your highest years offset your lower income years, allowing you to still give. His belief was that most don't make large contributions (not sure why it would matter) but this allows the investor to give towards different needs throughout the year. When I brought up the tithe to churches aspect, like livesoft said- conduit, he said it would be more than fine. So his answer was it can be used for short or long term.

I asked him about using Roth IRA verse 529 for school expenses. He said for sure use 529. A Roth works but more paperwork and possible red flags to explain to IRS.

Not to stir the pot but I asked him about earned income for my sons Roth and he did not object. Many different opinions on this topic.

livesoft
Posts: 69587
Joined: Thu Mar 01, 2007 8:00 pm

Re: High Income Earner Humbly Seeks Advice

Post by livesoft » Fri Jun 09, 2017 3:26 pm

Finance-MD wrote:What do you think about very large contributions? Let's pretend someone wanted to donate, say $20,000 annually while working. He wants to take advantage of the big tax deduction during very high income years and years of high market growth so decides to front-load it... and put in say $100,000. $20,000 could be paid out immediately, the other $80,000 could grow. After 6 years, now there's let's say $~500,000 in there. Now, the person has established an endowment that can pay out $20,000 annually (4%) or $15,000 (3%) potentially for perpetuity... + additional contributions while still earning money, etc.

If I'm not mistaken, I think Physician on Fire's approach is to get his DAF up to 10% of his portfolio (or something like that) and use it as an endowment over time. I hadn't thought about DAF's as an additional investment account to be used as an endowment until I read his post... but it certainly sounds appealing to me.
I was just injecting my opinion about DAFs into the conversation and quoted your post just because it was a most recent one about the DAF in this thread. Everybody has their own opinion, so I know other folks do things differently.

And one of the other opinions is that folks think some of their charities can not use a big 'one-time' donation wisely, so they want to dole it out over many years, but still get the tax deduction in one year.

So aren't I entitled to my own opinion? :)
Last edited by livesoft on Fri Jun 09, 2017 7:11 pm, edited 1 time in total.
Wiki This signature message sponsored by sscritic: Learn to fish.

DFAMAN
Posts: 108
Joined: Sat Sep 19, 2009 6:03 pm

Re: High Income Earner Humbly Seeks Advice

Post by DFAMAN » Fri Jun 09, 2017 5:29 pm

I realize that the bias on this board is toward "do it yourself" management, but with your existing assets and earning potential, I don't think it would be a bad idea for you to consider an advisor (not a broker) with whom you should be able to negotiate a very reasonable (less than 40 basis points per year, most likely) fee and who could help you with all kinds of things, like DAFs (they would take care of the leg work), tax loss harvesting, consulting on asset allocation based on good academic research, etc., and this person could give you access to DFA funds, which are "passive" (not stock pickers) but which have some advantages. I had earnings similar to yours for the 10 years prior to my retirement. Given how hard I was working, my advisor provided a huge help to take care of the details and to make sure things stayed on track. You could do all of this yourself, but there are some very good fiduciary advisors who could make your life easier. This may doesn't make sense for everyone, but for someone like you, I believe it would make your life easier and not cost you in terms of your long-term goals.

With your earnings, you could be in a position to make very significant contributions to church and other causes that you care about, for a long period of time. You also could be in a position, if you desire, to retire with an 8 figure portfolio within a manageable period of time, and also do tremendous good works with a portion of your money.

PM me if you want details of my situation. I just retired fairly recently.

Best to you.

User avatar
PhysicianOnFIRE
Posts: 458
Joined: Fri Jan 08, 2016 3:46 pm
Location: Up North

Re: High Income Earner Humbly Seeks Advice

Post by PhysicianOnFIRE » Mon Jun 26, 2017 10:04 pm

Finance-MD wrote:
livesoft wrote:
Finance-MD wrote:Once you donate those appreciated shares to the DAF, that is your charitable donation for the sake of tax purposes

Once in the DAF, you can then keep that 'money' invested.
You do not need to do any 'selling' yourself
Literally the DAF will continue to increase in value because it's a new investment account, but not for you, for your charitable beneficiaries
My opinion is that a DAF is a conduit account and shares going in should be used to send money to charities within a year or less. Gains in the shares should happen in your own personal accounts and not in the DAF. That way you get the biggest tax deduction. So let the gains happen in your own account, then donate shares to DAF, then money from the DAF to your charity.
Hi livesoft - always enjoy your posts!

Yes - I thought i was inferring to let the gains happen in taxable, then send over to DAF.
If for example he plans to send 100,000 to charity each year, he can invest an additional 100,000 into his taxable account, then choose 100,000 worth of stocks with the most long-term capital gains to then transfer to the DAF.

I definitely appreciate your opinion on money being sent to charities within a year. e.g. if the DAF weren't there, the donation would be made already. And I have heard that some people don't end up establishing charitable organizations, etc. and not actually donating any substantial money to charitable purposes (which I certainly don't agree with).

What do you think about very large contributions? Let's pretend someone wanted to donate, say $20,000 annually while working. He wants to take advantage of the big tax deduction during very high income years and years of high market growth so decides to front-load it... and put in say $100,000. $20,000 could be paid out immediately, the other $80,000 could grow. After 6 years, now there's let's say $~500,000 in there. Now, the person has established an endowment that can pay out $20,000 annually (4%) or $15,000 (3%) potentially for perpetuity... + additional contributions while still earning money, etc.

If I'm not mistaken, I think Physician on Fire's approach is to get his DAF up to 10% of his portfolio (or something like that) and use it as an endowment over time. I hadn't thought about DAF's as an additional investment account to be used as an endowment until I read his post... but it certainly sounds appealing to me.
Yes -- that is the plan. My salary is about 80% less than the OP's, but I've been working about 4 times longer, so I've managed to fund our DAF with $200,000 and will put in another $50,000 or so this year.

As outlined very well in several posts here, I do treat it as an endowment of sorts. Fill it up now when I occupy the upper federal and state income tax brackets and dole it out over a lifetime, using a slightly more aggressive withdrawal rate than I will with my own retirement money.

I'll be comfortable giving 5% or more from the DAF annually as the consequences of that running out in my lifetime are very different from my nest egg running dry too soon.

This thread is full of solid advice, and I'm planning to work with the OP to develop an action plan that I will publish in the coming weeks.

:beer
-PoF

crispydoc
Posts: 13
Joined: Tue Oct 18, 2016 12:32 pm

Re: High Income Earner Humbly Seeks Advice

Post by crispydoc » Sun Jul 09, 2017 8:45 pm

Congrats on beginning from a position of enviable strength!

Mike Piper at the Oblivious Investor has a great post highlighting 8 simple portfolios http://www.obliviousinvestor.com/8-samp ... ortfolios/ that permit you to select a level of complexity to match your investing comfort. Might offer you a look at a sound investing menu that won't overwhelm.

In defense of starting with the 3 fund portfolio as others have suggested: you can use these 3 funds as building blocks for later should you seek a more complex portfolio as your financial education and experience progress.

Congratulations on starting near the finish line!

CD

Topic Author
LongTerm1
Posts: 22
Joined: Thu May 25, 2017 3:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by LongTerm1 » Sat Aug 05, 2017 7:38 pm

Thank you all for your time and efforts. Based on this thread, Physician on FIRE highlighted my story and created an IPS based largely on your comments. The information that was offered, except a few, is truly valuable and I hope it proves useful for others. Invaluable for me.

To further the conversation, I would recommend that each of you read the following two part summary article (Part I is an introduction and summary. link.) Part II has the IPS, discusses the DAF, 529s, and other recommendations from this thread. link). I would also encourage you to read the comments.

Based on all the recommendations, I've started the process of implementing the following:

** PLEASE ** If you feel obliged to comment and tell me what you would do different. Please do. Greatly appreciated.

Allocation- I believe the correct allocation for me is 65% Vanguard Total Stock Market/ 15% Vanguard Total International/ 20% Vanguard Intermediate Tax exempt bonds. I will hold the Tax exempt bonds in the taxable account. Currently I have invested $1.8M in VTSAX. I am investing chunks over time. If the market corrects then I would dump whatever is left in equities. I don't think an investor needs international but for the time being I think 15% will be appropriate. I have sold all my stocks except 6 of them (4 of the 6 have limits orders in and hope to sell this coming week). I will also be selling the other two after everything pans out. I have also placed a limit order to sell VDE. Trying to simplify everything. Not going to do the backdoor Roth IRA.

529 plans. I am going to setup three separate plans for my children this year. I plan to contribute $100k in each account and invest in VTSAX. I am going to continue contributing to my children's Roth until they reach $20k and then re-eval. My concern is their education- not their retirement.

I plan to continue the defined benefit cash balance program. I hate the administrative fees but I need the write off and it helps me squirrel away as much as possible.

Insurance. I don't think I need disability insurance. I will be purchasing an umbrella policy. I had an informal meeting with an attorney and the only asset protection advice he suggested was the umbrella policy. Keep the term life insurance.

Salary- I always knew I should be taking a monthly or at least a quarterly salary (instead of once a year because it to make it simple and clean- which also helped with making donations to the church). I will invest salary distributions according to my 65/15/20 allocation.

Setup a DAF through vanguard and make all church donations through this fund. Sell VTSAX to fund the DAF every year.

Commercial property- probably not going to pay off note for a few years considering low interest rate.

Lifestyle- work hard and try to retire in 11-16 years. I have taken some time off of work after reading some suggestions and will work on doing a better job balancing. Will limit my day to 9 hours a day.

I would still like to find some type of investment that creates an additional source of revenue. As many pointed out, I am my own returns. If I don't work, no returns. Another source of income would be great.

Again, thank you again for taking time to read the posts and share your knowledge.

ImaBeginner
Posts: 102
Joined: Fri Sep 11, 2015 12:21 pm

Re: High Income Earner Humbly Seeks Advice

Post by ImaBeginner » Sat Aug 05, 2017 10:16 pm

I think you are making a huge mistake not getting at least 10k a month of disability until you are closer to being decided on retirement. You arent going to keep it forever, but insuring the next 5 years or so guards you from your #1 risk, a loss of your earning potential.
Compared to your income it is dirt cheap. If you lost a hand or had an accident affecting your ability to work you effectively have wasted most of your education. At least if your modest expenses are covered, you and your family could continue on without financial issues. Your current nest egggets to grow untouched.
Last edited by ImaBeginner on Sat Aug 05, 2017 11:23 pm, edited 1 time in total.

Finance-MD
Posts: 316
Joined: Sun Mar 26, 2017 9:27 am

Re: High Income Earner Humbly Seeks Advice

Post by Finance-MD » Sat Aug 05, 2017 11:21 pm

Congrats LongTerm1 on moving forward with your plan.
PoF - awesome articles; excellent work and well thought out.

LongTerm1 -
Article says 60/20/20 but you say 65/15/20... any reason for the 65/15 instead of 60/20/20 with rounder numbers?

Is your bond allocation filling up your cash balance (treasuries) with remainder in muni's in taxable?

Article looks like trying to put all bonds in protected accounts preferentially. Based on the 0.5% tax drag with 2% dividend rate, I thought WCI showed that bonds is preferable in taxable.
I use this approach and use muni's in taxable... this also decreases volatility of my liquid account that I can use for real estate purchases... though it hampers TLH.
However, with high concern for RMD's, maybe bonds in protected is the better way to go.

Why no backdoor Roth? Trying to keep simpler? Understand if that's the rationale... but you may be doing Roth conversions in the future anyhow, so why not.
But if you do TLH and donation of appreciated shares, I agree the backdoor Roths might just add an unnecessary level of complexity without much benefit.

Did you mean to say you will fill up the 529's up to $200k? Are you going to lump sum $100k, then after 4 years do $28k annually until $200k?

I would do long term disability until you are okay not working another day or earning another dollar.

Your investments are another source of income... what other type of income would you like to have? Do you want another job that will take time? If you want higher monthly passive income, then you can take a portion of your investments and put them into passive direct real estate that will yield higher 'dividends.' You have your commercial property. Do you want more?

What is your long term plan for your AA? Assuming you get up to your 80/20, do you plan to stay at 80/20 for perpetuity?
I think that should be part of the IPS (and I may have just missed it).

I just want to say - i think it's amazing how much crowdsourced time, effort, and knowledge have come together to discuss this very excellent 'case.'

You moving forward with your plan speaks volumes to your dedication OP (this is by no means an easy 'jump'). And taking this leap forward hrlps contributors know their time and effort has been put to good use.

Congrats ---

thefireguy
Posts: 35
Joined: Tue Jul 29, 2014 12:34 am
Contact:

Re: High Income Earner Humbly Seeks Advice

Post by thefireguy » Sun Aug 06, 2017 12:20 am

Great thread here and I don't have much to add because there are a lot wiser, wealthier and experienced folks on this thread than I.

Just one comment on international exposure and general mindset. I would tend to disagree on the not needing it. Yes agreed that US stock market has outperformed INTL in the last 7 years, but past performance does not indicate the future. If anything, if you think about normalization that could indicate that international could go on a run for the next 7 years. My thoughts are just to make sure that your investment strategy is still focused on the long term horizon (20+ years).

Ultimately though, your contributions will likely be the driving factor in your accumulation because of that big shovel that you have built. Congrats and glad to hear you are spending more time with family. It's something that I can say as a an employee and a new dad, I will certainly struggle with the work/life balance paradigm in my life. So as an owner, I would definitely take advantage of the flexibility that you have.

On the ROTH contributions for your kids, you (or they someday) are allowed to take the contributions out tax and penalty free ONLY before 59 1/2. Not any growth. Your CPA should be able to confirm this. I keep a spreadsheet of my contributions for my records and this serves as another "backup" emergency fund if ever needed. But I'd rather let it grow. And in your case very unlikely you'll need those funds.

With the amount of income you have and the business you have built - I would think you might think about starting to diversify your income streams at some point in the future. Real estate might be one option for that. Single family homes, Apt buildings, commercial properties. Probably would want to start small. If you go this route make sure to set up the real estate in LLC or something similar so any potential risk is insulated from your personal finances. Also if you wanted to be more hands off you could try some of the online REITS / real estate platforms. But I'd be super careful with these to understand fees and risks.

And can't remember now if it came up yet but you probably want at least a couple of million of both term life insurance and an umbrella policy - in your case. Both should be pretty cheap and would provide yet another security blanket for your family.

Topic Author
LongTerm1
Posts: 22
Joined: Thu May 25, 2017 3:45 pm

Re: High Income Earner Humbly Seeks Advice

Post by LongTerm1 » Sun Aug 06, 2017 12:24 pm

Thank you all for your replies.

PoF did an excellent job designing and articulating my story. I hope to have a continued relationship.

Finance-MD I know many have said I have already won the game which is true in regards to the amount money I can save/expenses but still there are so many variables in my life with three little kids, career... life. I'm fine with taking a little more risk/reward and bumping the allocation from 60% to 65%.

I so wish Vanguard has some type of pie chart or something that told us the percentage you had in each fund. Would make buying and reallocating super easy. I have been told that most use an excel spreadsheet. I haven't gotten that far.

Bonds. Some comments on Boglehead said I should consider a total bond fund while others said go with intermediate tax exempt. I thought 20% tax exempt in my taxable account would work. Any thoughts?

Backdoor- after speaking with my accountant he also said it would be a hassle for little reward. His opinion.

529- to clarify I will be placing $100k in three separate 529 account's ($300k total) this year. I'll revisit contributions in a few years. That's a lot of money but I would rather do a chunk now.

International- It's probably a good idea to have but I can't lie, it's hard to justify. Bottom line is I am going to do it since I am looking for a balanced portfolio.

I would like another source of income- like thefireguy recommended- maybe real estate. My only concern about owning actual real estate is liability. Hopefully the corporate entities would protect me. Something that creates enough income to sustain my monthly expenses. Thefireguy is exactly right, my concern is time. The argument could be made, "why reinvent the wheel, if I can make more in my current profession." So basically if time is my biggest asset, why invest my time for a smaller reward when compared to current income. So far I've applied this and just worked harder. A passive stream would be my dream.... make a little money while on vacation would be awesome.

User avatar
celia
Posts: 9981
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: High Income Earner Humbly Seeks Advice

Post by celia » Sun Aug 06, 2017 2:25 pm

LongTerm1 wrote:I plan to continue the defined benefit cash balance program. I hate the administrative fees but I need the write off and it helps me squirrel away as much as possible.
Think of the $6K administration fee as the "cost" for maintaining the plan. That cost isn't that bad if you have more than 6 participants in the plan. Of course, the administrator has to keep track of when each employee becomes eligible and leaves. Possibly a leaving employee can roll their share into a 401K or TIRA, so that is extra work for them. They also have regulatory filings, and probably audits, to keep the plan in compliance with IRS regs.
Insurance. I don't think I need disability insurance. I will be purchasing an umbrella policy. I had an informal meeting with an attorney and the only asset protection advice he suggested was the umbrella policy. Keep the term life insurance.
I think you need all of them: disability, umbrella, life, business, professional liability. You have too much to risk to not have proper coverage.
Setup a DAF through vanguard and make all church donations through this fund. Sell VTSAX to fund the DAF every year.
It was suggested earlier to grow the stock in taxable, then donate it to DAF, then sell. That will keep LT capital gains out of your income tax return whereas selling before you donate will increase your income tax liability.
I would still like to find some type of investment that creates an additional source of revenue. As many pointed out, I am my own returns. If I don't work, no returns. Another source of income would be great.
Consider buying commercial property (and have it managed?) in a larger town. Seek some diversity by having it be different than the building you already own. (different business, company revenues, location)


I would have your wife convert all her non-Roth IRAs to Roth. Then have her do backdoor Roth contributions each year. This will have a small up-front tax liability the first year, but then the earnings can grow tax free. Have her Roth and the kids' be invested solely in a stock fund to keep things simple.

Start thinking about estate taxes and see an estate planning lawyer within a year. There is another thread about a high net worth individual who is wondering if it makes sense to convert some of his/her tax-deferred accounts to Roth. That is debatable in that person's situation, but I thought this estate planning post was good:

viewtopic.php?f=2&t=225019&p=3480825&#p3480825

User avatar
GreatOdinsRaven
Posts: 550
Joined: Thu Apr 23, 2015 8:47 pm

Re: High Income Earner Humbly Seeks Advice

Post by GreatOdinsRaven » Sun May 27, 2018 10:43 am

LongTerm1 wrote:
Sun Jun 04, 2017 7:27 pm
livesoft wrote:I just received in the mail a very nice flyer of a new dental practice in town. The photos used were of the dentist, their spouse, and their adorable children all with fantastic smiles! I bet those kids got paid modeling fees for this bit of marketing.
I have heard of dentist doing it for their practices. Don't forget photos on websites and photos on the walls throughout the office or practice.

To be clear from what I've been told, you pay a 10% penalty on the money you take out of a Roth before like 59.5 years of age but education is excluded. Now my children will be tax on that money each year they withdraw but it will be in their tax bracket not mine. It also affects their ability for financial aid and any grants.

I will need to look into the 529 option more. Especially if I can contribute $140k. I can do that every 5 years?

I liked the Roth option since I felt they could use it for retirement, education, house or school.

I’ve found this Vanguard 529 pages to be very helpful. You can compare the Vanguard Nevada plan to any state’s plan. I’d recommend comparing the Vanguard NV plan to your state’s plan and to Utah. Utah has higher total contribution limits than TX and NV. Our plan is to start funding a plan in UT when we’ve reached the limits of the NV plan in approximately 2 years.

As someone else mentioned we plan to use it as one way to pass assets to our heirs.

https://vanguard.wealthmsi.com/comp529m ... lanid2=UT1

I also recommend the Vanguard 529 college cost calculator (launch the pdf report to get more useful information):
https://vanguard.wealthmsi.com/csp.php

We have DCA’d into the plan over the years. If we had the means to contribute a 5 year lump sum we would have done so.

Last thought- I believe you or someone else mentioned 529 accounts opened by grandparents. Each state’s plan has total contribution limits for all plans in that particular state. So if you, your spouse and grandparents have all opened 529 accounts in, for instance TX, the total contribution limit for all accounts in that state is $370,000. As someone else mentioned when that happens, if you so choose, you can open another account in another state. Obviously your interest in doing so will be predicated on the current age of your child(ren), estimated cost of attendance, years of attendance, and any wealth transfer planning options you’re considering. If you use the Vanguard calculator for 8 years of private school (undergrad and med school...) with a starting date more than 10 years out, you’ll be astounded by the estimated cost of attendance... Of course that opens the discussion of what’s actually reasonable and does it make sense to invest that much into education when a cheaper public school education can yield the same or similar career in the end (this coming from a person who has a background in both public and Ivy school education). I can make both arguments.

You might also find the wiki to be very helpful:
https://www.bogleheads.org/wiki/529_plan

As Livesoft mentioned, your end net-worth will largely be determined by your savings rate rather than investment returns- particularly in the short to intermediate term.

And as someone else mentioned I’d assume you have the mentality of making hay while the sun shines.

I have had the same attitude.

Trust me- life comes at you quickly and there’s always the chance that your circumstances will change dramatically and unexpectedly. I’ve seen it happen to family, friends and to myself. If you’ve front-loaded your savings and make great planning choices you’ll be ready for the storm. Life has a way of humbling us all. Your current savings rate will help Insulate you. Make sure your umbrella policy is large-enough. Buy a little more term life insurance than you need (it’s dirt cheap, especially relative to your income) and every year due to inflation we all lose purchasing power... I like the idea of term life ladders. Buy a longer term than you think you’ll need. I’ve had friends who have become unisurable and who had too little term coverage amounts for too short of a term.

I knew a guy who was 33 with an undiagnosed PFO. CVA. Dead 4 weeks later. Underinsured (uninsured...). Two kids. Stay at home spouse. Mortgage. No 529s...

Same for same specialty disability. Make sure you’re covered.

GOR
"The greatest enemies of the equity investor are expenses and emotions." -John C. Bogle, Little Book of Common Sense Investing. | | "Winter is coming." Lord Eddard Stark.

User avatar
tfb
Posts: 8190
Joined: Mon Feb 19, 2007 5:46 pm
Contact:

Re: High Income Earner Humbly Seeks Advice

Post by tfb » Sun May 27, 2018 2:32 pm

LongTerm1 wrote:
Sun Aug 06, 2017 12:24 pm
Backdoor- after speaking with my accountant he also said it would be a hassle for little reward. His opinion.
William Bernstein once said "If you've won the game, stop playing." At your income level, the $5,500 for a backdoor Roth and $5k to a kid's Roth are a drop in a bucket. You might as well treat them as gimmicks and not play on the edges. Instead focus your attention on risk reduction. Keep asking yourself what can go wrong. You don't need additional aggressive tactics. You will make it by simply not screwing it up.
Harry Sit, taking a break from the forums.

Post Reply