Widow and investments

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Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Widow and investments

Post by vkat » Thu Oct 03, 2019 1:49 pm

Hi,
I am a widow (age 38 )years.
Two dependents age 8 and 4 years.

Debts:
House 15 year fixed at 2.87%. 12 years mortgage remaining.
Making additional monthly payments to principal to reduce the term.
Total interest payment 66K (15 years)

IRA- 70 K
will be purchasing fidelity s&P 500 index fund

Full time employed.
Will recieve a pension 80% of the salary at pension. 61 years of age.
Taxable account
Vanguard- VFORX -plan to invest 6k every year from savings.

I have 100 k in cash that I would like advice to invest in.
Also, I receive 2k for each child in SS benefits each month, that I use for daycare and other monthly expenses like clothes, after care classes etc.
Any advice on how to use this money to fund for the kids and save money to secure financial future for the kids.

mhalley
Posts: 7654
Joined: Tue Nov 20, 2007 6:02 am

Re: Widow and investments

Post by mhalley » Thu Oct 03, 2019 2:15 pm

Sorry for your loss. I would not make extra payments to such a low interest mortgage. The first thing to do is to take care of your own retirement before setting things up for your children. That would be a minimum of 15% savings for retirement. I would try to max out any additional retirement plan at work plus max out a Roth IRA. Pensions are great, but they do go away or get cut, or you change jobs, so you need to protect yourself against this happening. I am assuming you have already done the required things to protect your children, IE, Will, Term life insurance, and disability insurance in place, you already have a 3 to 6 month emergency fund with the 100k. After you have got your retirement in order, Then you can worry about your kids. That would be either a 529 plan if you expect them to go to college, or a UTMA/UGMA account.
What is the goal for the 100k? Use part of it for your emergency fund, and If it is retirement, then go ahead and invest the rest of it in the 3 fund portfolio. I am not a fan of target date funds in taxable accounts myself.

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Watty
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Re: Widow and investments

Post by Watty » Thu Oct 03, 2019 2:43 pm

vkat wrote:
Thu Oct 03, 2019 1:49 pm
IRA- 70 K
will be purchasing fidelity s&P 500 index fund
If there is a low cost target date fund in the 401K then that would be a better choice since it would be more diversified.
vkat wrote:
Thu Oct 03, 2019 1:49 pm
House 15 year fixed at 2.87%. 12 years mortgage remaining.

......

I have 100 k in cash that I would like advice to invest in.
With being widowed and two kids you should probably have at least a years expenses in an emergency fund. That should be invested in something very conservative like CD's or an insured savings account.

What is the balance of the mortage?

What are your state and federal tax brackets?

Just for brainstorming one thing that comes to mind would be to pay down your mortage by just enough so that it is paid off right when your oldest kid starts college which would be in about ten years. That would free up your mortage payment so that you could use those funds each month to help pay for college costs.

lakpr
Posts: 3072
Joined: Fri Mar 18, 2011 9:59 am

Re: Widow and investments

Post by lakpr » Thu Oct 03, 2019 2:53 pm

Watty wrote:
Thu Oct 03, 2019 2:43 pm
vkat wrote:
Thu Oct 03, 2019 1:49 pm
IRA- 70 K
will be purchasing fidelity s&P 500 index fund
If there is a low cost target date fund in the 401K then that would be a better choice since it would be more diversified.
Watty, the OP is saying "IRA", you are reading "401k" ... just thought I'd point that out.

I was going to suggest that she use the $100k to contribute indirectly to the 401k plan if available [ meaning max out the entire paycheck if necessary to contribute $19k to a 401k plan, if available; then use this $100k for living expenses ]. But then noticed no mention of a 401k or 403b in the original post.

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Thu Oct 03, 2019 8:17 pm

Hi,
My employer does not offer a 401k.
The retirement contribution directly goes to the state retirement services..thus the pension.

House debt remaining is 220k.
Term left 12 years.

Yes, term life insurance, will in place.
Yes, 100k is in combined CDs and high yield savings accounts.
Tax bracket is 22 % this year.
Another thing I am not sure about is SS survivor income to the kids taxable?
On the SS website there are guidelines on use of SS money for kids.
20k a year per child sitting in the savings account..which adds up to 200k each when they turn 18.
Any advice on how to manage the SS money.

HomeStretch
Posts: 2931
Joined: Thu Dec 27, 2018 3:06 pm

Re: Widow and investments

Post by HomeStretch » Thu Oct 03, 2019 8:42 pm

A little more info would be helpful in order to give you better advice on how to invest the $100k.

What are your federal and state marginal tax brackets?

Do you have an emergency fund of 6-12 months of living expenses in a high-yield savings account?

You are contributing $6k per year to the Taxable account. How much per year are you contributing to the IRA?
Are your IRA contributions pretax or Roth?

What is your desired asset allocation (AA) for your investment portfolio? Your AA is a personal decision. I suggest you increase your bond % (you are currently holding 15% bonds in your IRA Target Date Fund). At age 38, at least 20-25% of your total portfolio (IRA and Taxable account) in bonds would be reasonable IMO.

It’s likely most tax efficient to hold your bond allocation in your IRA. The rest of the IRA would be in equities - the S&P 500 fund you mentioned is fine but a Total Stock Market Fund would be even more diversified as it holds large cap stock (similar to S&P 500) plus small- and mid-cap stocks.

Is your car reliable, safe and running well?

Do you have disability insurance?

No experience with managing minor’s SSI benefits. But as the Representative Payee I think you need to report on the expenditures periodically? To help with that... Have you set up a bank account for each child to deposit each child’s payment? Any payments for the child’s direct expenses like clothes, childcare, medical expenses, etc. could be paid from the account. You could prepare a monthly statement for each child of their allocation of housing, food, insurance, etc. then reimburse yourself for those expenses.

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Fri Oct 04, 2019 8:58 am

HomeStretch wrote:
Thu Oct 03, 2019 8:42 pm
A little more info would be helpful in order to give you better advice on how to invest the $100k.

What are your federal and state marginal tax brackets? I have to research on this!

Do you have an emergency fund of 6-12 months of living expenses in a high-yield savings account? Yes

You are contributing $6k per year to the Taxable account. How much per year are you contributing to the IRA?
Are your IRA contributions pretax or Roth? Don't know! What is your recommendation?

What is your desired asset allocation (AA) for your investment portfolio? Your AA is a personal decision. I suggest you increase your bond % (you are currently holding 15% bonds in your IRA Target Date Fund). At age 38, at least 20-25% of your total portfolio (IRA and Taxable account) in bonds would be reasonable IMO.
My target date fund is in Taxable account.

It’s likely most tax efficient to hold your bond allocation in your IRA. The rest of the IRA would be in equities - the S&P 500 fund you mentioned is fine but a Total Stock Market Fund would be even more diversified as it holds large cap stock (similar to S&P 500) plus small- and mid-cap stocks.

Is your car reliable, safe and running well? yes, new and paid off.

Do you have disability insurance? yes through employer.

No experience with managing minor’s SSI benefits. But as the Representative Payee I think you need to report on the expenditures periodically?
As a biological parent, I am exempt from reporting expenditures. They updated the guidelines recently.
To help with that... Have you set up a bank account for each child to deposit each child’s payment? YES.

Any payments for the child’s direct expenses like clothes, childcare, medical expenses, etc. could be paid from the account. -YES doing this.
You could prepare a monthly statement for each child of their allocation of housing, food, insurance, etc. then reimburse yourself for those expenses.
How do I set up an allocation for housing. Since I am paying mortgage and there is no rent.
Insurance is minimal. Food - Here is the question. The grocery comes out of my credit card and is joint on for the family. The kids are so young. I feel the food expense is minimal right now. Its just not worth the effort.

I also found out I have 403 b and 457 plans available through employment. What do they mean? and how much to put in them?

psteinx
Posts: 3427
Joined: Tue Mar 13, 2007 2:24 pm

Re: Widow and investments

Post by psteinx » Fri Oct 04, 2019 10:59 am

vkat - sorry for your loss. My brother also became a widower at a relatively young age.

It sounds like you're probably close to the beginning of the process of adjusting to your loss (no doubt personally, but also financially), and learning about financial planning. You've come to a good place to start. That said, your situation is likely rather different from many others here, so some of us may struggle to provide good advice. If you can comfortably provide more information, you'll likely get better advice.

Perhaps you may want to post your financial information in the format outlined here:
viewtopic.php?f=1&t=6212

That said, that may be burdensome, and in any case, some of your challenges don't fit standard templates. At a minimum, it might be helpful to provide information on your income, (including the nature of anything you might be receiving (pension, SS, etc.) as a widow) - the information about your kids' SS benefits is good and no doubt that money helps things. Also, your housing situation (home value/equity). Oftentimes, knowing either the specific city/area you live in, or the category (very high/high/middle/low cost of living) can provide some information.

And given that you're a widow, the amount of family support (financial and personal) you have access to may be helpful. If you're pretty isolated (both financially and personally), then things like life insurance for you (to benefit your kids) become more important. If you've got involved parents (or parents-in-law) of young enough age and strong enough financial position that they could step up for your kids in the event something happens to you, then that obviously is helpful.

You would probably benefit from browsing the wiki:
https://www.bogleheads.org/wiki/Main_Page
and looking up specific topics there, too (like 403b and 457).

There is a book, "The Bogleheads' Guide to Investing", that you may find useful to get you up to speed on a lot of core topics.
Last edited by psteinx on Mon Oct 07, 2019 10:10 am, edited 1 time in total.

psteinx
Posts: 3427
Joined: Tue Mar 13, 2007 2:24 pm

Re: Widow and investments

Post by psteinx » Fri Oct 04, 2019 11:05 am

Note that this forum tends to be a little light on day-to-day finance issues (how to budget for food, good techniques for credit card usage, and so on), though it does get addressed.

In general, IMO, you should be focusing on 3 areas:

1) Month-to-Month (and year to year) budget. Get your financial house in order (if it isn't currently). Get a handle on inflows versus outflows, and give yourself breathing space.

2) Kids' education. Big topic, and there are a LOT of ways to reduce costs for college versus high headline figures for elite schools.

3) Your own retirement.

You mention "save money to secure financial future for the kids". I hope you mean securing their financial future within your home to age 18 or so, and college thereafter. Don't worry too much about their adulthood (age ~25+) - they should (hopefully) be able to take care of themselves later. You've probably got enough on your plate tackling #s 1, 2, and 3 above.

lakpr
Posts: 3072
Joined: Fri Mar 18, 2011 9:59 am

Re: Widow and investments

Post by lakpr » Fri Oct 04, 2019 11:36 am

vkat wrote:
Fri Oct 04, 2019 8:58 am
I also found out I have 403 b and 457 plans available through employment. What do they mean? and how much to put in them?
These plans are for salting away money for your retirement. You can contribute to the plans either on a pre-tax basis (so if you earn $100k, and contribute $10k, then your income will reflect $90k at the time of tax returns), or a Roth basis (no change in income).

457 plans are technically "deferred compensation". The money that you put away in this plan can be withdrawn at any time, the only pre-condition being that you should be separated from employment from that particular employer who offered the plan. In short, you should lose your current job or retire. Taxes are due of course, but no penalties.

Money saved in 403b plans are purely intended for "retirement", and therefore do not allow you to withdraw money from the plan without penalties. Penalties are on TOP of taxes on the withdrawal.

Note that if you DO contribute to the 403b and/or 457 plans, your ability to contribute to Traditional IRA (as you are doing now) and take a tax deduction on it will be affected. Even if you contribute $1 and nothing more. You are deemed an "active participant in a workplace retirement plan" and therefore your ability to deduct IRA contribution is affected.

The contribution limits are $19k each to 457 plan and 403b plan, per year.

We can go over the features and additional questions if you are able to share your income, and post your questions in the format recommended in this sticky: Asking Portfolio Questions. We will be able to provide tailored advice to your specific situation.

In general, you want to maximize the 457 contribution first, the 403b contribution next, and a Roth IRA.

krow36
Posts: 2250
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Widow and investments

Post by krow36 » Fri Oct 04, 2019 10:01 pm

vkat wrote:
Fri Oct 04, 2019 8:58 am
I also found out I have 403 b and 457 plans available through employment. What do they mean? and how much to put in them?
If you are a public school teacher, you are likely to have to choose a 403b and/or 457 vendor from a list that your school district maintains. Most school districts allow multiple vendors to offer their 403b plans. There are 2 basic types of K-12 403b plans, those based on annuities, and those that are mutual fund based custodial accounts. The former are usually very expensive—2-3% per year, and should be avoided. The latter can be very low-cost with expense ratios as low as 0.04% or lower. If you are fortunate, your district’s vendor list will include Fidelity, Vanguard or Aspire. You can usually find the vendor list on your district’s HR website. If not, give HR a call.

You can learn more about 403b plans for K-12 employees at this Wiki article:
https://www.bogleheads.org/wiki/403b_pl ... _employees

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Harry Livermore
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Re: Widow and investments

Post by Harry Livermore » Sat Oct 05, 2019 7:32 am

I am very sorry for your loss. I am guessing you are either a public school teacher or employed in some capacity by a school system? Hopefully that makes your work schedule close to the kids' school schedules and helps the juggling. My wife is a teacher and her career has been both fulfilling and secure, things not readily found nowadays.
You have come to a great community to help you navigate the financial waters. Learn as much as you can from the folks here, most of whom are way smarter than I. Please keep coming back with questions.
If you can, start contributing a little of every paycheck to your 403(b). Make sure there is a low cost option like Vanguard or Fidelity within your plan. A Target Date Fund would be an excellent choice. I suggest participating in the 403(b) because when you retire, that will be YOUR money, no questions asked, and not subject to mismanagement, cuts, or the envy/ wrath of fellow taxpayers, as your pension might be. My wife and I have planned very carefully to be able to weather a taxpayer revolt that would undercut her "promised" pension (I'm not trying to scare you, I think it's a remote possibility) The amount you contribute can be small at first until you find your footing financially, like $100 per pay period or so. Ramp up as you can. As others have pointed out, you can still put money in an IRA but it will be NONDEDUCTIBLE. Ultimately you can put more money into the 403(b) each year so that's why I'm advising to start there. You'll need to file a form with your taxes (8606?) if you make nondeductible contributions to an IRA.
Please also start 529 college plans for your kids. There have been several lively discussions as of late on this forum regarding college costs. Don't presume that they will go down over the next 18 years or that "someone" will "solve" the tuition inflation issue. Again, think small, $100 per month, and ramp up as you can.
Other than that, I would advise NOT doing anything rash or ambitious just yet, as you get your footing. Learn as much as you can about personal finance and investing. Keep a large emergency fund. Your #1 priority should be to keep monthly overhead low, and have a large buffer of money (your $100K cash is an excellent start) Make a budget. See if that $100K is a year's worth of expenses. If it is, I would not put too much of it in anything except CDs and high-yield savings (that's me personally) Since you are now a one-parent, one-breadwinner household, I would advise keeping more "months in the bank" than the usual 6 months. I would NOT prepay the mortgage. You will be done with it soon enough. I think that money would be better put into 403(b) and 529 plans. Your mortgage payment will SEEM like less money via inflation in 12 years, but you can't make up 12 years' market returns to fund your retirement and kids' college.
Best of luck, and please don't vanish. Keep posting here.
Cheers

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Sat Oct 05, 2019 9:01 pm

Sounds like investing in 403b is a good start.
Here are the options:
From Lincoln financial group.

NEIAX (ER )0.45
NTIAX (ER) 0.46
VGSLX (ER)0.10
ACITX (ER)0.47
DODIX (ER) 0.43

Rest all the options have high ERs.

My desired AA 72/28
My 28 % is well secured in CDs/ HYSA
Need advice on how to manage the 72 % , knowing the above criteria.

lakpr
Posts: 3072
Joined: Fri Mar 18, 2011 9:59 am

Re: Widow and investments

Post by lakpr » Sat Oct 05, 2019 9:16 pm

vkat wrote:
Sat Oct 05, 2019 9:01 pm
Sounds like investing in 403b is a good start.
Here are the options:
From Lincoln financial group.

NEIAX (ER )0.45
NTIAX (ER) 0.46
VGSLX (ER)0.10
ACITX (ER)0.47
DODIX (ER) 0.43

Rest all the options have high ERs.

My desired AA 72/28
My 28 % is well secured in CDs/ HYSA
Need advice on how to manage the 72 % , knowing the above criteria.
People do not memorize tickers, can you please expand the full names of the funds? Please also list all choices up to 1% ER.

Also, usually it is the case that you have access to more than one 403b provider. Especially in school districts. Lincoln Financial group does not have good reputation on this board. Are you sure you are stuck with only them? Are you sure there aren't other choices? What about 457 plans? Is there any state specific retirement plan that you may be eligible? What state are you in?

Please also list your current gross salary. There are a number of tax related strategies that directly hinge upon what you make. I am also assuming your tax filing status is "Head of Household".

This is why I have asked you to post the information in the format of "Asking Portfolio Questions" sticky on this forum, earlier.

krow36
Posts: 2250
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Location: WA

Re: Widow and investments

Post by krow36 » Sat Oct 05, 2019 10:27 pm

vkat wrote:
Sat Oct 05, 2019 9:01 pm
Sounds like investing in 403b is a good start.
Here are the options:
From Lincoln financial group.

NEIAX (ER )0.45
NTIAX (ER) 0.46
VGSLX (ER)0.10
ACITX (ER)0.47
DODIX (ER) 0.43

Rest all the options have high ERs.

My desired AA 72/28
My 28 % is well secured in CDs/ HYSA
Need advice on how to manage the 72 % , knowing the above criteria.
Are you saying that your employer will only allow you use Lincoln Financial for your 403b account? Maybe I guessed wrong and you are not a public school employee? Non-profits usually have only a single vendor.

If you would follow lakpr's suggestions, it would help posters give you useful suggestions.

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Sun Oct 06, 2019 8:55 am

Thanks for being patient. I had to re- do a lot of numbers as EF would be different now.
Here is the requested format. :happy

Emergency funds: 1 year funds. In HYSA @ 1.9%

Debt: House mortgage
12 years remaining. 220K remaining. @2.87%

Tax Filing Status:
This year will be Married Filing jointly.
Next year 2020 will be Head of household. Widow with 2 dependent children.

Tax Rate: 22% now and next year for federal.
State is 5.75%

State of Residence: Virginia

Age: 38 years

Desired Asset allocation: 72 % stocks / 28% bonds
Desired International allocation:10% of stocks

Current portfolio: 100k (not including the EF)



Current retirement assets

Taxable
28% cash/CD/HYSA (for investing –not including emergency funds)(yield 1.9 % -2.6 %)
2% fund ( VFORX )(vanguard Target date 2040) (ER 0.14)


My IRA at Fidelity
70 % Fidelity 500 index fund (FXAIX) (ER 0.015)

Contributions

New annual Contributions

taxable :6 % to VFORX

Available funds


Funds available in my 403(b)
At present not contributing to 403 (b)
Through Lincoln financial group. That’s the only vendor.
American Funds Europacific Growth R42(REREX) (ER 0.84)
Manning & Napier World Opportunities (EXWAX) (ER 1.07)
AllianzGI NFJ Dividend Value A ( PNEAX) ER 1.08)
American Funds Fundamental Invs R4 (RFNEX) (ER 0.66)
American Funds Growth Fund of Amer R4 (RGAEX) ( ER 0.68)
Artisan Mid Cap Value Investor 3 (ARTQX ) (1.2)
BlackRock Small Cap Growth Equity Instl 3 (PSGIX) (0.82)
Columbia Large Cap Index A (NEIAX) (ER 0.45)
Columbia Mid Cap Index A3, (NTIAX) (ER 0.46)
Columbia Small Cap Value Fund I Z3 (CSCZX) (ER 1.06)
JPMorgan Small Cap Equity Sel 3 (VSEIX) (ER 1.01)
Vanguard REIT Index Adm4 (VGSLX) ( ER 0.10)
Victory Munder Mid-Cap Core Growth A (MGOAX) ( ER 1.37)
American Century Infl-Adj Bond Inv1 (ACITX) (ER 0.47)
Dodge & Cox Income1 (DODIX) (ER 0.43)
Questions:
1. What is my best financial strategy knowing the above.

2. Would like to have a financial security in 10 years time. Would like to retire in 22 years.
3. How much % should I invest in each of the above accounts? What is good investment option for stock index funds, bond funds , 72 % OF portfolio (taxable in Vanguard and IRA in Fidelity)

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grabiner
Advisory Board
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Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Widow and investments

Post by grabiner » Sun Oct 06, 2019 11:08 am

vkat wrote:
Sun Oct 06, 2019 8:55 am
Funds available in my 403(b)
At present not contributing to 403 (b)
Through Lincoln financial group. That’s the only vendor.
American Funds Europacific Growth R42(REREX) (ER 0.84)
Manning & Napier World Opportunities (EXWAX) (ER 1.07)
AllianzGI NFJ Dividend Value A ( PNEAX) ER 1.08)
American Funds Fundamental Invs R4 (RFNEX) (ER 0.66)
American Funds Growth Fund of Amer R4 (RGAEX) ( ER 0.68)
Artisan Mid Cap Value Investor 3 (ARTQX ) (1.2)
BlackRock Small Cap Growth Equity Instl 3 (PSGIX) (0.82)
Columbia Large Cap Index A (NEIAX) (ER 0.45)
Columbia Mid Cap Index A3, (NTIAX) (ER 0.46)
Columbia Small Cap Value Fund I Z3 (CSCZX) (ER 1.06)
JPMorgan Small Cap Equity Sel 3 (VSEIX) (ER 1.01)
Vanguard REIT Index Adm4 (VGSLX) ( ER 0.10)
Victory Munder Mid-Cap Core Growth A (MGOAX) ( ER 1.37)
American Century Infl-Adj Bond Inv1 (ACITX) (ER 0.47)
Dodge & Cox Income1 (DODIX) (ER 0.43)
Questions:
1. What is my best financial strategy knowing the above.
Assuming you don't get an employer match on the 403(b), max out the IRA first (Roth IRA if traditional is not deductible) in preference to the 403(b), since you have better investment options in the IRA.

The expenses in this 403(b) are low enough that it is better than a taxable account, for money you won't need until retirement. I would suggest selling the Vanguard Target Retirement 2040 in your taxable account (even if you may have a small capital gains) so that you can contribute more to the 403(b). If you have more in your taxable account than the IRA and 403(b) contribution limit, leave it in a CD or high-yield savings account and count it as part of your bond portfolio until it gets into the 403(b).

Normally, I would recommend using the lowest-expense fund in the 403(b), but that fund (REIT Index) is not suitable for a large part of the portfolio. You say that you only want 10% of your stock in international; this needs to be in your IRA because the 403(b) option is expensive. In addition, since the small-cap funds in the 403(b) are expensive, you should hold that in the IRA.

Therefore, 72% stock would be:
7% REIT Index (10% of stock) in 403(b)
7% Fidelity Total International (10% of stock) in IRA (feel free to increase this percentage)
58% total US market, which can be either 80% Columbia Large-Cap Index in 403(b) and 20% Fidelity Extended Market Index in IRA, or, once the 403(b) is filled, use Fidelity Total Stock Market Index in the IRA.

This allows all the bonds to be in one fund in the Fidelity IRA, which could be Fidelity Total Bond Market Index.
2. Would like to have a financial security in 10 years time. Would like to retire in 22 years.
This is a reasonable goal, but it is necessarily dependent on the market movements.
Wiki David Grabiner

GlacierRunner
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Re: Widow and investments

Post by GlacierRunner » Sun Oct 06, 2019 11:11 pm

vkat wrote:
Thu Oct 03, 2019 8:17 pm
On the SS website there are guidelines on use of SS money for kids.
20k a year per child sitting in the savings account..which adds up to 200k each when they turn 18.
Any advice on how to manage the SS money.
Without going to the SS website, my recollection is that SS money should be spent for the care and maintenance of the children. This money should be spent first (house, food, daycare, clothing, transportation, etc.) and records kept. Then you should use the funds you earn to save for them for education and other goals. The SS money is not supposed to be saved.

The children's benefit will be taxable if 1/2 of their SS benefits + their income is more than $25,000. Presumably your young children are not earning other income.

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Wiggums
Posts: 1933
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Re: Widow and investments

Post by Wiggums » Mon Oct 07, 2019 5:32 am

grabiner wrote:
Sun Oct 06, 2019 11:08 am
vkat wrote:
Sun Oct 06, 2019 8:55 am
Funds available in my 403(b)
At present not contributing to 403 (b)
Through Lincoln financial group. That’s the only vendor.
American Funds Europacific Growth R42(REREX) (ER 0.84)
Manning & Napier World Opportunities (EXWAX) (ER 1.07)
AllianzGI NFJ Dividend Value A ( PNEAX) ER 1.08)
American Funds Fundamental Invs R4 (RFNEX) (ER 0.66)
American Funds Growth Fund of Amer R4 (RGAEX) ( ER 0.68)
Artisan Mid Cap Value Investor 3 (ARTQX ) (1.2)
BlackRock Small Cap Growth Equity Instl 3 (PSGIX) (0.82)
Columbia Large Cap Index A (NEIAX) (ER 0.45)
Columbia Mid Cap Index A3, (NTIAX) (ER 0.46)
Columbia Small Cap Value Fund I Z3 (CSCZX) (ER 1.06)
JPMorgan Small Cap Equity Sel 3 (VSEIX) (ER 1.01)
Vanguard REIT Index Adm4 (VGSLX) ( ER 0.10)
Victory Munder Mid-Cap Core Growth A (MGOAX) ( ER 1.37)
American Century Infl-Adj Bond Inv1 (ACITX) (ER 0.47)
Dodge & Cox Income1 (DODIX) (ER 0.43)
Questions:
1. What is my best financial strategy knowing the above.
Assuming you don't get an employer match on the 403(b), max out the IRA first (Roth IRA if traditional is not deductible) in preference to the 403(b), since you have better investment options in the IRA.

The expenses in this 403(b) are low enough that it is better than a taxable account, for money you won't need until retirement. I would suggest selling the Vanguard Target Retirement 2040 in your taxable account (even if you may have a small capital gains) so that you can contribute more to the 403(b). If you have more in your taxable account than the IRA and 403(b) contribution limit, leave it in a CD or high-yield savings account and count it as part of your bond portfolio until it gets into the 403(b).

Normally, I would recommend using the lowest-expense fund in the 403(b), but that fund (REIT Index) is not suitable for a large part of the portfolio. You say that you only want 10% of your stock in international; this needs to be in your IRA because the 403(b) option is expensive. In addition, since the small-cap funds in the 403(b) are expensive, you should hold that in the IRA.

Therefore, 72% stock would be:
7% REIT Index (10% of stock) in 403(b)
7% Fidelity Total International (10% of stock) in IRA (feel free to increase this percentage)
58% total US market, which can be either 80% Columbia Large-Cap Index in 403(b) and 20% Fidelity Extended Market Index in IRA, or, once the 403(b) is filled, use Fidelity Total Stock Market Index in the IRA.

This allows all the bonds to be in one fund in the Fidelity IRA, which could be Fidelity Total Bond Market Index.
2. Would like to have a financial security in 10 years time. Would like to retire in 22 years.
This is a reasonable goal, but it is necessarily dependent on the market movements.
+1

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Thu Nov 14, 2019 12:57 pm

Thank you for all the advice. I am still learning and finding additional information.

Please advice.

Emergency funds: 1 year funds. In HYSA @ 1.9%

Debt: House mortgage
12 years remaining. 220K remaining. @2.87%

Tax Filing Status:
This year will be Married Filing jointly.
Next year 2020 will be Head of household. Widow with 2 dependent children.

Tax Rate: 22% now and next year for federal.
State is 5.75%

State of Residence: Virginia

Age:

Desired Asset allocation: 72 % stocks / 28% bonds
Desired International allocation:10% of stocks

Current portfolio: 100k (not including the EF)



Current retirement assets

Taxable
28% cash/CD/HYSA (for investing –not including emergency funds)(yield 1.9 % -2.6 %)
2% fund ( VFORX )(vanguard Target date 2040) (ER 0.14)
3.5% VTSAX (ER 0.04%)

My IRA at Fidelity
70 % Fidelity 500 index fund (FXAIX) (ER 0.015)

Contributions

New annual Contributions

taxable :6 % to VFORX

Available funds


Funds available in my 403(b)
At present not contributing to 403 (b)
Through Lincoln financial group. That’s the only vendor.
American Funds Europacific Growth R42(REREX) (ER 0.84)
Manning & Napier World Opportunities (EXWAX) (ER 1.07)
AllianzGI NFJ Dividend Value A ( PNEAX) ER 1.08)
American Funds Fundamental Invs R4 (RFNEX) (ER 0.66)
American Funds Growth Fund of Amer R4 (RGAEX) ( ER 0.68)
Artisan Mid Cap Value Investor 3 (ARTQX ) (1.2)
BlackRock Small Cap Growth Equity Instl 3 (PSGIX) (0.82)
Columbia Large Cap Index A (NEIAX) (ER 0.45)
Columbia Mid Cap Index A3, (NTIAX) (ER 0.46)
Columbia Small Cap Value Fund I Z3 (CSCZX) (ER 1.06)
JPMorgan Small Cap Equity Sel 3 (VSEIX) (ER 1.01)
Vanguard REIT Index Adm4 (VGSLX) ( ER 0.10)
Victory Munder Mid-Cap Core Growth A (MGOAX) ( ER 1.37)
American Century Infl-Adj Bond Inv1 (ACITX) (ER 0.47)
Dodge & Cox Income1 (DODIX) (ER 0.43)

This is the option available in 457
https://www.varetirement.org/cashmatch/ ... files.html

Questions:
1. Should I invest in 403b with Lincoln Financial group or 457 Deferred compensation plan ( 30 $ annual maintenance fee )with the above options.
2. What funds should I choose for the tax deferred accounts.I am considering
BlackRock’s Equity Index Fund F (ER 0.01%)
3. If I open a brokerage account for 457 account with TD ameritrade. Can I purchase Vanguard funds every paycheck. How does the cost compare for the next 20 years with the Blackrock Index fund F that is available under the 457 account. It is a SDBA with TD ameritrade.
4. What are my other options with TD ameritrade SDBA? I have heard that they have poor customer service.

4. How much % should I invest in each of the above accounts? What is good investment option for stock index funds. I want to keep the cash/ fixed aspect of my portfolio and start contributing to stocks/index funds.

lakpr
Posts: 3072
Joined: Fri Mar 18, 2011 9:59 am

Re: Widow and investments

Post by lakpr » Thu Nov 14, 2019 2:04 pm

Answer 1: This is a no-brainer. You have super-excellent choices in your 457 plan (0.01% for the Stock fund, 0.03% for the Small Cap fund, 0.03% for the Bond fund and 0.06% for the international fund). So you should attempt to max out the first $19k (or $25k if you are older than 50 at the end of the year) in the 457 plan. If you can STILL contribute additional money, then choose 403b plan to salt away up to additional $19k (or $25k) in only these funds:

Columbia Large Cap Index A (NEIAX) (ER 0.45)
Vanguard REIT Index Adm4 (VGSLX) ( ER 0.10) <=== including this only because it's an excellent ER if you want to tilt to REIT, can skip
Dodge & Cox Income1 (DODIX) (ER 0.43)

The American Funds EuroPacific Growth R42(REREX) (ER 0.84) for international equities in your 403b: it's a good fund but the ER is way too high. I would skip it.

You don't need to open a brokerage account, there's really no value to do so given the excellent 457 plan choices.

HomeStretch
Posts: 2931
Joined: Thu Dec 27, 2018 3:06 pm

Re: Widow and investments

Post by HomeStretch » Thu Nov 14, 2019 3:50 pm

Can you clarify:

1. whether your total portfolio (including cash to be invest and excluding emergency fund) is $170k or $100k as your first and latest posts seem to say something different to me (see below)?

2. Your latest post says you “want to keep the cash/fixed income aspect” of your portfolio. Does this mean you want to keep the Taxable account cash of 28% ($28k?) in Cash and not invest it in equity or bond funds?

Your latest post says your total portfolio is $100k (excluding emergency fund) in a Taxable account and Traditional IRA. Your Taxable account has 28% in cash which would be $28k.

Your first post says you have $70k in a Traditional IRA plus $100k in cash (excluding emergency fund) to invest and that you will be invest $6k/year in a target date fund in a Taxable account.

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Thu Nov 14, 2019 8:16 pm

Yes sorry for all the mix up.

Since I had income past these months I have put money in taxable with VTSAX
EF cash HYSA ( not including PORTFOLIO of 100k)
Total portfolio 100 k

70 % fidelity IRA
5% taxable Vanguard
25 % CDs taxable

Also since I have income, I can save 6k annually ( after all expenses) that I would like to invest either in 457 or 403 b .
I am sure my net income will be higher next year with change in w4 and pay raise about 4 % of annual salary.

Herekittykitty
Posts: 655
Joined: Wed Apr 16, 2014 8:11 pm
Location: Flyover Country

Re: Widow and investments

Post by Herekittykitty » Thu Nov 14, 2019 8:34 pm

I'm sorry for your loss. I was in a similar situation at your age, widowed, young children. This was decades ago, the Internet was just starting and not useful, and not nearly as much information as available.

My first thoughts are to give yourself and the kids time to grieve and adapt. Take good care of yourself and them, mind and spirit. Do not make any decisions that you don't have to make unless you understand them very clearly. Keep your risk level low until you understand very clearly what dice you are throwing and why, and what the upside and downside of the risk is. Keep in mind that your emotional ability to tolerate risk may not be the same now as it will in a year or so. You are very likely still healing and you need security while you heal.

As for Social Security survivors benefits: Do not take anyone's speculation, guess, or any such thing as accurate. This is too important. As I recall it was not difficult to do the reporting to Social Security. Also I think it was possible to save money on the kids' behalf (my memory may be faulty, so don't assume it is right), but I didn't. I recall there is an age the child gets their own check (I think it was 18), which then stops on graduation from high school. Kids may not be wise in how they spend that money for those months. I don't remember if the total family survivors benefits stayed the same as each child graduated and their check stopped entirely but it might have. I am only mentioning any of that to bring up questions you might ask Social Security, as it has been a lot of years since I was in the situation, my memory could be inaccurate, and things may have changed. I would go to Social Security either on line if you can find your questions answered there, otherwise go in person. I would ask to see the form you will use to report to Social Security how you spent money on behalf of the kids, because if you have it in advance you will know before it is time to report. It is important to understand how Social Security survivor benefits work, although once it becomes clear it is not that complicated.

Based on your assets and income as far as I can tell, you have the potential for being fine financially. Don't move too fast on financial decisions. Take time to learn. If you are clear and certain about what you want to do and why, then fine. If not, then wait.

Do keep money you intend to invest sometime completely separate from your emergency fund, household expense fund, and so on. It is easy to mix those things together in the same pot and then the money you intend to invest goes for other things you could have been fine without. (Ask me how I know.)

Best wishes.
I don't know anything.

krow36
Posts: 2250
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Widow and investments

Post by krow36 » Fri Nov 15, 2019 12:37 am

vkat wrote:
Thu Nov 14, 2019 12:57 pm
This is the option available in 457
https://www.varetirement.org/cashmatch/ ... files.html

Questions:
1. Should I invest in 403b with Lincoln Financial group or 457 Deferred compensation plan ( 30 $ annual maintenance fee )with the above options. The VA state 457 plan is excellent. I would start with that and skip the 403b plan for the time being.
2. What funds should I choose for the tax deferred accounts.I am considering
BlackRock’s Equity Index Fund F (ER 0.01%) If I were you I would use one of the Target Retirement funds which are very diversified. The TR 2030 would be a good one for you to start with. The expense ratio of 0.08% very low.
3. If I open a brokerage account for 457 account with TD ameritrade. Can I purchase Vanguard funds every paycheck. How does the cost compare for the next 20 years with the Blackrock Index fund F that is available under the 457 account. It is a SDBA with TD ameritrade. You should skip the brokerage account. The 457 has lots of great low-cost funds and you don't need a brokerage account to access any other funds.
4. What are my other options with TD ameritrade SDBA? I have heard that they have poor customer service.

4. How much % should I invest in each of the above accounts? What is good investment option for stock index funds. I want to keep the cash/ fixed aspect of my portfolio and start contributing to stocks/index funds. For the 457, you won't be able to max it out for 2019, maybe not even be able to make any contributions? Call them and ask. You'll need to fill out paperwork for the 457 plan and a salary reduction form for your employer. You can contribute up to 19.5k in 2020. It has to go through payroll reduction, so talk to them about how to go about it.
Is your VA state pension the Hybrid Pension?

User avatar
dodecahedron
Posts: 4819
Joined: Tue Nov 12, 2013 12:28 pm

Re: Widow and investments

Post by dodecahedron » Fri Nov 15, 2019 5:47 am

First of all, I want to say how sorry I am for your loss. My heart
goes out to you. I was widowed at 59, with two young adult
daughters, and that was hard, but I can only imagine how much
harder it must be with young children.
vkat wrote:
Sun Oct 06, 2019 8:55 am
Tax Filing Status:
This year will be Married Filing jointly.
Next year 2020 will be Head of household. Widow with 2 dependent children.
Actually, your tax situation is somewhat better than described above.

If your husband died in 2019, then you are correct that this year will
be Married Filing Jointly (MFJ), but in 2020 and 2021, your filing
status will be Qualifying Widow (QW), which is significantly better
than Head of Household (HoH).

Then, starting in 2022, you will be Head of Household and you
can stay in that filing status as long as you do not remarry and
have at least one dependent child living with you.

QW fling status is very close to the same as MFJ status (same standard
deduction and same tax brackets, for example.) There are a few
provisions slightly less favorable to QW than to MFJ, but they
tend to be relatively minor in the greater scheme of things.

Congress created the QW filing status decades ago to ease the
household tax shock associated with the transition from MFJ.

Note that your children´s SS benefit income will NOT go on
YOUR tax return. If SS is their only income, they will not
have a tax filing requirement. When they reach midteens
and perhaps get part-time jobs and file tax returns,
they would report the SS benefits on their own returns
but unless they have a lot of non-SS income, their SS
benefits are unlikely to be taxable income for them.

StrawMan
Posts: 22
Joined: Mon Jul 07, 2014 7:51 am

Re: Widow and investments

Post by StrawMan » Fri Nov 15, 2019 6:58 am

Just here to post encouragement (I’m not as financially savvy as the rest) - OP I was 38 with a young child when I became a widower. It’s rough, but sounds like you’re doing great. Hang in there!

Katietsu
Posts: 2520
Joined: Sun Sep 22, 2013 1:48 am

Re: Widow and investments

Post by Katietsu » Fri Nov 15, 2019 9:07 am

dodecahedron wrote:
Fri Nov 15, 2019 5:47 am


Actually, your tax situation is somewhat better than described above.

If your husband died in 2019, then you are correct that this year will
be Married Filing Jointly (MFJ), but in 2020 and 2021, your filing
status will be Qualifying Widow (QW), which is significantly better
than Head of Household (HoH).

Then, starting in 2022, you will be Head of Household and you
can stay in that filing status as long as you do not remarry and
have at least one dependent child living with you.

Note that your children´s SS benefit income will NOT go on
YOUR tax return. If SS is their only income, they will not
have a tax filing requirement. When they reach midteens
and perhaps get part-time jobs and file tax returns,
they would report the SS benefits on their own returns
but unless they have a lot of non-SS income, their SS
benefits are unlikely to be taxable income for them.
Print this out and keep it for when you do your taxes each year. Putting children’s SS on the parent’s return and using head of household instead of qualifying widow are both common mistakes made even by paid preparers.

zeal
Posts: 195
Joined: Tue Dec 11, 2018 4:28 pm

Re: Widow and investments

Post by zeal » Fri Nov 15, 2019 9:29 am

I’m sorry for your loss. I don’t have a whole lot to contribute, but just want to leave you with some encouragement as well and follow along with your story here. Your spouse left you in a good financial situation, so don’t stress too much about it and don’t feel like you need to make changes immediately. Take your time and make sure you understand what you are investing in before you buy into something.

My wife is a teacher in VA, so we are also a part of the VRS. She opted for the Hybrid plan with the “Help Me Do It” path. She only uses the Stock Fund, International Stock Fund, and Bond Fund to make up her 457/401a allocation—these are the funds we figured were best when analyzing expense ratio and turnover. If you want to instead use a Target Date Fund in this account, those are great choices too—we just wanted more control over her asset allocation. We don’t make enough money to consider the 403b at this point, but she does contribute the maximum to her Roth IRA at Vanguard every year, which is all invested in VTSAX. Hope that helps!

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Fri Nov 15, 2019 11:15 am

krow36 wrote:
Fri Nov 15, 2019 12:37 am
vkat wrote:
Thu Nov 14, 2019 12:57 pm
This is the option available in 457
https://www.varetirement.org/cashmatch/ ... files.html

Questions:
1. Should I invest in 403b with Lincoln Financial group or 457 Deferred compensation plan ( 30 $ annual maintenance fee )with the above options. The VA state 457 plan is excellent. I would start with that and skip the 403b plan for the time being.
2. What funds should I choose for the tax deferred accounts.I am considering
BlackRock’s Equity Index Fund F (ER 0.01%) If I were you I would use one of the Target Retirement funds which are very diversified. The TR 2030 would be a good one for you to start with. The expense ratio of 0.08% very low.
3. If I open a brokerage account for 457 account with TD ameritrade. Can I purchase Vanguard funds every paycheck. How does the cost compare for the next 20 years with the Blackrock Index fund F that is available under the 457 account. It is a SDBA with TD ameritrade. You should skip the brokerage account. The 457 has lots of great low-cost funds and you don't need a brokerage account to access any other funds.
4. What are my other options with TD ameritrade SDBA? I have heard that they have poor customer service.

4. How much % should I invest in each of the above accounts? What is good investment option for stock index funds. I want to keep the cash/ fixed aspect of my portfolio and start contributing to stocks/index funds. For the 457, you won't be able to max it out for 2019, maybe not even be able to make any contributions? Call them and ask. You'll need to fill out paperwork for the 457 plan and a salary reduction form for your employer. You can contribute up to 19.5k in 2020. It has to go through payroll reduction, so talk to them about how to go about it.
Is your VA state pension the Hybrid Pension?
No it is plan 2.

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Fri Nov 15, 2019 11:21 am

dodecahedron wrote:
Fri Nov 15, 2019 5:47 am
First of all, I want to say how sorry I am for your loss. My heart
goes out to you. I was widowed at 59, with two young adult
daughters, and that was hard, but I can only imagine how much
harder it must be with young children.
vkat wrote:
Sun Oct 06, 2019 8:55 am
Tax Filing Status:
This year will be Married Filing jointly.
Next year 2020 will be Head of household. Widow with 2 dependent children.
Actually, your tax situation is somewhat better than described above.

If your husband died in 2019, then you are correct that this year will
be Married Filing Jointly (MFJ), but in 2020 and 2021, your filing
status will be Qualifying Widow (QW), which is significantly better
than Head of Household (HoH).

Then, starting in 2022, you will be Head of Household and you
can stay in that filing status as long as you do not remarry and
have at least one dependent child living with you.

QW fling status is very close to the same as MFJ status (same standard
deduction and same tax brackets, for example.) There are a few
provisions slightly less favorable to QW than to MFJ, but they
tend to be relatively minor in the greater scheme of things.

Congress created the QW filing status decades ago to ease the
household tax shock associated with the transition from MFJ.

Note that your children´s SS benefit income will NOT go on
YOUR tax return. If SS is their only income, they will not
have a tax filing requirement. When they reach midteens
and perhaps get part-time jobs and file tax returns,
they would report the SS benefits on their own returns
but unless they have a lot of non-SS income, their SS
benefits are unlikely to be taxable income for them.
I am trying to find a spot on w4 that says QW..
The first 2 lines are MFJ and HOH.( should I mark both these 0 for 2020)
3 rd line is single with dependent children. Is this how to go about this?
I would like more clarification on QW on W4.

RCL
Posts: 374
Joined: Sat Jul 05, 2014 2:48 am

Re: Widow and investments

Post by RCL » Fri Nov 15, 2019 2:40 pm

I believe your filing status for tax returns would be on the 1040 form, not on a W-4 which is a withholding form

Edit: I see your are specifically asking about how to change your W-4
It Is Best To Consult Others Before Taking Unusual Actions

User avatar
dodecahedron
Posts: 4819
Joined: Tue Nov 12, 2013 12:28 pm

Re: Widow and investments

Post by dodecahedron » Fri Nov 15, 2019 2:59 pm

vkat wrote:
Fri Nov 15, 2019 11:21 am
dodecahedron wrote:
Fri Nov 15, 2019 5:47 am
First of all, I want to say how sorry I am for your loss. My heart
goes out to you. I was widowed at 59, with two young adult
daughters, and that was hard, but I can only imagine how much
harder it must be with young children.
vkat wrote:
Sun Oct 06, 2019 8:55 am
Tax Filing Status:
This year will be Married Filing jointly.
Next year 2020 will be Head of household. Widow with 2 dependent children.
Actually, your tax situation is somewhat better than described above.

If your husband died in 2019, then you are correct that this year will
be Married Filing Jointly (MFJ), but in 2020 and 2021, your filing
status will be Qualifying Widow (QW), which is significantly better
than Head of Household (HoH).

Then, starting in 2022, you will be Head of Household and you
can stay in that filing status as long as you do not remarry and
have at least one dependent child living with you.

QW fling status is very close to the same as MFJ status (same standard
deduction and same tax brackets, for example.) There are a few
provisions slightly less favorable to QW than to MFJ, but they
tend to be relatively minor in the greater scheme of things.

Congress created the QW filing status decades ago to ease the
household tax shock associated with the transition from MFJ.

Note that your children´s SS benefit income will NOT go on
YOUR tax return. If SS is their only income, they will not
have a tax filing requirement. When they reach midteens
and perhaps get part-time jobs and file tax returns,
they would report the SS benefits on their own returns
but unless they have a lot of non-SS income, their SS
benefits are unlikely to be taxable income for them.
I am trying to find a spot on w4 that says QW..
The first 2 lines are MFJ and HOH.( should I mark both these 0 for 2020)
3 rd line is single with dependent children. Is this how to go about this?
I would like more clarification on QW on W4.
Good question! Although you will be checking QW on Form 1040
when you actually file those tax returns for 2020 and 2021,
they do not explicitly have a place to mark QW on the Form W-4,
which is just a simplified withholding calculation. If you are
talking about the worksheet on page 3 of the Form W-4
instructions, I think the conservative assumption would be
to use HoH for that purpose of estimating withholding in 2020
and 2021.

Then when you file your actual 1040 return, you will
check QW and will wind up with somewhat more of a refund
than if you had checked MFJ on the worksheet in the W-4.

Note that the W-4 worksheet is just for your rough estimation
purposes, it is not an exact precise documentation at that stage.

But you should definitely not mark *both* HoH and MFJ on
the preliminary estimation worksheet for the W-4.

One or the other, but not both. MFJ will
probably be closer but HoH is more conservative for a
preliminary estimate if you prefer positive surprises to
negative ones (as most of us do.)

Topic Author
vkat
Posts: 12
Joined: Thu Oct 03, 2019 1:37 pm

Re: Widow and investments

Post by vkat » Fri Nov 15, 2019 8:28 pm

dodecahedron wrote:
Fri Nov 15, 2019 2:59 pm
vkat wrote:
Fri Nov 15, 2019 11:21 am
dodecahedron wrote:
Fri Nov 15, 2019 5:47 am
First of all, I want to say how sorry I am for your loss. My heart
goes out to you. I was widowed at 59, with two young adult
daughters, and that was hard, but I can only imagine how much
harder it must be with young children.
vkat wrote:
Sun Oct 06, 2019 8:55 am
Tax Filing Status:
This year will be Married Filing jointly.
Next year 2020 will be Head of household. Widow with 2 dependent children.
Actually, your tax situation is somewhat better than described above.

If your husband died in 2019, then you are correct that this year will
be Married Filing Jointly (MFJ), but in 2020 and 2021, your filing
status will be Qualifying Widow (QW), which is significantly better
than Head of Household (HoH).

Then, starting in 2022, you will be Head of Household and you
can stay in that filing status as long as you do not remarry and
have at least one dependent child living with you.

QW fling status is very close to the same as MFJ status (same standard
deduction and same tax brackets, for example.) There are a few
provisions slightly less favorable to QW than to MFJ, but they
tend to be relatively minor in the greater scheme of things.

Congress created the QW filing status decades ago to ease the
household tax shock associated with the transition from MFJ.

Note that your children´s SS benefit income will NOT go on
YOUR tax return. If SS is their only income, they will not
have a tax filing requirement. When they reach midteens
and perhaps get part-time jobs and file tax returns,
they would report the SS benefits on their own returns
but unless they have a lot of non-SS income, their SS
benefits are unlikely to be taxable income for them.
I am trying to find a spot on w4 that says QW..
The first 2 lines are MFJ and HOH.( should I mark both these 0 for 2020)
3 rd line is single with dependent children. Is this how to go about this?
I would like more clarification on QW on W4.
Good question! Although you will be checking QW on Form 1040
when you actually file those tax returns for 2020 and 2021,
they do not explicitly have a place to mark QW on the Form W-4,
which is just a simplified withholding calculation. If you are
talking about the worksheet on page 3 of the Form W-4
instructions, I think the conservative assumption would be
to use HoH for that purpose of estimating withholding in 2020
and 2021.

Then when you file your actual 1040 return, you will
check QW and will wind up with somewhat more of a refund
than if you had checked MFJ on the worksheet in the W-4.

Note that the W-4 worksheet is just for your rough estimation
purposes, it is not an exact precise documentation at that stage.

But you should definitely not mark *both* HoH and MFJ on
the preliminary estimation worksheet for the W-4.

One or the other, but not both. MFJ will
probably be closer but HoH is more conservative for a
preliminary estimate if you prefer positive surprises to
negative ones (as most of us do.)
Thanks for clarifying. I appreciate all the feedback I'm getting here.

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