We Made It ! now need a little help

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Topic Author
MPLSTCH
Posts: 56
Joined: Sun Mar 26, 2017 9:59 am

We Made It ! now need a little help

Post by MPLSTCH » Sat Jan 12, 2019 11:09 am

We are now RETIRED (husband and wife). Been a long time coming, but we are there. Now I would like a little help / ideas on a 401k rollover that is in process.
$ 556,000 will soon be deposited in a Fidelity IRA. Am considering FSKAX Total Market, and maybe FXNAX for the bond portion of the portfolio. Any other ideas? / suggestions would be appreciated.

$ 970,000 (approx) is being moved into a Fidelity brokerage account. Since NUA is being applied here, I will pay tax on the $ 43,482 cost basis. Our current thought is to sell enough stock to become debt free (152,265). The company is stable with stock rising lately, but the future is always unknown. We would also like to establish a cash position. We could do this with a larger stock sale, or a sale next year. We are open to ideas on how to gradually diversify out of such a large part our retirement being in company stock.

Your thoughts are appreciated. I respect all the folks here, or I would not be putting this out here

Topic Author
MPLSTCH
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Re: We Made It ! now need a little help

Post by MPLSTCH » Sat Jan 12, 2019 11:20 am

For got to add that our combined SSA is $ 3700.00

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bertilak
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Re: We Made It ! now need a little help

Post by bertilak » Sat Jan 12, 2019 11:44 am

May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

Pocanutin
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Re: We Made It ! now need a little help

Post by Pocanutin » Sat Jan 12, 2019 11:52 am

OP:

Those two funds are what we own in our IRAs @ 50/50. Age 77/72 retired.
P

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ruralavalon
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Re: We Made It ! now need a little help

Post by ruralavalon » Sat Jan 12, 2019 12:05 pm

Congratulations on your retirement :) .

MPLSTCH wrote:
Sat Jan 12, 2019 11:09 am
We are now RETIRED (husband and wife). Been a long time coming, but we are there. Now I would like a little help / ideas on a 401k rollover that is in process.
$ 556,000 will soon be deposited in a Fidelity IRA. Am considering FSKAX Total Market, and maybe FXNAX for the bond portion of the portfolio. Any other ideas? / suggestions would be appreciated.
Those funds are reasonable choices in my opinion.


$ 970,000 (approx) is being moved into a Fidelity brokerage account. Since NUA is being applied here, I will pay tax on the $ 43,482 cost basis. Our current thought is to sell enough stock to become debt free (152,265). . . . .
It's probably a good idea to pay off the debts. My own personal preference is to be debt free in retirement.

What types, amounts and interest rates on the debt you will be paying?

. . . . The company is stable with stock rising lately, but the future is always unknown. We would also like to establish a cash position. We could do this with a larger stock sale, or a sale next year. We are open to ideas on how to gradually diversify out of such a large part our retirement being in company stock.
Why do you want a cash position?

How large is the position in company stock?

In my opinion it's a good idea to decrease the position in company stock, to get better diversification.

. . . . .

You could get more detailed ideas if more information is provided. Please see the post "Asking Portfolio Questions" for information needed and format

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place. .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

OregonDucksFan
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Re: We Made It ! now need a little help

Post by OregonDucksFan » Sat Jan 12, 2019 2:34 pm

Consider spreading selling taxable investments over time to pay off debts by looking at taxes. There is also the thought of balancing duration to diversify from company stock and taxes.

It's not clear if you're in the 15% or 20% long-term capital gains tax bracket. Or whether selling that much will bump you into 20% long-term capital gains tax bracket. Or how close in time you are to Required Minimum Distribution and Social Security.

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WoodSpinner
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Re: We Made It ! now need a little help

Post by WoodSpinner » Sat Jan 12, 2019 6:01 pm

Congrats!

I agree with the other posts, it’s time to reduce your exposure to company stock.

Not sure what your tax situation looks like....

You might be able to sell a chunk and shelter LTCG at 0%

In my case I donated a chunk of my company stock and setup a DAF. This allowed me to itemize my deductions plus fund the next few years of giving.

Topic Author
MPLSTCH
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Re: We Made It ! now need a little help

Post by MPLSTCH » Fri Jan 18, 2019 3:39 am

Details that were requested.

The Fidelity brokerage account has only company stock in it ( value at $998,000.00)
The NUA tax application will make the stock exempt from RMD

I am waiting on the "in Kind" transfer to show up.......and can then begin working with it

wife (age 64) SSA is 1893.00 mo
my (age 64) SSA is 1860.00 mo
my home sales gig is mo1800.00 (varies)

we currently have COBRA to cover us untill age 65 (this year)

What stock sale would keep us in the 0% capital gains bracket?

n00b
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Re: We Made It ! now need a little help

Post by n00b » Fri Jan 18, 2019 11:28 am

You are more exposed than I would want to be to a single company but with nearly 1M of unrealized capital gains in a taxable account it will take time to unwind in a tax-efficient manner.

It looks like with 85% of your SS taxed (a guess), your taxable income will be about 60k. The top of the 0% bracket on long term capital gains (and 12% marginal for income) for 2019 with standard deductions is about 103k so that leaves about 43k for tax-free long term capital gains.

That wouldn't apply to the first year as you will be realizing 43k of income to take advantage of NUA.
MPLSTCH wrote:
Fri Jan 18, 2019 3:39 am
Details that were requested.

The Fidelity brokerage account has only company stock in it ( value at $998,000.00)
The NUA tax application will make the stock exempt from RMD

I am waiting on the "in Kind" transfer to show up.......and can then begin working with it

wife (age 64) SSA is 1893.00 mo
my (age 64) SSA is 1860.00 mo
my home sales gig is mo1800.00 (varies)

we currently have COBRA to cover us untill age 65 (this year)

What stock sale would keep us in the 0% capital gains bracket?

b4real
Posts: 142
Joined: Wed Mar 05, 2014 6:19 am

Re: We Made It ! now need a little help

Post by b4real » Fri Jan 18, 2019 11:34 am

MPLSTCH wrote:
Fri Jan 18, 2019 3:39 am
What stock sale would keep us in the 0% capital gains bracket?
You can model this with the taxcaster app.

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