help with financial planning

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Topic Author
mirandablue
Posts: 21
Joined: Thu Oct 04, 2018 9:32 pm

help with financial planning

Post by mirandablue » Tue Jan 08, 2019 6:09 pm

Please help with financial planning; new to the world of investing, held most assets in cash so far, excluding retirement funds with previous employers:
Emergency fund: $25k in CDs
Debt: Condo purchased in 2018 for 382500. Mortgage: 15 yr fixed at 4% API
Tax filing status: Head of household
Tax rate: 32% federal, 9.3% state
State of residence: CA
Age: 40 years
Desired asset allocation: 80% stocks, 20% bonds
Desired international allocation: 30% of stock

Salary: $210k
Total assets:
Retirement: 9k with current employer (started 6 months ago) (details below)
80k with previous employer (TIAA cref money market and vanguard target fund)
ROTH IRA with wealthfront 5.5k
$200k (mostly in CDs and savings), wealthfront brokerage (10k) .

Current retirement assets:
New employer 401k
Vanguard target dated fund 2045 ER 0.05%
Domestic Stock 54.09%Foreign Stock 34.16%Bonds 9.92%Short Term 1.57%Other 0.26%
Current employer matches up to 6%
$9000 from last few months of employment

Other funds available in 401k with ER%s
BP LARGE CAP VALUE Stock Investments 0.32
DODGE & COX INT Stock Investments 0.53
INTL EQUITY INDEX Stock Investments 0.06
LARGE CAP GROWTH Stock Investments 0.36
MIDCAP EQUITY INDEX Stock Investments 0.03
NT S&P 500 INDEX Stock Investments N/A 0.01
OPPHMR DEV MKTS Stock Investments 0.79
RUSSELL 2000 SC INDX Stock Investments 0.02
T ROWE SMALL CAP STK Stock Investments 0.66
DIVERSIFIED BOND 0.23
T ROWE STABLE VALUE 0.25


Previous employer 403(b) ($80k)

CREF Money Market R3 $20k ER 0.24%
Vanguard Institutional Target Retirement 2045 Institutional $60k ER0.09%


ROTH IRA with wealthfront: $10k

U.S. Stocks 21%
Foreign Stocks 18%
Emerging Markets 15%
Dividend Stocks 15%
Real Estate 14%
Corporate Bonds 10%
Emerging Market Bonds 7%

Questions:
1. I want to invest the cash in hand ($200k) for retirement, and contribute a fixed amount on a monthly basis for retirement. Where should I invest and what asset allocations? Should I keep the current target dated fund or use individual funds. What are the advantages of each?. If individual funds, which ones and what ratio? This is in addition to maximizing 401k contributions for the year.

2. Should I roll over ROTH IRA at wealthfront to vanguard or leave it with wealthfront?
3. What should I do with retirement account with previous employer- TIAA money market and vanguard target fund? Should I roll over? What tax implications for back door ROTH?
4. Should I consolidate all these funds with Vanguard to have them all in one place.
Any specific advice and funds to invest these in (all of above) so I do not have to pay a financial advisor?
Last edited by mirandablue on Wed Jan 16, 2019 3:58 pm, edited 6 times in total.

User avatar
Brantley
Posts: 325
Joined: Mon Dec 03, 2012 1:02 am

Re: help with plan proposed by financial advisor

Post by Brantley » Tue Jan 08, 2019 6:25 pm

I have a few questions and thoughts:

1) Are you married? If so, can you update with your spouses info
2) Why do you have $200k in cash and CDs? Are you intending to spend that soon? I see you have a house already. You should invest most of this.
3) Are you total assets right? Doesn’t add up
4) You are behind on retirement savings. I’d focus on increasing HSA and/or 401k savings before funding the 529. Your child can get loans, but you are in trouble if you run out of retirement money
5) Is this financial advisor asking you to move money over to him with an AUM structure? I would avoid.
6) Is the TIAA pre-tax money? I wouldn’t convert it to a Roth as you’d have a large tax liability. Roll over into an equivalent IRA with Vanguard or Fidelity.
7) Do you have 401k savings at your current employer?
8) Wealthfront is fine, but it may be easier to consolidate
9) It likely makes sense for you to save all pre-tax at this point.
10) 10% seems a tad aggressive for bonds. Maybe closer to 20-30.
mirandablue wrote:
Tue Jan 08, 2019 6:09 pm
Please advice on the following plan proposed by a financial advisor:
Age: 40 years
State: CA
Salary: $210k with 20% projected bonus annually
Total assets: $250k (mostly in CDs and savings, TIAA from past employer etc)

Financial plan:
1. Retirement: Target retirement age :65-70 years
90% stock (38% US large-cap stock, 16% US mid/small cap stock, 36% international stock)
10% bonds (3% US short term bond,3% US intermediate term bond, 1% US long term bond, 3% international bond)
0% short term reserves

2. 529 plan for 9 year old son
Currently contributing $500/month (currently 16000 in the plan). Would like to send him to an Ivy league school if eligible
Should I increase my contributions (Hoping that ½ funding will come from other parent).
Should I continue with $500/month in case he gets a scholarship?


Assets:
$200k in CDs and savings
TIAA-CREF from previous employer ($80000). Should I roll this over to roth IRA?

Current employer matches up to 6% 401k. How should I allocate the 6% between traditional and ROTH?

What are some tax savings tips.

I have a roth IRA with wealthfront amounting to up to $10000.
Should I consolidate all these funds with Vanguard to have them all in one place.
Any specific advice and funds to invest these in (all of above) so I do not have to pay a financial advisor?

Liabilities:
Condo purchased in 2018 for 382500. Mortgage: 15 yr fixed at 4% API
~Brantley

retiredjg
Posts: 35141
Joined: Thu Jan 10, 2008 12:56 pm

Re: help with plan proposed by financial advisor

Post by retiredjg » Wed Jan 09, 2019 8:54 am

Mirandablue, it would be helpful if you would post your information in the format suggested in the link at the bottom of this message. There is a lot of information missing and that makes it difficult to help you. For example, we don't know how much or what is in your 401k, we don't know your tax bracket or marital status, etc. Just answering a question here and there is going to result in information all over the place and that makes it difficult to see and remember your whole situation.

A few things stand out.

1) You do not have a lot of money saved for your age, so I wonder if you should be saving $500 a month for college. It sounds harsh, but having adequate retirement savings is more important than your child going to an Ivy League school. Your child can go to a cheaper college and borrow for college. You cannot borrow to buy groceries or pay the electric bill when you retire.

2) I think 90% stocks is too aggressive for your age, especially since it appears that most of the money is not currently invested in stocks at all. Jumping to a very aggressive portfolio seems like a very poor choice to me. But there may be more to the story that we don't know.

On the good side, you are making a very good salary so it is possible you will be able to save a lot.

ralph124cf
Posts: 2118
Joined: Tue Apr 01, 2014 11:41 am

Re: help with plan proposed by financial advisor

Post by ralph124cf » Wed Jan 09, 2019 9:29 am

TIAA-CREF has some unique funds, including their Real Estate fund, and the Traditional fund that many people here use. Once you pull out of TIAA-CREF it is almost impossible to get back in.

I would skip the rollover of these funds.

Ralph

retiredjg
Posts: 35141
Joined: Thu Jan 10, 2008 12:56 pm

Re: help with plan proposed by financial advisor

Post by retiredjg » Wed Jan 09, 2019 9:41 am

Even if you decide to do a rollover, it should not be to Roth IRA because that will trigger taxes.

Might be good to leave that one where it is.

Topic Author
mirandablue
Posts: 21
Joined: Thu Oct 04, 2018 9:32 pm

Re: help with plan proposed by financial advisor

Post by mirandablue » Sat Jan 12, 2019 8:39 pm

retiredjg wrote:
Wed Jan 09, 2019 8:54 am
Mirandablue, it would be helpful if you would post your information in the format suggested in the link at the bottom of this message. There is a lot of information missing and that makes it difficult to help you. For example, we don't know how much or what is in your 401k, we don't know your tax bracket or marital status, etc. Just answering a question here and there is going to result in information all over the place and that makes it difficult to see and remember your whole situation.

A few things stand out.

1) You do not have a lot of money saved for your age, so I wonder if you should be saving $500 a month for college. It sounds harsh, but having adequate retirement savings is more important than your child going to an Ivy League school. Your child can go to a cheaper college and borrow for college. You cannot borrow to buy groceries or pay the electric bill when you retire.

2) I think 90% stocks is too aggressive for your age, especially since it appears that most of the money is not currently invested in stocks at all. Jumping to a very aggressive portfolio seems like a very poor choice to me. But there may be more to the story that we don't know.

On the good side, you are making a very good salary so it is possible you will be able to save a lot.
Thank you very much for replying. I have edited my original post to add as much details as I could find/understand.

Topic Author
mirandablue
Posts: 21
Joined: Thu Oct 04, 2018 9:32 pm

Re: help with plan proposed by financial advisor

Post by mirandablue » Sat Jan 12, 2019 8:40 pm

ralph124cf wrote:
Wed Jan 09, 2019 9:29 am
TIAA-CREF has some unique funds, including their Real Estate fund, and the Traditional fund that many people here use. Once you pull out of TIAA-CREF it is almost impossible to get back in.

I would skip the rollover of these funds.

Ralph
Thank you. I have edited my original post with more details, appreciate any input.

Topic Author
mirandablue
Posts: 21
Joined: Thu Oct 04, 2018 9:32 pm

Re: help with plan proposed by financial advisor

Post by mirandablue » Sat Jan 12, 2019 8:41 pm

Brantley wrote:
Tue Jan 08, 2019 6:25 pm
I have a few questions and thoughts:

1) Are you married? If so, can you update with your spouses info
2) Why do you have $200k in cash and CDs? Are you intending to spend that soon? I see you have a house already. You should invest most of this.
3) Are you total assets right? Doesn’t add up
4) You are behind on retirement savings. I’d focus on increasing HSA and/or 401k savings before funding the 529. Your child can get loans, but you are in trouble if you run out of retirement money
5) Is this financial advisor asking you to move money over to him with an AUM structure? I would avoid.
6) Is the TIAA pre-tax money? I wouldn’t convert it to a Roth as you’d have a large tax liability. Roll over into an equivalent IRA with Vanguard or Fidelity.
7) Do you have 401k savings at your current employer?
8) Wealthfront is fine, but it may be easier to consolidate
9) It likely makes sense for you to save all pre-tax at this point.
10) 10% seems a tad aggressive for bonds. Maybe closer to 20-30.
mirandablue wrote:
Tue Jan 08, 2019 6:09 pm
Please advice on the following plan proposed by a financial advisor:
Age: 40 years
State: CA
Salary: $210k with 20% projected bonus annually
Total assets: $250k (mostly in CDs and savings, TIAA from past employer etc)

Financial plan:
1. Retirement: Target retirement age :65-70 years
90% stock (38% US large-cap stock, 16% US mid/small cap stock, 36% international stock)
10% bonds (3% US short term bond,3% US intermediate term bond, 1% US long term bond, 3% international bond)
0% short term reserves

2. 529 plan for 9 year old son
Currently contributing $500/month (currently 16000 in the plan). Would like to send him to an Ivy league school if eligible
Should I increase my contributions (Hoping that ½ funding will come from other parent).
Should I continue with $500/month in case he gets a scholarship?


Assets:
$200k in CDs and savings
TIAA-CREF from previous employer ($80000). Should I roll this over to roth IRA?

Current employer matches up to 6% 401k. How should I allocate the 6% between traditional and ROTH?

What are some tax savings tips.

I have a roth IRA with wealthfront amounting to up to $10000.
Should I consolidate all these funds with Vanguard to have them all in one place.
Any specific advice and funds to invest these in (all of above) so I do not have to pay a financial advisor?

Liabilities:
Condo purchased in 2018 for 382500. Mortgage: 15 yr fixed at 4% API
Thank you Brantley, I have updated my original post with more details. Best

User avatar
Brantley
Posts: 325
Joined: Mon Dec 03, 2012 1:02 am

Re: help with plan proposed by financial advisor

Post by Brantley » Sat Jan 12, 2019 10:42 pm

mirandablue wrote:
Sat Jan 12, 2019 8:41 pm
Brantley wrote:
Tue Jan 08, 2019 6:25 pm
I have a few questions and thoughts:

1) Are you married? If so, can you update with your spouses info
2) Why do you have $200k in cash and CDs? Are you intending to spend that soon? I see you have a house already. You should invest most of this.
3) Are you total assets right? Doesn’t add up
4) You are behind on retirement savings. I’d focus on increasing HSA and/or 401k savings before funding the 529. Your child can get loans, but you are in trouble if you run out of retirement money
5) Is this financial advisor asking you to move money over to him with an AUM structure? I would avoid.
6) Is the TIAA pre-tax money? I wouldn’t convert it to a Roth as you’d have a large tax liability. Roll over into an equivalent IRA with Vanguard or Fidelity.
7) Do you have 401k savings at your current employer?
8) Wealthfront is fine, but it may be easier to consolidate
9) It likely makes sense for you to save all pre-tax at this point.
10) 10% seems a tad aggressive for bonds. Maybe closer to 20-30.
mirandablue wrote:
Tue Jan 08, 2019 6:09 pm
Please advice on the following plan proposed by a financial advisor:
Age: 40 years
State: CA
Salary: $210k with 20% projected bonus annually
Total assets: $250k (mostly in CDs and savings, TIAA from past employer etc)

Financial plan:
1. Retirement: Target retirement age :65-70 years
90% stock (38% US large-cap stock, 16% US mid/small cap stock, 36% international stock)
10% bonds (3% US short term bond,3% US intermediate term bond, 1% US long term bond, 3% international bond)
0% short term reserves

2. 529 plan for 9 year old son
Currently contributing $500/month (currently 16000 in the plan). Would like to send him to an Ivy league school if eligible
Should I increase my contributions (Hoping that ½ funding will come from other parent).
Should I continue with $500/month in case he gets a scholarship?


Assets:
$200k in CDs and savings
TIAA-CREF from previous employer ($80000). Should I roll this over to roth IRA?

Current employer matches up to 6% 401k. How should I allocate the 6% between traditional and ROTH?

What are some tax savings tips.

I have a roth IRA with wealthfront amounting to up to $10000.
Should I consolidate all these funds with Vanguard to have them all in one place.
Any specific advice and funds to invest these in (all of above) so I do not have to pay a financial advisor?

Liabilities:
Condo purchased in 2018 for 382500. Mortgage: 15 yr fixed at 4% API
Thank you Brantley, I have updated my original post with more details. Best
Where did your CDs/savings go? Feel like you are missing most of your wealth in this post. Assuming you are divorced with a kid?

Most of my questions above still stand. Let me know your thoughts.
~Brantley

Topic Author
mirandablue
Posts: 21
Joined: Thu Oct 04, 2018 9:32 pm

Re: help with plan proposed by financial advisor

Post by mirandablue » Sat Jan 12, 2019 11:10 pm

Brantley wrote:
Sat Jan 12, 2019 10:42 pm
mirandablue wrote:
Sat Jan 12, 2019 8:41 pm
Brantley wrote:
Tue Jan 08, 2019 6:25 pm
I have a few questions and thoughts:

1) Are you married? If so, can you update with your spouses info
2) Why do you have $200k in cash and CDs? Are you intending to spend that soon? I see you have a house already. You should invest most of this.
3) Are you total assets right? Doesn’t add up
4) You are behind on retirement savings. I’d focus on increasing HSA and/or 401k savings before funding the 529. Your child can get loans, but you are in trouble if you run out of retirement money
5) Is this financial advisor asking you to move money over to him with an AUM structure? I would avoid.
6) Is the TIAA pre-tax money? I wouldn’t convert it to a Roth as you’d have a large tax liability. Roll over into an equivalent IRA with Vanguard or Fidelity.
7) Do you have 401k savings at your current employer?
8) Wealthfront is fine, but it may be easier to consolidate
9) It likely makes sense for you to save all pre-tax at this point.
10) 10% seems a tad aggressive for bonds. Maybe closer to 20-30.
mirandablue wrote:
Tue Jan 08, 2019 6:09 pm
Please advice on the following plan proposed by a financial advisor:
Age: 40 years
State: CA
Salary: $210k with 20% projected bonus annually
Total assets: $250k (mostly in CDs and savings, TIAA from past employer etc)

Financial plan:
1. Retirement: Target retirement age :65-70 years
90% stock (38% US large-cap stock, 16% US mid/small cap stock, 36% international stock)
10% bonds (3% US short term bond,3% US intermediate term bond, 1% US long term bond, 3% international bond)
0% short term reserves

2. 529 plan for 9 year old son
Currently contributing $500/month (currently 16000 in the plan). Would like to send him to an Ivy league school if eligible
Should I increase my contributions (Hoping that ½ funding will come from other parent).
Should I continue with $500/month in case he gets a scholarship?


Assets:
$200k in CDs and savings
TIAA-CREF from previous employer ($80000). Should I roll this over to roth IRA?

Current employer matches up to 6% 401k. How should I allocate the 6% between traditional and ROTH?

What are some tax savings tips.

I have a roth IRA with wealthfront amounting to up to $10000.
Should I consolidate all these funds with Vanguard to have them all in one place.
Any specific advice and funds to invest these in (all of above) so I do not have to pay a financial advisor?

Liabilities:
Condo purchased in 2018 for 382500. Mortgage: 15 yr fixed at 4% API
Thank you Brantley, I have updated my original post with more details. Best
Where did your CDs/savings go? Feel like you are missing most of your wealth in this post. Assuming you are divorced with a kid?

Most of my questions above still stand. Let me know your thoughts.

Savings/CD included under assets. My personal marital status does not matter.I have reported my tax status

User avatar
Brantley
Posts: 325
Joined: Mon Dec 03, 2012 1:02 am

Re: help with financial planning

Post by Brantley » Sat Jan 12, 2019 11:27 pm

Ok - I still have these questions and suggestions

2) Why do you have $200k in cash and CDs? Are you intending to spend that soon? I see you have a house already. You should invest most of this.
4) You are behind on retirement savings. I’d focus on increasing HSA and/or 401k savings before funding the 529. Your child can get loans, but you are in trouble if you run out of retirement money
5) Is this financial advisor asking you to move money over to him with an AUM structure? I would avoid.
8) Wealthfront is fine, but it may be easier to consolidate
10) 10% seems a tad aggressive for bonds. Maybe closer to 20-30.
Last edited by Brantley on Mon Jan 14, 2019 12:51 pm, edited 1 time in total.
~Brantley

retiredjg
Posts: 35141
Joined: Thu Jan 10, 2008 12:56 pm

Re: help with financial planning

Post by retiredjg » Mon Jan 14, 2019 12:40 pm

Mirandablue, thank you for the update.

It is helpful to learn to see your portfolio as a whole, rather than by accounts. To do this, you need to list your holdings as a percent of the portfolio, not as a percentage of each account.

Your current retirement assets only add up to $99k. Even adding in the $25k in your emergency fund, this is far short of the $250k you say you have. Not sure where the disconnect is. For now, we'll just proceed as if your retirement portfolio is $99k. All percentages below are based on $99k. Here is what your portfolio really looks like based on that.

New employer 401k $9k 9% of total
9% Vanguard target dated fund 2045 which is 90% stocks and 10% bonds
  • 8.1% stocks and .9% bonds

Previous employer 403(b) ($80k) 80.8% of total
20.2% CREF Money Market R3 Money Market $20k
60.6% Vanguard Institutional Target Retirement 2045 Institutional $60k which is 90% stocks and 10% bonds
  • 54.5% stocks and 6.1% bonds
ROTH IRA with wealthfront: $10k 10% of total
2.1% U.S. Stocks 21%
1.8 Foreign Stocks 18%
1.5% Emerging Markets 15%
1.5% Dividend Stocks 15%
1.4% Real Estate 14%
1% Corporate Bonds 10%
0.7% Emerging Market Bonds 7%

Your current portfolio is 70.9% stocks and 28.9% bonds. I did not break out the US vs international stock allocation.

What you have (a mix of individual funds and target funds) is sort of an awkward way to run a portfolio. In order to figure out what you have, you have to break down each target fund and the Wealthfront account into pieces. This takes time and is also a way to make mistakes. It would be better to handle this differently in my opinion.

However, my opinion is not your opinion. How do you want to handle your portfolio? Would you like to use target funds only (It appears you can). Or would you like to use individual funds?


1. How should I maximize on retirement savings? Contribute max to the current target retirement plan? or should I reallocate assets for tax efficiency?
Since you do not have a taxable account, tax efficiency is not an issue.

Once I max out 401k, what should I invest in and in what frequency?
Roth IRA. Frequency does not matter. You can put in a certain amount each month or put in a lump some.

2. Should I roll over ROTH IRA at wealthfront to vanguard or leave it with wealthfront and keep contributing 6k annually?
There is no "should" for where you Roth IRA should be. As to whether you should keep contributing, you are above the income limit to contribute directly to Roth IRA. Have you been using the "back door"? Is that what you plan for the future?

3. What should I do with retirement account with previous employer? Should I roll over to roth IRA? How can I do that? Will there be tax with holdings on that?
This depends on what you want to do. Many people think that TIAA Traditional Annuity and their real estate fund is worth having. Others think that consolidating accounts makes more sense. You could leave it where it is, roll it into your current 401k if the costs are low enough, roll it into traditional IRA which would interfere with using the back door if that is what you are doing, or rolling into Roth IRA which is not advisable because of your tax bracket.

Should I consolidate all these funds with Vanguard to have them all in one place.
Not sure yet. What are your thoughts on this?

Other funds available in 401k
BP LARGE CAP VALUE Stock Investments
DODGE & COX INT Stock Investments
INTL EQUITY INDEX Stock Investments
LARGE CAP GROWTH Stock Investments
MIDCAP EQUITY INDEX Stock Investments
NT S&P 500 INDEX Stock Investments N/A
OPPHMR DEV MKTS Stock Investments
RUSSELL 2000 SC INDX Stock Investments
T ROWE SMALL CAP STK Stock Investments
DIVERSIFIED BOND
T ROWE STABLE VALUE
These seem to be good choices, but you have not listed the expense ratios that are specific to your plan. Can you get this information from your employer please?

About how much money can you save for retirement each year?

Where is the other $126k? Is it intended for something other than retirement?


I know I have asked you a lot of questions, but we need the answers to all of them. If you need help, just ask.

Topic Author
mirandablue
Posts: 21
Joined: Thu Oct 04, 2018 9:32 pm

Re: help with financial planning

Post by mirandablue » Mon Jan 14, 2019 11:10 pm

Your current portfolio is 70.9% stocks and 28.9% bonds. I did not break out the US vs international stock allocation.

What you have (a mix of individual funds and target funds) is sort of an awkward way to run a portfolio. In order to figure out what you have, you have to break down each target fund and the Wealthfront account into pieces. This takes time and is also a way to make mistakes. It would be better to handle this differently in my opinion.

However, my opinion is not your opinion. How do you want to handle your portfolio? Would you like to use target funds only (It appears you can). Or would you like to use individual funds?
What is the advantage and disadvantage of using target fund vs. individual funds. If I use individual funds, do I have to rebalance them often?
1. How should I maximize on retirement savings? Contribute max to the current target retirement plan? or should I reallocate assets for tax efficiency?
Since you do not have a taxable account, tax efficiency is not an issue.

Once I max out 401k, what should I invest in and in what frequency?
Roth IRA. Frequency does not matter. You can put in a certain amount each month or put in a lump some.

2. Should I roll over ROTH IRA at wealthfront to vanguard or leave it with wealthfront and keep contributing 6k annually?
There is no "should" for where you Roth IRA should be. As to whether you should keep contributing, you are above the income limit to contribute directly to Roth IRA. Have you been using the "back door"? Is that what you plan for the future?

I have not used back door Roth. My current position with the high salary started about 6 months ago. How do I use back door Roth. What is the limit of contribution to back door Roth.
3. What should I do with retirement account with previous employer? Should I roll over to roth IRA? How can I do that? Will there be tax with holdings on that?
This depends on what you want to do. Many people think that TIAA Traditional Annuity and their real estate fund is worth having. Others think that consolidating accounts makes more sense. You could leave it where it is, roll it into your current 401k if the costs are low enough, roll it into traditional IRA which would interfere with using the back door if that is what you are doing, or rolling into Roth IRA which is not advisable because of your tax bracket.

Should I consolidate all these funds with Vanguard to have them all in one place.
Not sure yet. What are your thoughts on this?

I think it is convenient to have them all in one place.
Other funds available in 401k
BP LARGE CAP VALUE Stock Investments
DODGE & COX INT Stock Investments
INTL EQUITY INDEX Stock Investments
LARGE CAP GROWTH Stock Investments
MIDCAP EQUITY INDEX Stock Investments
NT S&P 500 INDEX Stock Investments N/A
OPPHMR DEV MKTS Stock Investments
RUSSELL 2000 SC INDX Stock Investments
T ROWE SMALL CAP STK Stock Investments
DIVERSIFIED BOND
T ROWE STABLE VALUE
These seem to be good choices, but you have not listed the expense ratios that are specific to your plan. Can you get this information from your employer please?

I will get the ER from employer and post.

About how much money can you save for retirement each year?
I live well within my means., and can contribute up to $5000/month towards retirement. But not sure where to contribute to.

Where is the other $126k? Is it intended for something other than retirement?
These are in form of cash (savings, CD) at Ally. I was in graduate school/training till about 3 years ago and did not have the knowledge/time to learn or bother about investing. Was saving up cash to buy a house. Bought a condo this year and put only 20% down. The rest still remains with Ally that I want to invest towards retirement. Confused about where to invest and what asset allocation to use that is tax efficient as well.

I know I have asked you a lot of questions, but we need the answers to all of them. If you need help, just ask.
[/quote]

retiredjg
Posts: 35141
Joined: Thu Jan 10, 2008 12:56 pm

Re: help with financial planning

Post by retiredjg » Tue Jan 15, 2019 9:42 am

mirandablue wrote:
Mon Jan 14, 2019 11:10 pm
What is the advantage and disadvantage of using target fund vs. individual funds. If I use individual funds, do I have to rebalance them often?
Target funds are easy. All you do is add money. Individual funds may (or may not) lower the portfolio cost a small amount. Rebalancing is variable but once a year or two is probably good. But you do have to figure out how much money to put into each fund every year based on what you expect to save that year.

I have not used back door Roth. My current position with the high salary started about 6 months ago. How do I use back door Roth. What is the limit of contribution to back door Roth.
If you have already made or plan to make a contribution to Roth IRA for 2018, you need to check your salary and other income for 2018 and be sure you are not over the limit. If you are over the limit and have already made the contribution that will need to be fixed.

The back door is a complex topic. Read some old threads, read the wiki page, and this link to get started on it. Do not use the back door without figuring out the paperwork first.

https://thefinancebuff.com/the-backdoor ... ow-to.html

I think it is convenient to have them all in one place.
Is that your preference?

I live well within my means., and can contribute up to $5000/month towards retirement. But not sure where to contribute to.
Start with $19k to your 401k and $6k to Roth IRA if you decide to use the back door. If you have an HSA or FSA, fill that. Put the rest into a taxable account (an ordinary account that does not have a tax-advantage). We can talk about what funds to use there.

The rest still remains with Ally that I want to invest towards retirement. Confused about where to invest and what asset allocation to use that is tax efficient as well.
Well put this in the same funds as the new money going into taxable.

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mirandablue
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Re: help with financial planning

Post by mirandablue » Tue Jan 15, 2019 11:34 pm

Thank you very much for your inputs so far.
I did update the original post with ERs of the accounts available in the employer retirement plan.
Did some investigation into backdoor ROTH option as well., and made elections to maximize contributions to 401k.

Appreciate your help with selection of individual funds. Thanks!

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Re: help with financial planning

Post by retiredjg » Wed Jan 16, 2019 8:53 am

What is the ER for the target funds?

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mirandablue
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Re: help with financial planning

Post by mirandablue » Wed Jan 16, 2019 1:50 pm

ER for target funds available is 0.05%.
Thanks

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Help with financial planning and saving for retirement- reposting with details

Post by mirandablue » Wed Jan 16, 2019 4:00 pm

[post merged into here --admin LadyGeek]

Please help with financial planning; new to the world of investing, held most assets in cash so far, excluding retirement funds with previous employers:
Emergency fund: $25k in CDs
Debt: Condo purchased in 2018 for 382500. Mortgage: 15 yr fixed at 4% API
Tax filing status: Head of household
Tax rate: 32% federal, 9.3% state
State of residence: CA
Age: 40 years
Desired asset allocation: 80% stocks, 20% bonds
Desired international allocation: 30% of stock

Salary: $210k
Total assets:
Retirement: 9k with current employer (started 6 months ago) (details below)
80k with previous employer (TIAA cref money market and vanguard target fund)
ROTH IRA with wealthfront 5.5k
$200k (mostly in CDs and savings), wealthfront brokerage (10k) .

Current retirement assets:
New employer 401k
Vanguard target dated fund 2045 ER 0.05%
Domestic Stock 54.09%Foreign Stock 34.16%Bonds 9.92%Short Term 1.57%Other 0.26%
Current employer matches up to 6%
$9000 from last few months of employment

Other funds available in 401k with ER%s
BP LARGE CAP VALUE Stock Investments 0.32
DODGE & COX INT Stock Investments 0.53
INTL EQUITY INDEX Stock Investments 0.06
LARGE CAP GROWTH Stock Investments 0.36
MIDCAP EQUITY INDEX Stock Investments 0.03
NT S&P 500 INDEX Stock Investments N/A 0.01
OPPHMR DEV MKTS Stock Investments 0.79
RUSSELL 2000 SC INDX Stock Investments 0.02
T ROWE SMALL CAP STK Stock Investments 0.66
DIVERSIFIED BOND 0.23
T ROWE STABLE VALUE 0.25


Previous employer 403(b) ($80k)

CREF Money Market R3 $20k ER 0.24%
Vanguard Institutional Target Retirement 2045 Institutional $60k ER0.09%


ROTH IRA with wealthfront: $10k

U.S. Stocks 21%
Foreign Stocks 18%
Emerging Markets 15%
Dividend Stocks 15%
Real Estate 14%
Corporate Bonds 10%
Emerging Market Bonds 7%

Questions:
1. I want to invest the cash in hand ($200k) for retirement, and contribute a fixed amount on a monthly basis for retirement. Where should I invest and what asset allocations? Should I keep the current target dated fund or use individual funds. What are the advantages of each?. If individual funds, which ones and what ratio? This is in addition to maximizing 401k contributions for the year.

2. Should I roll over ROTH IRA at wealthfront to vanguard or leave it with wealthfront?
3. What should I do with retirement account with previous employer- TIAA money market and vanguard target fund? Should I roll over? What tax implications for back door ROTH?
4. Should I consolidate all these funds with Vanguard to have them all in one place.
Any specific advice and funds to invest these in (all of above) so I do not have to pay a financial advisor?

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mirandablue
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Re: help with financial planning

Post by mirandablue » Wed Jan 16, 2019 4:02 pm

retiredjg wrote:
Wed Jan 16, 2019 8:53 am
What is the ER for the target funds?
Updated the ERs for the current target fund and 403(b) from previous employer. Also, started a new post to consolidate all details under one post. Thanks

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Re: help with financial planning

Post by LadyGeek » Wed Jan 16, 2019 4:53 pm

mirandablue - In order to give appropriate advice, it's best to keep all the information in one spot. Otherwise, it's very difficult to go back and forth between the discussions and follow what's going on. I moved your updated post back into this thread.

If you have any questions ask them here. This isn't a big deal, don't worry about it.
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Re: Help with financial planning and saving for retirement- reposting with details

Post by retiredjg » Thu Jan 17, 2019 9:24 am

1. I want to invest the cash in hand ($200k) for retirement, and contribute a fixed amount on a monthly basis for retirement. Where should I invest and what asset allocations? Should I keep the current target dated fund or use individual funds. What are the advantages of each?. If individual funds, which ones and what ratio? This is in addition to maximizing 401k contributions for the year.
In a separate post, I'll give you some choices.

2. Should I roll over ROTH IRA at wealthfront to vanguard or leave it with wealthfront?
Up to you. I think you can achieve what you want either way.

3. What should I do with retirement account with previous employer- TIAA money market and vanguard target fund? Should I roll over?
I would roll this into your current 401k. If you decide to use the back door in the future, it will be out of the way.

4. Should I consolidate all these funds with Vanguard to have them all in one place.
There is no "should". However I think you want some consolidation and there is no reason not to that I can see.

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Re: help with financial planning

Post by retiredjg » Thu Jan 17, 2019 9:26 am

But first, you need to determine if you were/are eligible to contribute to Roth IRA for 2018. If not, if you have already contributed, that will need to be fixed.

Have you already contributed? How about an estimate of your total income for 2018?

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Re: Help with financial planning and saving for retirement- reposting with details

Post by retiredjg » Thu Jan 17, 2019 9:59 am

Here is what you currently have. Total portfolio = $299k
  • Taxable $200k 66.9%
    cash

    Current 401k $9k 3%
    target fund at 90/10

    ROTH IRA with wealthfront: $10k 3.3%
    mixed portfolio at 90/10

    Old 403(b) $80k 26.8%
    target at 90/10 and some money market


Roll the old 403b into your current 401k if allowed. In time, this old account will be pretty small and become a nuisance. Just avoid that and consolidate to 3 accounts. Total portfolio = $299k
  • Taxable $200k 66.9%

    Current 401k $89k 29.8%

    ROTH IRA with wealthfront: $10k 3.3%



Option 1 - Put a target fund in the current 401k and Roth IRA and handle the taxable account as a separate 3 fund portfolio. It would look like this

  • Taxable $200k
    56% US stocks
    24% international stocks
    20% bonds (tax exempt because of your high income)

    Current 401k $89k
    target fund at 80/20

    ROTH IRA with wealthfront or Vanguard $10k
    target fund or any mix of funds at 80/20
The nice thing about this is all you do for two accounts is add money without thinking. You would need to keep the taxable account in balance yourself. The two accounts with the target funds will migrate toward bonds over time. You would do that manually in the taxable account.




Option 2 - handle the entire thing as 1 portfolio. It could look many ways - here's one way
  • Taxable $200k 66.9%
    42.9% Total Stock Index
    24% Total International Index

    Current 401k $89k 29.8%
    9.8% NT S&P 500 INDEX Stock Investments N/A 0.01
    20% DIVERSIFIED BOND 0.23

    ROTH IRA Vanguard $10k 3.3%
    3.3% US stocks (probably extended market index)

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mirandablue
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Re: help with financial planning

Post by mirandablue » Thu Jan 17, 2019 8:08 pm

retiredjg wrote:
Thu Jan 17, 2019 9:26 am
But first, you need to determine if you were/are eligible to contribute to Roth IRA for 2018. If not, if you have already contributed, that will need to be fixed.

Have you already contributed? How about an estimate of your total income for 2018?
Thank you for bringing this to my attention.

I contributed $5500 towards ROTH IRA for 2018 early in the year. With the job change, my gross income (before taxes) for 2018 comes out to around 175k. So, likely exceed the income limit for qualifying? What can be done? Thanks again!

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Re: help with financial planning

Post by Brantley » Thu Jan 17, 2019 8:30 pm

mirandablue wrote:
Thu Jan 17, 2019 8:08 pm
retiredjg wrote:
Thu Jan 17, 2019 9:26 am
But first, you need to determine if you were/are eligible to contribute to Roth IRA for 2018. If not, if you have already contributed, that will need to be fixed.

Have you already contributed? How about an estimate of your total income for 2018?
Thank you for bringing this to my attention.

I contributed $5500 towards ROTH IRA for 2018 early in the year. With the job change, my gross income (before taxes) for 2018 comes out to around 175k. So, likely exceed the income limit for qualifying? What can be done? Thanks again!
If you are indeed in excess, you can reverse the contributions plus earnings by filling out an excess contribution form. Contact Wealthfront if this is the case and they can help.
~Brantley

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Re: help with financial planning

Post by Strayshot » Thu Jan 17, 2019 11:21 pm

I read through all this and think retiredjg and Brantley covered pretty much everything. My .02 would be to go with retiredjg’s option 1 for simplicity. I would move the brokerage and the IRA to Vanguard as there is nothing that wealthfront offers that is better than what Vanguard offers, so if there is no cost involved why stay with Wealthfront? Vanguard, Schwab, and Fidelity are the big three for a reason and I can’t come up with a value proposition to use any other company. Personally my life is at Fidelity and I love it.

Of your 5k per month to invest, over the course of the year you will put 6k into the Roth IRA via the backdoor method, you will put 19k into the 401k, and this should leave you 35k to contribute to taxable (about 3k a month).

There are mixed opinions on 529’s, but depending on the age of your dependent/s and the time available for compounding you could consider contributions to a 529 at some level (say 500/month into an sp500 index fund). CA offers no state tax benefit so that makes the 529 less appealing, and worst case is you use taxable assets at capital gains rates to spend on education needs.

The asset mix in target date funds (based on current glide paths) doesn’t go fixed income/bond heavy until about 5 years before the target, so you have a decade or more before you really need to worry about major changes in your target 2045 asset mix. Take a look in 2030 and determine if you need to move to target 2050 or something to stay with a more aggressive asset mix.

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Re: help with financial planning

Post by retiredjg » Fri Jan 18, 2019 8:53 am

I contributed $5500 towards ROTH IRA for 2018 early in the year. With the job change, my gross income (before taxes) for 2018 comes out to around 175k. So, likely exceed the income limit for qualifying? What can be done? Thanks again!
It appears you are over the limit. The MAGI for head of household topped out at $135k and your 401k contributions will not get your income under that number. There could be other things that will reduce that number, but it seems like a large gap to me. You can check your AGI when you do your taxes. If your AGI is over the limit then your MAGI will also be over the limit.

There are two choices to fix this.

1) You can call the custodian and tell them you made an excess contribution and that you want it to be returned to you. It will be as if you never sent them the money in the first place. Well, almost. They will send you the $5,500 and the earnings it has made - those earnings are taxable for 2018 so it is a little different.

2) You can call the custodian and ask them to re-characterize your Roth IRA contribution to a traditional IRA contribution. They will move the contribution (and its earnings) to tIRA. This will be a $5,500 non-deductible contribution to tIRA. Then convert everything ($5.5k and earnings) to Roth IRA. This will cause you to pay taxes on the earnings part with your 2019 taxes. This is "the back door".

You would document your 2018 non-deductible contribution with your 2018 taxes on Form 8686. And document the Roth conversion (step 2 of the back door) with your 2019 taxes.

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mirandablue
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Re: help with financial planning

Post by mirandablue » Fri Jan 18, 2019 4:23 pm

Brantley wrote:
Thu Jan 17, 2019 8:30 pm
mirandablue wrote:
Thu Jan 17, 2019 8:08 pm
retiredjg wrote:
Thu Jan 17, 2019 9:26 am
But first, you need to determine if you were/are eligible to contribute to Roth IRA for 2018. If not, if you have already contributed, that will need to be fixed.

Have you already contributed? How about an estimate of your total income for 2018?
Thank you for bringing this to my attention.

I contributed $5500 towards ROTH IRA for 2018 early in the year. With the job change, my gross income (before taxes) for 2018 comes out to around 175k. So, likely exceed the income limit for qualifying? What can be done? Thanks again!
If you are indeed in excess, you can reverse the contributions plus earnings by filling out an excess contribution form. Contact Wealthfront if this is the case and they can help.
Thank you Brantley!

Topic Author
mirandablue
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Re: help with financial planning

Post by mirandablue » Fri Jan 18, 2019 4:24 pm

retiredjg wrote:
Fri Jan 18, 2019 8:53 am
I contributed $5500 towards ROTH IRA for 2018 early in the year. With the job change, my gross income (before taxes) for 2018 comes out to around 175k. So, likely exceed the income limit for qualifying? What can be done? Thanks again!
It appears you are over the limit. The MAGI for head of household topped out at $135k and your 401k contributions will not get your income under that number. There could be other things that will reduce that number, but it seems like a large gap to me. You can check your AGI when you do your taxes. If your AGI is over the limit then your MAGI will also be over the limit.

There are two choices to fix this.

1) You can call the custodian and tell them you made an excess contribution and that you want it to be returned to you. It will be as if you never sent them the money in the first place. Well, almost. They will send you the $5,500 and the earnings it has made - those earnings are taxable for 2018 so it is a little different.

2) You can call the custodian and ask them to re-characterize your Roth IRA contribution to a traditional IRA contribution. They will move the contribution (and its earnings) to tIRA. This will be a $5,500 non-deductible contribution to tIRA. Then convert everything ($5.5k and earnings) to Roth IRA. This will cause you to pay taxes on the earnings part with your 2019 taxes. This is "the back door".

You would document your 2018 non-deductible contribution with your 2018 taxes on Form 8686. And document the Roth conversion (step 2 of the back door) with your 2019 taxes.
Thank you! I will contact wealthfront. I had some more specific questions about the taxable asset allocation. Is it possible to private message you?

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Re: help with financial planning

Post by mirandablue » Fri Jan 18, 2019 5:35 pm

Strayshot wrote:
Thu Jan 17, 2019 11:21 pm
I read through all this and think retiredjg and Brantley covered pretty much everything. My .02 would be to go with retiredjg’s option 1 for simplicity. I would move the brokerage and the IRA to Vanguard as there is nothing that wealthfront offers that is better than what Vanguard offers, so if there is no cost involved why stay with Wealthfront? Vanguard, Schwab, and Fidelity are the big three for a reason and I can’t come up with a value proposition to use any other company. Personally my life is at Fidelity and I love it.

Of your 5k per month to invest, over the course of the year you will put 6k into the Roth IRA via the backdoor method, you will put 19k into the 401k, and this should leave you 35k to contribute to taxable (about 3k a month).

There are mixed opinions on 529’s, but depending on the age of your dependent/s and the time available for compounding you could consider contributions to a 529 at some level (say 500/month into an sp500 index fund). CA offers no state tax benefit so that makes the 529 less appealing, and worst case is you use taxable assets at capital gains rates to spend on education needs.

The asset mix in target date funds (based on current glide paths) doesn’t go fixed income/bond heavy until about 5 years before the target, so you have a decade or more before you really need to worry about major changes in your target 2045 asset mix. Take a look in 2030 and determine if you need to move to target 2050 or something to stay with a more aggressive asset mix.
Thank you for the advice! I currently contribute to UESP plan at $500/month. I have about $17k there so far. The asset allocation for 7-9 age group is 85% vanguard total stock market index, 3% vanguard short term investment grade and 12% vanguard total bond market index. The ER is 0.023% with 0.14% administrative asset fee, with total annual asset fee being 0.163%. Do you advise that I continue investing here or start with another sp500 index fund? I would like to continue investing some money towards college fund, though people advise against it because of my unoptimal retirement funds so far.

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Re: help with financial planning

Post by retiredjg » Fri Jan 18, 2019 5:36 pm

mirandablue wrote:
Fri Jan 18, 2019 4:24 pm
Thank you! I will contact wealthfront. I had some more specific questions about the taxable asset allocation. Is it possible to private message you?
Yes. Just click on the little icon next to "contact" under my user name.

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Re: help with financial planning

Post by Strayshot » Fri Jan 18, 2019 8:27 pm

mirandablue wrote:
Fri Jan 18, 2019 5:35 pm
Strayshot wrote:
Thu Jan 17, 2019 11:21 pm
I read through all this and think retiredjg and Brantley covered pretty much everything. My .02 would be to go with retiredjg’s option 1 for simplicity. I would move the brokerage and the IRA to Vanguard as there is nothing that wealthfront offers that is better than what Vanguard offers, so if there is no cost involved why stay with Wealthfront? Vanguard, Schwab, and Fidelity are the big three for a reason and I can’t come up with a value proposition to use any other company. Personally my life is at Fidelity and I love it.

Of your 5k per month to invest, over the course of the year you will put 6k into the Roth IRA via the backdoor method, you will put 19k into the 401k, and this should leave you 35k to contribute to taxable (about 3k a month).

There are mixed opinions on 529’s, but depending on the age of your dependent/s and the time available for compounding you could consider contributions to a 529 at some level (say 500/month into an sp500 index fund). CA offers no state tax benefit so that makes the 529 less appealing, and worst case is you use taxable assets at capital gains rates to spend on education needs.

The asset mix in target date funds (based on current glide paths) doesn’t go fixed income/bond heavy until about 5 years before the target, so you have a decade or more before you really need to worry about major changes in your target 2045 asset mix. Take a look in 2030 and determine if you need to move to target 2050 or something to stay with a more aggressive asset mix.
Thank you for the advice! I currently contribute to UESP plan at $500/month. I have about $17k there so far. The asset allocation for 7-9 age group is 85% vanguard total stock market index, 3% vanguard short term investment grade and 12% vanguard total bond market index. The ER is 0.023% with 0.14% administrative asset fee, with total annual asset fee being 0.163%. Do you advise that I continue investing here or start with another sp500 index fund? I would like to continue investing some money towards college fund, though people advise against it because of my unoptimal retirement funds so far.
For an investment in the 529 with a 10 year horizon for use that seems like a reasonable expense ratio and asset mix. If it were me, I would look for an option that was more like 100% Vanguard TSM (or something that was 100% equities and had a similar low expense ratio) but that is because I am looking for as much growth in the 529 as possible and can tolerate some volatility. As the horizon to use gets closer maybe I would include some bonds, but even then the funds will be used over 4+ years of college so there is time for a possible dip that hits pre-college to correct during college while withdrawals are still happening......

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Re: help with financial planning

Post by mirandablue » Tue Jan 22, 2019 12:10 pm

Thanks! What is TSM? Is it total stock market index fund? Would you operate one separate from your retirement account?

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Re: help with financial planning

Post by mirandablue » Tue Jan 22, 2019 12:11 pm

also, how different are their growth or returns compared to 529 plans?

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Re: help with financial planning

Post by Brantley » Tue Jan 22, 2019 2:16 pm

mirandablue wrote:
Tue Jan 22, 2019 12:10 pm
Thanks! What is TSM? Is it total stock market index fund? Would you operate one separate from your retirement account?
You are correct - this is a total stock market index fund. Since your son is 9, and you have more of a 9 year horizon, you may want to be more conservative. You can look at vanguard target 2030 for a similar glide path (VTHRX). If you're putting money in a 529 and the spending is restricted, I personally would lean towards the conservative end. I would operate this differently from your retirement account as a) the money is restricted in usage and b) the time horizon is shorter
mirandablue wrote:
Tue Jan 22, 2019 12:10 pm
also, how different are their growth or returns compared to 529 plans?
Can you clarify the question? A 529 plan will have various investment options depending on the plan, where you can likely pick specific funds or a target fund. Looking at this a bit closer, it appears that there is no state deduction for using the California 529 plan. This makes the 529 plan a bit less desirable for you, but also means you can feel free to use any states 529 plan. Can anyone from CA correct me if I am wrong here?
~Brantley

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Re: help with financial planning

Post by Strayshot » Tue Jan 22, 2019 2:39 pm

Folks from any state can use any 529, but if their state offers a state tax deduction and they want to get it, they must use their states 529 plan. CA offers no state tax deduction, so OP can pick whatever plan has reasonable funds (Utah is usually recommended for vanguard fund selection).

The benefits of a 529 are tax free compounding and state tax deduction. The con is a restriction on qualified spending for education purposes.

If you have no state tax deduction and are going to use a more conservative asset mix (reducing the benefit of the tax free compounding) you may not want to use a 529 at all and retain your spending flexibility by simply putting earmarked funds for education in your taxable investing account. Lots of threads on here about pros and cons of 529’s with some good points on both sides of the topic.

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Re: help with financial planning

Post by mirandablue » Tue Jan 22, 2019 10:37 pm

Thank you both! Good points.
If I discontinue contributing to 529, can the balance in the account be rolled over to any other accounts without incurring fees? Or, it has to remain untouched to be used only for educational expenses? utah UESP

Also, as I accessed by ROTH IRA account for transfer to traditional IRA as recommended, I realized that I had contributed $5.5k during 2017 too (I was within income limits during that time). Wondering if I should roll over that 5.5k with earnings to a ROTH IRA at Vanguard to have everything at one place.

Also, I have a brokerage account at Wealthfront ($10k separate from the ROTH), with tax loss harvesting harvesting features.
stocks: 85%, municipal bonds:15%.
What would you recommend with this. Roll over to Vanguard to consolidate all retirement accounts?
Thanks!

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Re: help with financial planning

Post by Brantley » Tue Jan 22, 2019 10:57 pm

mirandablue wrote:
Tue Jan 22, 2019 10:37 pm
Thank you both! Good points.
If I discontinue contributing to 529, can the balance in the account be rolled over to any other accounts without incurring fees? Or, it has to remain untouched to be used only for educational expenses? utah UESP

Also, as I accessed by ROTH IRA account for transfer to traditional IRA as recommended, I realized that I had contributed $5.5k during 2017 too (I was within income limits during that time). Wondering if I should roll over that 5.5k with earnings to a ROTH IRA at Vanguard to have everything at one place.

Also, I have a brokerage account at Wealthfront ($10k separate from the ROTH), with tax loss harvesting harvesting features.
stocks: 85%, municipal bonds:15%.
What would you recommend with this. Roll over to Vanguard to consolidate all retirement accounts?
Thanks!
If you were to withdraw the funds from the 529 for unqualified expenses, I believe you would incur a penalty. Based on my comments and others, you should spend some more time thinking about whether you want to use a 529 or not. It’s a personal choice - do some reading of other threads before making a decision.

Were your 2017 contributions pre (deductible) or post (Roth) tax? I’m assuming the ladder. If you want to move it to Vanguard, go for it. It is important to note this would not be a “roll over” but rather a transfer from one trustee to another.

One thought on the back door Roth IRA - do you have any pre-tax IRA holdings? If so, you need to take this into consideration with the back door.

For the brokerage account, I would check to see what kind of unrealized gains you have, and what funds they currently hold. If you move to vanguard, this could trigger tax consequences (short term and or long term capital gains) if you have to liquidate the holdings.
~Brantley

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Re: help with financial planning

Post by retiredjg » Wed Jan 23, 2019 9:18 am

mirandablue wrote:
Tue Jan 22, 2019 10:37 pm
Also, as I accessed by ROTH IRA account for transfer to traditional IRA as recommended, I realized that I had contributed $5.5k during 2017 too (I was within income limits during that time). Wondering if I should roll over that 5.5k with earnings to a ROTH IRA at Vanguard to have everything at one place.
If you want to move this Roth IRA account to Vanguard, move it. This is a purely personal decision. Nobody here can tell you where you "should" hold it. Either place is fine. Just do whatever you prefer.

But if you decide to move it, you need to fix the excess contribution problem before you move it. Have you decided what you plan to do with your excess contribution? Are you removing it entirely or re-characterizing to tIRA and then converting to Roth IRA?

Also, I have a brokerage account at Wealthfront ($10k separate from the ROTH), with tax loss harvesting harvesting features.
stocks: 85%, municipal bonds:15%.
What would you recommend with this. Roll over to Vanguard to consolidate all retirement accounts?
Thanks!
Apparently this is an account we didn't know about.

What you do NOT want to do is have a taxable account at Wealthfront that has tax loss harvesting features and at Vanguard at the same time. Eventually, this will cause wash sales which is not illegal, but a hassle you don't want to worry about.

Your choices:
  • Put all your taxable account at Wealthfront (including the new money you plan to invest in the future) and tax loss harvest.

    Keep Wealthfront taxable account and do not tax loss harvest. Open a Vanguard account for the new money.

    Move the Wealthfront taxable account to Vanguard and put your new money there as well.

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mirandablue
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Re: help with financial planning

Post by mirandablue » Wed Jan 23, 2019 10:58 pm

retiredjg wrote:
Wed Jan 23, 2019 9:18 am
mirandablue wrote:
Tue Jan 22, 2019 10:37 pm
Also, as I accessed by ROTH IRA account for transfer to traditional IRA as recommended, I realized that I had contributed $5.5k during 2017 too (I was within income limits during that time). Wondering if I should roll over that 5.5k with earnings to a ROTH IRA at Vanguard to have everything at one place.
If you want to move this Roth IRA account to Vanguard, move it. This is a purely personal decision. Nobody here can tell you where you "should" hold it. Either place is fine. Just do whatever you prefer.

But if you decide to move it, you need to fix the excess contribution problem before you move it. Have you decided what you plan to do with your excess contribution? Are you removing it entirely or re-characterizing to tIRA and then converting to Roth IRA?

I am doing the backdoor ROTH with the excess amount.
Also, I have a brokerage account at Wealthfront ($10k separate from the ROTH), with tax loss harvesting harvesting features.
stocks: 85%, municipal bonds:15%.
What would you recommend with this. Roll over to Vanguard to consolidate all retirement accounts?
Thanks!
Apparently this is an account we didn't know about.
No, this was indicated in my original post as a separate brokerage account under assets (probably you read it together with ROTH).

What you do NOT want to do is have a taxable account at Wealthfront that has tax loss harvesting features and at Vanguard at the same time. Eventually, this will cause wash sales which is not illegal, but a hassle you don't want to worry about.

Your choices:
  • Put all your taxable account at Wealthfront (including the new money you plan to invest in the future) and tax loss harvest.

    Keep Wealthfront taxable account and do not tax loss harvest. Open a Vanguard account for the new money.

    Move the Wealthfront taxable account to Vanguard and put your new money there as well.
OK, thanks!

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