Poor Publix employee seeking 401k investment advice

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suemarkp
Posts: 321
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Location: Kent, WA

Re: Poor Publix employee seeking 401k investment advice

Post by suemarkp » Sun Apr 26, 2020 6:36 pm

In a taxable account, you may not want dividends, so you could invest in things that minimize churn and dividends. An advanced topic is Tax Loss Harvesting. To do that, you don't want to automatically reinvest dividends. Just let them sit in your settlement account and decide which fund you want to purchase with them, or spend them (or use it as money to put into a Roth or traditional IRA), or leave them in the settlement account. But at some point understand tax loss harvesting so you don't shoot yourself in the foot by buying something too close to when you want to sell it.
Mark | Kent, WA

bryansmile
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Joined: Wed Feb 12, 2014 10:14 am

Re: Poor Publix employee seeking 401k investment advice

Post by bryansmile » Sun Apr 26, 2020 7:20 pm

I think it's a good idea to open a Roth IRA account at Vanguard. For many, IRA is an important tax saving retirement account, next to a 401k. See here https://www.bogleheads.org/wiki/Roth_IRA
If the RJ account is a regular brokerage account, I suggest you take 12k from it and contribute to the Roth IRA (6k for 2019 before tax filing deadline which is now 7/15/2020, and 6k for 2020), and the rest of the RJ money can go into a Vanguard brokerage account. Going forward, you can take any extra money you have (dividends, tax refunds, etc, and selling some fund in your Vanguard brokerage) and contribute to the Roth up to the annual max set by IRS.
Last edited by bryansmile on Sun Apr 26, 2020 8:09 pm, edited 2 times in total.

typical.investor
Posts: 1998
Joined: Mon Jun 11, 2018 3:17 am

Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sun Apr 26, 2020 7:36 pm

ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
I really appreciate everyone taking the time to help me out! I e-mailed RJ to ask what type of account I have with them. I'll let you all know ASAP. This is my plan at the moment:
I strongly encourage you to open an IRA at Schwab, Fidelity or Vanguard when you open a taxable account for the RJ funds. RJ really looks like it's taxable but it's good to confirm.
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
1) Keep 10% deduction out of my paycheck for the 401(k)
Great.
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
2) Have 60% S&P 500, 20% Baird, 20% American Funds Europacific Growth R6 (RERGX)
Those are the three best choices. The State Street balanced funds look like good options too. Easy to use since they have US, Intl and bonds, and will rebalance by themself.
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
3) Once a year reallocate the balance evenly between these three things.
Good plan. I would try to avoid selling in taxable to rebalance to avoid paying tax on capital gains.
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
4) This is where I need some advice. I would like to reinvest my dividends and tax return. This dividends plus tax return is about $1500 a year. Should I buy Publix stock with this? Or reinvest this in whatever account that I open in place of RJ? Maybe 1/2 in stock and 1/2 in the other account?
Good question. You have seen some say hold as much Publix stock as you can, and others say it's too much concentration. I would suggest keeping the grants but reinvesting dividends in Total Market, and not holding more. If you sell Publix in the 401k and keep the grants (in taxable), you are still at 25%. That is fine for now, but I would definitely put dividends into Total Market and try to get the Publix holdings down over time.

First, I would move some of the RJ money into the IRA for both 2019 and 2020 (up to the $,6000 limit) Then in the future, I would move those dividends to your IRA for 2021 etc. This will help increase your tax return because you can lower your earned income by the amount you contribute to the IRA and deduct. Please see my prior posts for an example.

Also, dividends from funds in the IRA won't be taxable.

I know this is a lot of info. At this point, just worry about getting out of RJ and getting an IRA set up.

MikeMak27
Posts: 129
Joined: Fri Jul 03, 2015 4:37 am

Re: Poor Publix employee seeking 401k investment advice

Post by MikeMak27 » Sun Apr 26, 2020 7:51 pm

“I don't see myself making more than $20/ hour since I don't think I want to be a manager and I don't feel like I'm smart enough to have a better job so I'm thinking about sticking with Publix for as long as I can“

The fact that your on bogelheads researching how to better invest your money and finding best way to save for your retirement makes you smarter than well over half America! Keep working hard and keep being a great person! Your worth with those two skills means you’re easily capable of making 100k a year.
Mak 3 fund portfolio: 50% US small cap value & US Small cap (IJS, IJR), 40% Emerging Markets (IEMG, VWO, FPADX), 10% US REIT (VNQ)

bryansmile
Posts: 279
Joined: Wed Feb 12, 2014 10:14 am

Re: Poor Publix employee seeking 401k investment advice

Post by bryansmile » Sun Apr 26, 2020 8:01 pm

In your 401k, I think the state street balanced funds are the best choices. I'd just pick one with the desired stock/bond ratio and contribute all to it. For example, the one list below is at 75% stock/25% bonds and has an expense ratio of .02% (see the final page under 'fee disclosure'). Best of all, it'll rebalance itself so you don't have to.https://publix401k.voya.com/static/epwe ... s/CH5U.PDF

sfmurph
Posts: 73
Joined: Mon Aug 12, 2019 8:15 pm

Re: Poor Publix employee seeking 401k investment advice

Post by sfmurph » Mon Apr 27, 2020 12:47 pm

ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
I really appreciate everyone taking the time to help me out!
No problem. When someone has the saving and spending habits that you do, it's easier to point out how to best keep your money!
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
I e-mailed RJ to ask what type of account I have with them. I'll let you all know ASAP. This is my plan at the moment:

1) Keep 10% deduction out of my paycheck for the 401(k)
Perfect.
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm

2) Have 60% S&P 500, 20% Baird, 20% American Funds Europacific Growth R6 (RERGX)
3) Once a year reallocate the balance evenly between these three things.
Seems fine. One thing is that you're thinking of your investments in 3 "buckets": Voya 401(k), soon-to-be-ex RJ brokerage, and Publix. Here's a wiki on Asset allocation in multiple accounts, but I warn you, it's a pretty dense page.
ralphboy wrote:
Sun Apr 26, 2020 5:35 pm
4) This is where I need some advice. I would like to reinvest my dividends and tax return. This dividends plus tax return is about $1500 a year. Should I buy Publix stock with this? Or reinvest this in whatever account that I open in place of RJ? Maybe 1/2 in stock and 1/2 in the other account?
You need to decide on an overall asset allocation. Then the answer to this will be obvious. Take some time and write up an IPS (Investment policy statement). The example IPS on that page is pretty great.

My IPS has a section for "Asset classes to use" and in that section, I have "Funds that automatically rebalance stocks and bonds" and "Company stock grants and ESPP" in there. In my case, my company stock is public, and the ESPP gives me a 15% discount on the stock, which is a great deal so I do that to the max I can. My IPS also has a section for "Investment Philosophy" that has "Buy-&-hold, long-term, low Expense Ratio, stock & bond index fund" and "Diversify away from company stock at 5% per quarter, keeping below appropriate annual tax levels."

In your case, I could see setting a target percentage of Publix stock, say 30%. You're over that now, so all your Publix dividends should be invested somewhere else, for both your 401(k) and brokerage account. Before you set a "diversify away from Publix" number, you need to understand what it would mean to sell granted shares, ESPP and 401(k) purchased shares. Is there a discount when you buy? Etc.

Then you can look at your overall asset allocation. At your age, 30% bonds and 70% stock probably makes sense, but 40/60 or 20/80 could too. Putting 30% Publix stock into a 30/70 allocation would mean 30% bonds, 30% Publix stock and 40% other stock, with "other stock" broken into 30% US and 10% international. So that would mean 30% in Baird bonds, 10% in RERGX, 30% in the S&P 500 and 30% in Publix (with the equivalent bonds, international and S&P 500 funds in your non-RJ brokerage). That might be a bit fiddly though. You could also consider using the automatically rebalancing funds.

But first you need to decide where your brokerage funds should go. If you want the option to go into a branch, consider Fidelity or Charles Schwab. Look up online to see which one has a nearby branch (Schwab has many more branches). Also, with your good credit card usage, consider that Fidelity has a great 2% cash back card. When you open a new brokerage account, open a "Roth IRA" too. In the 12% tax bracket, that's a great choice for you, and you can put $12,000 in right away ($6K for 2020 and $6K for 2019, if you do it before July).

Topic Author
ralphboy
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Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Mon Apr 27, 2020 2:07 pm

The RJ account is a regular account and not an IRA. I'll try and figure out where to go next. I would like to make an appoint with someone and show them some of the suggestions on here.

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amp
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Re: Poor Publix employee seeking 401k investment advice

Post by amp » Mon Apr 27, 2020 2:16 pm

ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
The RJ account is a regular account and not an IRA. I'll try and figure out where to go next.
At the very least, you can stop putting new money in that RJ account and open a new IRA at a discount broker like Fidelity, Vanguard, etc. You can then start funding the IRA instead (up to $6,000 per year). Do be aware that in most circumstances, you have to be 59 1/2 or older before you can withdraw money from an IRA.

After opening the IRA you can figure out the best way to handle the RJ account.

bryansmile
Posts: 279
Joined: Wed Feb 12, 2014 10:14 am

Re: Poor Publix employee seeking 401k investment advice

Post by bryansmile » Mon Apr 27, 2020 3:05 pm

ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
The RJ account is a regular account and not an IRA. I'll try and figure out where to go next. I would like to make an appoint with someone and show them some of the suggestions on here.
It may be a while before you can meet with them in person. In the mean time, you'll want to read up as much as you can on investing, IRAs and asset allocations. They are all under the bogleheads wiki.
https://www.bogleheads.org/wiki/Outline_of_investing

StrivingVigorously
Posts: 1
Joined: Mon Apr 27, 2020 3:04 pm

Re: Poor Publix employee seeking 401k investment advice

Post by StrivingVigorously » Mon Apr 27, 2020 3:27 pm

Hi there. Former publix worker here(Grocery Clerk). A couple of years ago I was in a similar situation like yours. Working the frozen section making $11.50/hr and feeling hopeless. decided I'd had enough after 5yrs. Quit and went to community college. Currently working in healthcare making 90k+. There are so many opportunities outside of Publix. Don't be afraid to move out. You seem well rounded and should be able to build a good career in some other field. Hope this gives you some encouragement. Good Luck!

motorcyclesarecool
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Re: Poor Publix employee seeking 401k investment advice

Post by motorcyclesarecool » Mon Apr 27, 2020 6:56 pm

ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
The RJ account is a regular account and not an IRA. I'll try and figure out where to go next. I would like to make an appoint with someone and show them some of the suggestions on here.
Remember, the people at RJ are salespeople, trained in the art of persuading you not to leave.

Figure out where the nearest Schwab or Fidelity branch is, and open an account there. I would go with whoever is most convenient to where you live and work. Ask them how you can gradually move your RJ account over to an IRA.
Last edited by motorcyclesarecool on Mon Apr 27, 2020 7:19 pm, edited 1 time in total.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

sfmurph
Posts: 73
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Re: Poor Publix employee seeking 401k investment advice

Post by sfmurph » Mon Apr 27, 2020 7:09 pm

motorcyclesarecool wrote:
Mon Apr 27, 2020 6:56 pm
ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
The RJ account is a regular account and not an IRA. I'll try and figure out where to go next. I would like to make an appoint with someone and show them some of the suggestions on here.
Remember, the people at RJ are salespeople, trained in the art of persuading you not to leave.

Figure out where the nearest Schwab or Fidelity branch is, and open an account there. I would go with whoever is most convenient to where you live and work. As them how you can gradually move your RJ account over to an IRA.
100% agree with this.

Topic Author
ralphboy
Posts: 33
Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Mon Apr 27, 2020 7:38 pm

There's a Charles Schwab by me but they are temporarily closed. So do you all think it's best for me to have a "regular account" like I did with RJ and an IRA (Roth or Traditional)? Should I then move almost all of the RJ money to the other account and invest the remaining $6,000 from the RJ account to the IRA? Is there a way where I can have the regular account linked to the IRA so I can have $100 a month taken out of it and put in the IRA?
Good question. You have seen some say hold as much Publix stock as you can, and others say it's too much concentration. I would suggest keeping the grants but reinvesting dividends in Total Market, and not holding more. If you sell Publix in the 401k and keep the grants (in taxable), you are still at 25%. That is fine for now, but I would definitely put dividends into Total Market and try to get the Publix holdings down over time.

First, I would move some of the RJ money into the IRA for both 2019 and 2020 (up to the $,6000 limit) Then in the future, I would move those dividends to your IRA for 2021 etc. This will help increase your tax return because you can lower your earned income by the amount you contribute to the IRA and deduct.
I wish I understood your reply but I am really having a hard time comprehending it. What do you mean by "keeping the grants?" Does grants = stock that I receive from Publix just for working there? Also what does "Total Market" refer to? Is that just adding money to my account that is replacing RJ (regular account or IRA?)? When I put in money in say Charles Schwab how does that work? Do I go online and find the stock symbol and then enter the amount that I want to invest?

I'm also confused about the "in taxable" part for the grants. Which of my accounts does that refer to? Also, where do you get 25% from? Between the stock that I received from Publix and the stock that I paid for that is over 80% of my portfolio (I'm also investing 60% S&P 500, 20% Baird, and 20% American Funds EuroPacific Growth Fund each week from my paycheck deduction).
Get the Publix holdings down over time.
I'm not buying stock with my weekly paycheck deductions, is that good enough?
What dividends are those you are referring to?
I was referring to the dividends from Publix stock. I have direct deposit so I feel like that is the only thing I'm making money from since it goes right into my checking account. I don't know the process for moving money from the Voya 401k to Charles Schwab (or whatever place I choose).
In the IRA invest in very diversified index funds with low expense ratios.
I'll have to read about an IRA to me it sounds like the same thing as a "regular account" but I don't get taxed on it(?) Do I still have stocks and bonds and the same things to invest in like a regular account? Why have a regular account at all? When looking at all my options to invest in how do I know what is are "very diversified index funds." Can you give me an example of that, I'm not exactly sure what I should be looking for.

Like when I click on the investment to learn more about it, will it show it as 20% bond/ 30% international/ 50% domestic? What range is considered "low" for expense ratios?
In a taxable account, you may not want dividends, so you could invest in things that minimize churn and dividends. An advanced topic is Tax Loss Harvesting. To do that, you don't want to automatically reinvest dividends. Just let them sit in your settlement account and decide which fund you want to purchase with them, or spend them (or use it as money to put into a Roth or traditional IRA), or leave them in the settlement account.
My dividends go to my bank of america checking account. So if I then pay out of that to invest, will that avoid the issue that you're talking about?

I apologize for all of the questions.

My face when reading the replies in this thread -> :confused

typical.investor
Posts: 1998
Joined: Mon Jun 11, 2018 3:17 am

Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Mon Apr 27, 2020 8:44 pm

ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
There's a Charles Schwab by me but they are temporarily closed. So do you all think it's best for me to have a "regular account" like I did with RJ and an IRA (Roth or Traditional)?
Schwab is closed, but you can call.

Yes, you need a "regular (taxable)" account and should get an IRA.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Should I then move almost all of the RJ money to the other account and invest the remaining $6,000 from the RJ account to the IRA?

$12,000 into RJ account. $6,000 for 2019 and $6,000 for 2020. The 2019 deadline is July 15, 2020
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Is there a way where I can have the regular account linked to the IRA so I can have $100 a month taken out of it and put in the IRA?
Good idea. It's perhaps possible. I don't know the systems every place. That's a small detail in the overall picture I think.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Good question. You have seen some say hold as much Publix stock as you can, and others say it's too much concentration. I would suggest keeping the grants but reinvesting dividends in Total Market, and not holding more. If you sell Publix in the 401k and keep the grants (in taxable), you are still at 25%. That is fine for now, but I would definitely put dividends into Total Market and try to get the Publix holdings down over time.

First, I would move some of the RJ money into the IRA for both 2019 and 2020 (up to the $,6000 limit) Then in the future, I would move those dividends to your IRA for 2021 etc. This will help increase your tax return because you can lower your earned income by the amount you contribute to the IRA and deduct.
I wish I understood your reply but I am really having a hard time comprehending it. What do you mean by "keeping the grants?" Does grants = stock that I receive from Publix just for working there?

Yes. That is exactly what I meant by grants. It's from your item --> 1) A Profit Plan where Publix gives me stock
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Also what does "Total Market" refer to? Is that just adding money to my account that is replacing RJ (regular account or IRA?)? When I put in money in say Charles Schwab how does that work? Do I go online and find the stock symbol and then enter the amount that I want to invest?

Total Market is the name of a fund. Schwab, Fidelity and Vanguard all have them.

You can see examples here https://www.bogleheads.org/wiki/Three-fund_portfolio
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
I'm also confused about the "in taxable" part for the grants. Which of my accounts does that refer to?
"in taxable" refers to any holdings that are not in an IRA or 401(k) tax sheltered account. You have:

1) RJ
2) Publix Stock you received
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Also, where do you get 25% from? Between the stock that I received from Publix and the stock that I paid for that is over 80% of my portfolio (I'm also investing 60% S&P 500, 20% Baird, and 20% American Funds EuroPacific Growth Fund each week from my paycheck deduction).
I believe 80% is far too high for a single stock. Thus, I would sell the holdings in the 401(k) and allocate it to something else.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Get the Publix holdings down over time.
I'm not buying stock with my weekly paycheck deductions, is that good enough?
Probably, but I don't know how much they are giving you. In any case, you might also reinvest the dividends from Publix into something else.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
What dividends are those you are referring to?
I was referring to the dividends from Publix stock. I have direct deposit so I feel like that is the only thing I'm making money from since it goes right into my checking account. I don't know the process for moving money from the Voya 401k to Charles Schwab (or whatever place I choose).
The Voya 401k doesn't move. It stays with your employer.
The RJ account can move to Charles Schwab, Fidelity, Vanguard or where-ever you choose.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
In the IRA invest in very diversified index funds with low expense ratios.
I'll have to read about an IRA to me it sounds like the same thing as a "regular account" but I don't get taxed on it(?)

Do I still have stocks and bonds and the same things to invest in like a regular account?
IRAs are taxed deferred. 1) You deduct your contribution amount from taxable income to lower taxes now, 2) don't pay taxes on dividends or sales and 3) pay income taxes later in retirement when you take the money out to spend

ROTH IRAs 1) You don't allow you deduct contributions from taxable income [different from an IRA] 2) don't pay taxes on dividends or sales [same as IRA] and 3) don't pay income taxes later in retirement when you take the money out to spend [same as IRA]

At your current tax rates, I would suggest the IRA.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Why have a regular account at all?
You actually don't need one unless you can't contribute any more money to tax sheltered. They are useful for holding some money you might need before retirement, for example if you plan to retire early and won't be able to take money from the IRA without penalty.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
When looking at all my options to invest in how do I know what is are "very diversified index funds." Can you give me an example of that, I'm not exactly sure what I should be looking for.

Like when I click on the investment to learn more about it, will it show it as 20% bond/ 30% international/ 50% domestic?
If you stick to total market funds, you will be all good. Here is the same link I provided above. https://www.bogleheads.org/wiki/Three-fund_portfolio

Publix (one company) isn't diversified. Some of your RJ holdings are concentrated in certain sectors and aren't very diversified.

Total market (diversified) funds will give you exposure to the whole economy. This is usually best.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
In a taxable account, you may not want dividends, so you could invest in things that minimize churn and dividends. An advanced topic is Tax Loss Harvesting. To do that, you don't want to automatically reinvest dividends. Just let them sit in your settlement account and decide which fund you want to purchase with them, or spend them (or use it as money to put into a Roth or traditional IRA), or leave them in the settlement account.
My dividends go to my bank of america checking account. So if I then pay out of that to invest, will that avoid the issue that you're talking about?
In the future, I'd use the dividends in your bank of america checking account to make contributions to the IRA.

Don't worry about Tax Loss Harvesting now.

Total Market funds are very tax efficient and good in taxable accounts.

Don't think that dividends are better. Many people do and choose funds for high dividends. Truth be told, companies that don't pay dividends generally have stock prices that rise faster than dividend paying stocks.

Publix, for instance, is undertaking expansion now. I am not sure how they will pay for it, but perhaps dividends won't be as generous. This is as companies have a choice - pay money out in dividends or reinvest it in the company.

You have 80% of your money in Publix. I love Publix but all it takes is a few idiot executives to decide they want to hire people cheaper because it'll make them richer. And what if the expansion doesn't go well? You are taking a big risk that the people in charge of Publix can expand well. I feel that the Publix in your 401(k) plus the Publix you got from grants and bought is too much risk in one company.
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
I apologize for all of the questions.

My face when reading the replies in this thread -> :confused
It's because we are throwing out tons of information that we are familiar with.
ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
The RJ account is a regular account and not an IRA. I'll try and figure out where to go next.
* get RJ money into a lower cost portfolio without their fees
* open an IRA and make 2019 and 2020 contributions from RJ money
* deduct your IRA contributions on your tax return
* continue to move money to the IRA in 2021, 2022 until the RJ money gets moved to tax sheltered
ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
I would like to make an appoint with someone and show them some of the suggestions on here.
* hey, you are talking to us :wink:
* try to get reimbursement for RJ closing fees

Choosing an exact AA (asset allocation) might seem daunting, but it's not such a big deal. Anything reasonable will work. Nobody knows what will work best. Total Market funds are very difficult to beat. So they are the generally recommended choice.

bayview
Posts: 2213
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Location: WNC

Re: Poor Publix employee seeking 401k investment advice

Post by bayview » Mon Apr 27, 2020 8:54 pm

ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
There's a Charles Schwab by me but they are temporarily closed. So do you all think it's best for me to have a "regular account" like I did with RJ and an IRA (Roth or Traditional)? Should I then move almost all of the RJ money to the other account and invest the remaining $6,000 from the RJ account to the IRA? Is there a way where I can have the regular account linked to the IRA so I can have $100 a month taken out of it and put in the IRA? ...
What you are calling “regular account” (a very good term, actually) is what is called a taxable account here on BH. In other words, it is truly “regular”, in that there are no preferential tax treatments of it. When you read other posts on BH, you can just translate “taxable” as “regular”.

I’m guessing that it would be simpler to have the $100 (or whatever figure you wind up with) taken from your paycheck rather than from your taxable/regular account, depending on the options with your new taxable/regular account.

When you read about an IRA account, it’s similar to your regular account in terms of you can buy stocks and stock funds, bonds and bond funds, CDs, etc in it, but the money that goes in from your paycheck has not been taxed first, and you don’t have to pay any income or other taxes on it until you *(edit to add) start pulling the money out. So the investments grow within the IRA without taxation until you must pull them out at 72 (RMD, Required Minimum Distribution) a little bit each year per a schedule published by the IRS.

There’s another form of IRA called a Roth IRA, named after a Senator Roth who introduced the authorizing bill. For this one, you contribute post-tax money from your paycheck (or from your taxable account), and the money grows without taxation forever, and as of now, there are no RMDs. Otherwise, it’s the same as a traditional IRA, where you can invest stocks and stock funds, bonds and bond funds, CDs, etc. The only meaningful difference is the taxation. Tax me now (Roth IRA), or tax me later (traditional IRA.)

I understand what you’re saying about how overwhelming this is at first. It’s called “drinking from the fire hydrant.” :D Just take it one step at a time. Read the Bogleheads wiki, and I would especially recommend “If You Can”, by Dr. Bill Bernstein, who posts here. You are miles ahead of many of the people who he writes for in terms of your savings rate, but he has a calm and step-by-step approach to learning how to invest for your future financial security, along with a great reading list, most of which is available for your local library, once they open again. Good luck! It is so refreshing to have people like you join Bogleheads!

https://www.amazon.com/If-You-Can-Mille ... 734&sr=8-1 free on Kindle, currently $5.99 paperback

*edited to clarify taxation on traditional IRAs
Last edited by bayview on Tue Apr 28, 2020 7:15 am, edited 1 time in total.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

typical.investor
Posts: 1998
Joined: Mon Jun 11, 2018 3:17 am

Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Mon Apr 27, 2020 9:00 pm

bayview wrote:
Mon Apr 27, 2020 8:54 pm
I understand what you’re saying about how overwhelming this is at first. It’s called “drinking from the fire hydrant.”
That's hilarious and completely true!

** My Advice Summary **
Raymond James is too expensive and not in your interest.
You can use an IRA to save on money on taxes.
Use Total Market funds
80% in Publix is too concentrated for me

meebers
Posts: 351
Joined: Sat Apr 14, 2012 7:20 pm
Location: Florida

Re: Poor Publix employee seeking 401k investment advice

Post by meebers » Mon Apr 27, 2020 9:01 pm

All of my kids and their future wives/husbands as well as all my grand kids have worked for Publix in their lives. One SIL still works there and is getting ready to retire. I will say that they all have come out of there for the better. All have bought Publix stock and most still hold on to it. At one point in time, Publix let the immediate family purchase stock and I took advantage of that. It's no longer possible now, but if I could buy Publix stock again, I sure would. I would estimate that what I put in has X4 the amount now. No maintenance fee's etc. Will pay tax when I withdraw it and I also pay tax on the dividends. I could never say that Publix will go under some time in the future, but in IMHO, that is an extreme long shot. My personal expenditures for food is about 85 % at Publix, :o I consider them a great company. (No I don't work for them and never have)

Rosencrantz1
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Re: Poor Publix employee seeking 401k investment advice

Post by Rosencrantz1 » Mon Apr 27, 2020 9:06 pm

epictetus wrote:
Fri Apr 24, 2020 5:51 pm
i would encourage you to consider looking into educational options you might be interested in such as technical school/training, a community college, etc.

your post is very well laid out and very thoughtful. i think you are selling yourself short in thinking you don't have other options.

if you don't want other options that is fine. but if you would like to have other options but don't think you have the mental horsepower for other options i think you are selling yourself short.
I didn't read every response - but, I strongly echo these comments. You're young. I honestly think it's in your best interest to maximize your income. You don't necessarily have to be motivated to pursue a PhD in aeronautics. There are plenty of fields that pay well - plumbing, electricians, HVAC, specialized mechanics, etc. I urge you to look into alternative fields of employment and make the jump to a 6 figure+ income. Doing so will dramatically change your retirement investments - much more than 'finetuning' your investments with your current income. Do not sell yourself short. Best of luck to you.

sfmurph
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Re: Poor Publix employee seeking 401k investment advice

Post by sfmurph » Mon Apr 27, 2020 9:25 pm

typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
There's a Charles Schwab by me but they are temporarily closed. So do you all think it's best for me to have a "regular account" like I did with RJ and an IRA (Roth or Traditional)?
Schwab is closed, but you can call.

Yes, you need a "regular (taxable)" account and should get an IRA.
Yes. Charles Schwab sounds perfect. You can't go to the branch now, but they have excellent phone support too. You should call and set up a "regular" brokerage account and an IRA. The choice between a Roth and a regular IRA is still to make. (I think a Roth would be better at your tax bracket, but I might be wrong.)
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Should I then move almost all of the RJ money to the other account and invest the remaining $6,000 from the RJ account to the IRA?

$12,000 into RJ account. $6,000 for 2019 and $6,000 for 2020. The 2019 deadline is July 15, 2020
There's a type here. Almost all of your RJ regular brokerage account should go into a new, regular brokerage account at Schwab. Also $12,000 of that money should go into a new IRA account at Schwab. There are annual limits to how much you can put into an IRA (because there's a tax advantage that they don't want abused), but you still have time to put money in your IRA for 2019 and 2020.
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Is there a way where I can have the regular account linked to the IRA so I can have $100 a month taken out of it and put in the IRA?
Good idea. It's perhaps possible. I don't know the systems every place. That's a small detail in the overall picture I think.
Don't worry about this just yet. You have enough money in your regular, taxable brokerage account that you can fund the IRA up to the $6,000 max for 2020.
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
In the IRA invest in very diversified index funds with low expense ratios.
I'll have to read about an IRA to me it sounds like the same thing as a "regular account" but I don't get taxed on it(?)

Do I still have stocks and bonds and the same things to invest in like a regular account?
IRAs are taxed deferred. 1) You deduct your contribution amount from taxable income to lower taxes now, 2) don't pay taxes on dividends or sales and 3) pay income taxes later in retirement when you take the money out to spend

ROTH IRAs 1) You don't allow you deduct contributions from taxable income [different from an IRA] 2) don't pay taxes on dividends or sales [same as IRA] and 3) don't pay income taxes later in retirement when you take the money out to spend [same as IRA]

At your current tax rates, I would suggest the IRA.
There's a small error in this description, I think. For a regular IRA, you get to deduct the amount from your taxes now (just like your 401(k) at Voya), but you do pay taxes later in retirement when you take the money out to spend. With a Roth IRA, you pay taxes now, but then you never pay taxes on the higher stock prices or on any dividends.

This is why I think you should open a Roth IRA at this time.
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
Why have a regular account at all?
You actually don't need one unless you can't contribute any more money to tax sheltered. They are useful for holding some money you might need before retirement, for example if you plan to retire early and won't be able to take money from the IRA without penalty.
Ah, the biggest drawback to an IRA and a 401(k) is that you can't touch the money until you get old enough (something like 60 or so). So if you need the money next year, you have to pay a penalty to get it. So you don't want all of your money in a 401(k) or IRA, because you might need it!
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
In a taxable account, you may not want dividends, so you could invest in things that minimize churn and dividends. An advanced topic is Tax Loss Harvesting. To do that, you don't want to automatically reinvest dividends. Just let them sit in your settlement account and decide which fund you want to purchase with them, or spend them (or use it as money to put into a Roth or traditional IRA), or leave them in the settlement account.
My dividends go to my bank of america checking account. So if I then pay out of that to invest, will that avoid the issue that you're talking about?
In the future, I'd use the dividends in your bank of america checking account to make contributions to the IRA.
I would set up the Publix dividends to be paid directly into your new Schwab brokerage account. You have a lot of money in checking, and you can set up new deposits into a brokerage account to be automatically put into a mutual fund. But that's for a little later.
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm
ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
I apologize for all of the questions.

My face when reading the replies in this thread -> :confused
It's because we are throwing out tons of information that we are familiar with.
And this is my face when I see your questions → :D

We're happy to help, and pretty patient. Even if we do give confusing answers sometimes!
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm

* try to get reimbursement for RJ closing fees
Yes, this. Mention to the person on the phone at Schwab that you're moving money from RJ and would they cover account closing fees. It doesn't hurt to ask!
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm

Choosing an exact AA (asset allocation) might seem daunting, but it's not such a big deal. Anything reasonable will work. Nobody knows what will work best. Total Market funds are very difficult to beat. So they are the generally recommended choice.
Especially in tax sheltered accounts like IRA and 401(k), there's not a real impact to changing your mind, especially as you're figuring it out.

typical.investor
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Mon Apr 27, 2020 9:41 pm

sfmurph wrote:
Mon Apr 27, 2020 9:25 pm
typical.investor wrote:
Mon Apr 27, 2020 8:44 pm


IRAs are taxed deferred. 1) You deduct your contribution amount from taxable income to lower taxes now, 2) don't pay taxes on dividends or sales and 3) pay income taxes later in retirement when you take the money out to spend

ROTH IRAs 1) You don't allow you deduct contributions from taxable income [different from an IRA] 2) don't pay taxes on dividends or sales [same as IRA] and 3) don't pay income taxes later in retirement when you take the money out to spend [different from IRA]

At your current tax rates, I would suggest the IRA.
There's a small error in this description, I think.
Fixed.

The advantage of the IRA over the ROTH now is deducting $6000 from your income. That amount will grow tax deferred.

motorcyclesarecool
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Re: Poor Publix employee seeking 401k investment advice

Post by motorcyclesarecool » Mon Apr 27, 2020 10:43 pm

My version of free advice from a rando on the internet: I would cash out $12,000 of the RJ account and put it into a Traditional IRA at Schwab. $6,000 for “2019” and $6000 for “2020”.

The reason why I think you should put the RJ money into Traditional IRA and not a Roth IRA is because you risk having a surprise tax bill at the end of the year. If you sell all your RJ shares in the same year at a short term capital gain and use those dollars to max out your Roth IRA suddenly, there’s a chance you might wind up owing taxes when you file your return next year.

Making it a Traditional IRA contribution will mean that you can qualify for a bigger refund for 2019 and potentially 2020. If you already did your taxes this year, you might have to file an amended tax return to get that benefit. Depending on your tax situation it might make sense to spread our your withdrawal from RJ over a few years.

Then, once you’re done getting your money out of RJ, I would open a Roth IRA at Schwab, and use your tax refund and Publix dividends to put it up to the maximum each year. You’re gonna want that tax-free Roth money, trust me.

Your 401(k) money will need to stay within the plan for as long as you work at Publix.

The Publix stock they give you for being an employee you should probably keep. Put the dividends into the bank until you open a Roth IRA. Then put them in there.

You need to figure out for yourself how much in total bond market, how much in a stock market index fund, and how much International you want.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Poor Publix employee seeking 401k investment advice

Post by bryansmile » Tue Apr 28, 2020 1:25 am

ralphboy wrote:
Mon Apr 27, 2020 7:38 pm
What range is considered "low" for expense ratios?
In wiki page https://www.bogleheads.org/wiki/Three-fund_portfolio under the heading "Three-fund Portfolios using Mutual Funds", it lists 3 good index funds at Schwab. If you google their expense ratios, you'll see they are .03%-.06%, that's very low.

"With Schwab, investors can construct a three-fund portfolio using:
Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)"

Also, right now Schwab is offering $200 bonus for bringing in $25k+, and you have to have a friend's referral. So if you have a friend with a Schwab account, ask them for a referral code.

kiwi123
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Re: Poor Publix employee seeking 401k investment advice

Post by kiwi123 » Tue Apr 28, 2020 4:16 am

Just want to say it's awesome to someone really take the time to understand their investments (and ask lots of good questions) and how to "redo their portfolio". AND, doing it sooner/younger than most (certainly a good 10 years sooner before i tackled this problem)!

And moving out of RJ will be great for your long-term returns... minimizing costs is so important. They're probably costing you 10-20% of your annual gains for the money you have invested there (e.g. your account only grows 5% instead of 6%). They might tell you it's "only" $100-150 per year but compounded over the next 30 years and on a bigger account balance as you save more will really cost you in the long run. Trying to explain this to friends is probably the most frustrating thing i do :-)

Congrats and keep it going! (and all my friends that live in the SE love Publix so it looks like youre at a good place :-)

FI4LIFE
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Re: Poor Publix employee seeking 401k investment advice

Post by FI4LIFE » Tue Apr 28, 2020 6:14 am

An IRA is a retirement account, similar to a "regular account" in every way except for how it is taxed. There are two types:

A ROTH IRA is where you put money in out of your "take home" pay (after taxes). Money in this account grows tax free and when you withdraw in retirement, you pay no taxes on those withdrawals.

A TRADITIONAL IRA is similar to a ROTH in that it grows tax free. The difference is you contribute to it before paying taxes out of your income, reducing your tax burden NOW. In exchange for this benefit, you will be taxed on your withdrawals when you take the money out later, in retirement.

Others can advise which is likely better in your case, although it will be a bit of a guess since your situation can change in the future. It's basically a choice between paying taxes now, or later.

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ruralavalon
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Re: Poor Publix employee seeking 401k investment advice

Post by ruralavalon » Tue Apr 28, 2020 8:02 pm

ralphboy wrote:
Mon Apr 27, 2020 2:07 pm
The RJ account is a regular account and not an IRA. I'll try and figure out where to go next. I would like to make an appoint with someone and show them some of the suggestions on here.
You need to open 2 new accounts: (1) a new IRA; and (2) a taxable brokerage account for transfer of the Raymond James account.

Both accounts should be at a low cost provider like Vanguard, Fidelity or Schwab. My personal preference is Vanguard. Both Fidelity and Schwab have local customer service offices in some areas but Vanguard does not.

Does either Fidelity or Schwab have a local customer service office within reasonable driving distance of you?

If so then make an appointment and talk to them about opening the two accounts which you need.

If not then let us know and we can give you suggestions on how to find a local planner who could help you face to face.

Please let us know which fund company you will use for the 2 accounts.

As mentioned before you cannot move the 401k account.

. . . . .

I suggest contributing your tax refund and the dividends from the taxable account to your new IRA.

In my opinion a traditional IRA is probably a better chouce, rather than a Roth IRA. Traditional contributions are likely better for most people.
Last edited by ruralavalon on Tue Apr 28, 2020 8:17 pm, edited 4 times in total.
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sfmurph
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Re: Poor Publix employee seeking 401k investment advice

Post by sfmurph » Tue Apr 28, 2020 8:06 pm

typical.investor wrote:
Mon Apr 27, 2020 9:41 pm
The advantage of the IRA over the ROTH now is deducting $6000 from your income. That amount will grow tax deferred.
Yes. And the advantage of the Roth IRA over the traditional IRA is that you never pay any tax on the dividends or price growth when you go to spend the money in the Roth IRA.


In any case, the original poster has until July to open an IRA at Schwab. Opening the regular brokerage account, transferring the funds and getting Schwab to cover the fees for closing the RJ account is the first step.

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ralphboy
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Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Fri May 01, 2020 11:41 am

Just want to say it's awesome to someone really take the time to understand their investments (and ask lots of good questions) and how to "redo their portfolio". AND, doing it sooner/younger than most (certainly a good 10 years sooner before i tackled this problem)!
Thanks, I'm trying but it's like trying to understand Chinese.
I would cash out $12,000 of the RJ account and put it into a Traditional IRA at Schwab. $6,000 for “2019” and $6000 for “2020”.
I already did my taxes and received $1200. If I file an amended tax return do I have to pay the person to do my taxes again? How much more of a refund do you think I would get back? If I remember correctly, I was told that I got a bigger refund because I just made it under $30,000 for my income.
I believe 80% is far too high for a single stock. Thus, I would sell the holdings in the 401(k) and allocate it to something else.
Should I do a fund transfer and put that back in the options in my voya account?
Maybe take 50% out and split it up between the S&P500, Baird, and American Europacific growth? This is what my Voya account looks like:

Fund Name..........................Balance
Baird Aggregate Bond Fund........$7.04
State Street S&P 500..............$1,541.52 (15% of balance)
American EuroPacific Growth......$7.05
Publix Stock..........................8,063.13 (83% of balance)
Cash Component of Publix Stock..$88.13
Total..................................$9706.87
Open Charles Schwab IRA (invest in very diversified index funds with low expense ratios) and brokerage account (Total Market funds). In wiki page https://www.bogleheads.org/wiki/Three-fund_portfolio under the heading "Three-fund Portfolios using Mutual Funds", it lists 3 good index funds at Schwab. If you google their expense ratios, you'll see they are .03%-.06%, that's very low.

"With Schwab, investors can construct a three-fund portfolio using:
Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)"
Try to get reimbursement for RJ closing fees.
Do I use this portfolio for my brokerage account or IRA or both?
Deduct your IRA contributions on your tax return
Do I have to remember my contributions or will I be mailed paperwork come tax time?
Figure out where the nearest Schwab or Fidelity branch is, and open an account there. I would go with whoever is most convenient to where you live and work. As them how you can gradually move your RJ account over to an IRA
Continue to move money to the IRA in 2021, 2022 until the RJ money gets moved to tax sheltered
Once all of RJ money withdrawn over a few years open a Roth IRA and use your tax refund and Publix dividends to put it up to the maximum each year
Lets assume my RJ account is $30,000, so should I move $18,000 to my Schwab regular account and move $12,000 over the next 2 years to my IRA? After that, should I open a Roth and ignore the traditional IRA? Do I keep both IRA accounts open?

mroe800
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Re: Poor Publix employee seeking 401k investment advice

Post by mroe800 » Fri May 01, 2020 12:12 pm

ralphboy wrote:
Fri May 01, 2020 11:41 am
Figure out where the nearest Schwab or Fidelity branch is, and open an account there. I would go with whoever is most convenient to where you live and work. As them how you can gradually move your RJ account over to an IRA
Continue to move money to the IRA in 2021, 2022 until the RJ money gets moved to tax sheltered
Once all of RJ money withdrawn over a few years open a Roth IRA and use your tax refund and Publix dividends to put it up to the maximum each year
Lets assume my RJ account is $30,000, so should I move $18,000 to my Schwab regular account and move $12,000 over the next 2 years to my IRA? After that, should I open a Roth and ignore the traditional IRA? Do I keep both IRA accounts open?
You have until July 15th 2020 to contribute up to $6000 to your IRA for 2019. Then you have until tax day next year (4/##/2021) to contribute the $6000 for 2020, and so forth.

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ruralavalon
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Re: Poor Publix employee seeking 401k investment advice

Post by ruralavalon » Fri May 01, 2020 1:44 pm

Is there a Fidelity or Schwab customer service office within a reasonable driving distance of your location?

In my opinion deciding on a fund company to use for your IRA and taxable account is probably the next decision you need to address.

In your 401k account are you permitted to exchange shares of Publix stock for the mutual funds offered in the 401k plan?

It looks like you have about 28% of the total portfolio in Publix stock, not 80%. It's usually better to coordinate investments among all accounts, rather than focusing only on any single account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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ralphboy
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Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Fri May 01, 2020 4:25 pm

ruralavalon wrote:
Fri May 01, 2020 1:44 pm
Is there a Fidelity or Schwab customer service office within a reasonable driving distance of your location?
Yes, but they are temporarily closed.
In your 401k account are you permitted to exchange shares of Publix stock for the mutual funds offered in the 401k plan?
It says, "Effective April 13, 2020, Participants can now transfer balances out of the Publix Stock Fund into other investment options via a Fund Transfer. Your transfer OUT of Publix Stock Fund will process on the next valuation effective date."
It looks like you have about 28% of the total portfolio in Publix stock, not 80%. It's usually better to coordinate investments among all accounts, rather than focusing only on any single account.
How do you get 28%? It says Publix stock makes up $8,063.13 of the $9,706.87 that I have in my 401k.

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ruralavalon
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Re: Poor Publix employee seeking 401k investment advice

Post by ruralavalon » Fri May 01, 2020 5:05 pm

ralphboy wrote:
Fri May 01, 2020 4:25 pm
. . . . .
It looks like you have about 28% of the total portfolio in Publix stock, not 80%. It's usually better to coordinate investments among all accounts, rather than focusing only on any single account.
How do you get 28%? It says Publix stock makes up $8,063.13 of the $9,706.87 that I have in my 401k.
So far I have roughly $13,900 in the profit plan, $9,600 in the 401k plan, and $3,000 that I spent on buying Publix stock via the Employee Stock Purchase Plan.
. . . . .
In addition to my retirement with Publix I have $28,000 invested with Raymond James. My investor has total control of what to buy.
28 was a typo.

Total portfolio = $54.5k
Public stock $8k + $3k = $11k
$11k/$54.5k = 20%.
It's usually better to treat all accounts together as a single unified portfolio.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

typical.investor
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Fri May 01, 2020 9:43 pm

ralphboy wrote:
Fri May 01, 2020 4:25 pm
ruralavalon wrote:
Fri May 01, 2020 1:44 pm
Is there a Fidelity or Schwab customer service office within a reasonable driving distance of your location?
Yes, but they are temporarily closed.
Give them a call.

They report higher call volumes, but you should be able to connect. Tell them you have a very good idea of which funds you want(1), but are confused about the process of transferring.

Also ask if the Raymond James holdings can be transferred to Schwab and liquidated for no cost. If not, you have to liquidate at Raymond James and then transfer cash to Schwab and then reinvest. That will keep you out of the market for a few days or maybe longer. Maybe good, maybe bad but the market is very volatile these days and I would prefer to transfer stocks "in-kind", have them sold at Schwab (assuming no cost) and then reinvested. Ask them about that.

You need an IRA or a ROTH IRA. If you choose the IRA, you will have $6000 deducted from taxable income. In a 12% tax bracket, that'd be about $700 in tax savings I think. You will eventually have to pay income tax on withdrawals.

Using a ROTH IRA means you don't need to redo taxes, but you won't get a larger refund. Of course, withdrawals will be tax free.

Either an IRA or ROTH IRA is fine. I suggest an IRA will work out better if tax rates remain the same, other prefer a ROTH as future rates are unknown and the security of being tax free is desireable. I remember my grandpa saying they would never tax social security but they did. Who can know the future? Not me, so I plan on what I know today.

Don't forget to ask if they can reimburse you for Raymond James account closing fees.

(1) Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)
Last edited by typical.investor on Fri May 01, 2020 11:16 pm, edited 1 time in total.

typical.investor
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Fri May 01, 2020 11:02 pm

ruralavalon wrote:
Fri May 01, 2020 5:05 pm
ralphboy wrote:
Fri May 01, 2020 4:25 pm
. . . . .
It looks like you have about 28% of the total portfolio in Publix stock, not 80%. It's usually better to coordinate investments among all accounts, rather than focusing only on any single account.
How do you get 28%? It says Publix stock makes up $8,063.13 of the $9,706.87 that I have in my 401k.
So far I have roughly $13,900 in the profit plan, $9,600 in the 401k plan, and $3,000 that I spent on buying Publix stock via the Employee Stock Purchase Plan.
. . . . .
In addition to my retirement with Publix I have $28,000 invested with Raymond James. My investor has total control of what to buy.
28 was a typo.

Total portfolio = $54.5k
Public stock $8k + $3k = $11k
$11k/$54.5k = 20%.
It's usually better to treat all accounts together as a single unified portfolio.
This doesn't look right. If I understand correctly there is also Publix from the profit plan. I assume that is in some kind of a taxable account.

The OP doesn't seem clear on what the assets he/she has. I am just confused by the holdings in the portfolio. Ralphboy wrote:
$13,900 in the profit plan, $9,600 in the 401k plan, and $3,000 that I spent on buying Publix stock via the Employee Stock Purchase Plan.
$28,000 invested with Raymond James.
But the statement shows $37.5 at Raymond James. Perhaps the $28k cited by the OP doesn't include gain the portfolio has seen. The OP stated they believed dividends to be the only source of growth. I think the OP isn't familiar with capital gains in publicly traded stocks. I am not sure how Publix behaves, but maybe it only issues dividends.

To the best of my knowledge, the portfolio looks like.

Total portfolio = $64k [$37500 (Raymond James) + $13900 (Publix from profit plan) + $9,600 (401k plan) +$3k (Employee Stock Purchase Plan) ]

Publix stock = $24900 [$8k (401k) + $3k (in taxable via the Employee Stock Purchase Plan) + $13,900 (taxable from the profit plan)]

39% of Publix stocks in the portfolio overall. $24900/$64k
That is why I suggest selling [or converting it whatever the process is] Publix in the 401(k) to the selections already identified.

Doing so would mean $16900 ($3k in taxable via the Employee Stock Purchase Plan+ $13,900 taxable from the profit plan) in Publix or 26% of overall holdings.

It's too much of Publix in my opinion, but others disagree. That is a discussion for another day perhaps.

In any case, the important thing is to move away from Raymond James to save on costs and have better fund selections.

Questions:
Where is the $3k (bought via the Employee Stock Purchase Plan) held?
Where is the $13,900 (from the profit plan held)?
We know dividends are going to a checking account, so I conclude they are in some kind of taxable account.

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ralphboy
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Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Fri May 01, 2020 11:38 pm

I put in $28,000 of my own money in RJ. It is worth $38,000 last time I looked at it.
Questions:
Where is the $3k (bought via the Employee Stock Purchase Plan) held?
Where is the $13,900 (from the profit plan held)?
We know dividends are going to a checking account, so I conclude they are in some kind of taxable account.
I think the $13,900 is held in voya because when I log on their website it shows my 401k and profit plan accounts. The Employee Stock Purchase Plan is not shown on the Voya website and I can only see it by logging on "Publix Stockholder Online." Today I received my dividends 1) From the $3,000 Employee Stock Purchase Plan and 2) From the profit plan. I did not receive a dividend from the publix stock in my 401k.

typical.investor
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sat May 02, 2020 12:17 am

ralphboy wrote:
Fri May 01, 2020 11:38 pm
I put in $28,000 of my own money in RJ. It is worth $38,000 last time I looked at it.
Questions:
Where is the $3k (bought via the Employee Stock Purchase Plan) held?
Where is the $13,900 (from the profit plan held)?
We know dividends are going to a checking account, so I conclude they are in some kind of taxable account.
I think the $13,900 is held in voya because when I log on their website it shows my 401k and profit plan accounts. The Employee Stock Purchase Plan is not shown on the Voya website and I can only see it by logging on "Publix Stockholder Online." Today I received my dividends 1) From the $3,000 Employee Stock Purchase Plan and 2) From the profit plan. I did not receive a dividend from the publix stock in my 401k.
Ok, that makes sense. The Employee Stock Purchase Plan and profit plans are both in taxable. Thus, dividends can go to your checking account. The 401k plan probably reinvests the dividends automatically.

So I think I am correct then:

$37500 (taxable at Raymond James)
$13900 (taxable Publix from profit plan at Voya)
$9,600 (401k plan)
$3k (taxable Employee Stock Purchase Plan at Publix Stockholder Online)
-------------------------------------
$64,000 total portfolio value

I suggest:
1) moving Raymond James to Schwab

After that is done, you will have:
$37500 (taxable at Schwab)
$13900 (taxable Publix from profit plan at Voya)
$9,600 (401k plan)
$3k (taxable Employee Stock Purchase Plan at Publix Stockholder Online)

I would do the following to target an Asset Allocation of:

40% us
20% int
15% bond
25% Publix


$25500 (taxable at Schwab)
$3,700 Schwab Total Stock Market Index (SWTSX)
$12,200 Schwab International Index (SWISX)
$9,600 Schwab U.S. Aggregate Bond Index Fund (SWAGX)

$9,600 (401k plan)
$9,600 S&P 500

$12,000 IRA or ROTH IRA
$12,000 Schwab Total Stock Market Index (SWTSX) ***2019,2020 contributions. Watch the calendar and do it before the deadline.

PUBLIX
$13,900 (taxable Publix from profit plan at Voya)
$3,000 (taxable Employee Stock Purchase Plan at Publix Stockholder Online)

Notes:
--------------

1) Dividends from the $16.9k PUBLIX stocks go to checking and you can invest that into taxable or the IRA. This will start to reduce your percent in Publix I think depending on how much the profit plan contributes each year.

2) keep using the taxable money in 2021, 2022, 2023 etc to fund the IRA (up to the $6k/year limit). This is a good tax move.

3) I chose the S&P 500 in the 401(k) because it is the cheapest fund there. The international and bond options are a little more expensive.

4) the exact dollar figures above will change day-to-day as the market fluctuates and dividend come in. If you can figure out how much goes in each account to meet your AA of:

40% us
20% int
15% bond
25% Publix

then you can save a lot of money on the Raymond James fees. Also, it will let you make best use of your tax sheltered accounts.

5). You don't have to use my exact suggested allocation of:

40% us
20% int
15% bond
25% Publix

Any reasonable allocation is fine, but I wouldn't increase bonds or Publix.

6). I wouldn't worry about keeping 25% in Publix. I would just keep whatever amount the Employee Stock Purchase Plan and Profit Plans end up being.

Then I would calculate 15% in bonds. Then I would calculate 2X in US stocks than international.

7) You've done a fine job so far. Have confidence in your decisions and do what you deem best. My suggestions are just an illustration.

Topic Author
ralphboy
Posts: 33
Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Sat May 02, 2020 8:06 am

I see that I can open an account with them online. Maybe that'll make things easier.

https://www.schwab.com/public/schwab/in ... count.html
$12,000 Schwab Total Stock Market Index (SWTSX) ***2019,2020 contributions.
For the IRA do I have to put $6,000 in before the deadline and the day after it add the other $6,000?
Last edited by ralphboy on Sat May 02, 2020 8:14 am, edited 1 time in total.

typical.investor
Posts: 1998
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sat May 02, 2020 8:14 am

ralphboy wrote:
Sat May 02, 2020 8:06 am
I see that I can open an account with them online. Maybe that'll make things easier.

https://www.schwab.com/public/schwab/in ... count.html
That’s a fine solution.

I checked and it looks like sales of the RJ mutual funds would be free. So you can transfer holdings “in-kind” and sell them after they arrive.

That will help keep you invested. If you liquidate, RJ might sell and delay the transfer so they can come up with some problem and collect interest for a few days.

Topic Author
ralphboy
Posts: 33
Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Sat May 02, 2020 8:24 am

Should I have the same investments in my IRA and regular Schwab account?

These:
Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)

typical.investor
Posts: 1998
Joined: Mon Jun 11, 2018 3:17 am

Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sat May 02, 2020 8:28 am

ralphboy wrote:
Sat May 02, 2020 8:24 am
Should I have the same investments in my IRA and regular Schwab account?

These:
Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)
Yes.

You’ll note in my most recent example portfolio, those are the funds I used.

You don’t have to have all three in both places though.

Bob Gibson
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Re: Poor Publix employee seeking 401k investment advice

Post by Bob Gibson » Sat May 02, 2020 8:45 am

The dividend for the Publix stock in your 401k should show in Voya on the activity tab. I checked mine this morning and it’s there.

Topic Author
ralphboy
Posts: 33
Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Sat May 02, 2020 9:03 am

Bob Gibson wrote:
Sat May 02, 2020 8:45 am
The dividend for the Publix stock in your 401k should show in Voya on the activity tab. I checked mine this morning and it’s there.
Oh I see, it went to "cash component of publix stock"

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ruralavalon
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Location: Illinois

Re: Poor Publix employee seeking 401k investment advice

Post by ruralavalon » Sat May 02, 2020 9:31 am

typical.investor wrote:
Sat May 02, 2020 12:17 am
$37500 (taxable at Raymond James)
$13900 (taxable Publix from profit plan at Voya)
$9,600 (401k plan)
$3k (taxable Employee Stock Purchase Plan at Publix Stockholder Online)
-------------------------------------
$64,000 total portfolio value
ralphboy.

Is this summary of your accounts correct and the right amounts?

It will be important to coordinate investments among all accounts, treating all accounts together as a single unified portfolio.


ralphboy wrote:
Sat May 02, 2020 8:06 am
I see that I can open an account with them online. Maybe that'll make things easier.

https://www.schwab.com/public/schwab/in ... count.html
$12,000 Schwab Total Stock Market Index (SWTSX) ***2019,2020 contributions.
For the IRA do I have to put $6,000 in before the deadline and the day after it add the other $6,000?
I suggest opening the a Schwab IRA online, and investing in Schwab Total Stock Market Index (SWTSX).

Use your tax refund and the Publix stock dividends (from the Publix stock in the profit plan and the stock purchase plan) to start funding the Schwab IRA.

The dividends from the Publix stock in the 401k must stay in the 401k.

I suggest waiting until the local Schwab office (20 miles away) opens up to do the transfer of the Raymond James account, so that the Schwab office can help you with the transfer.

You need to have copies of the tax basis information for your investments before starting the transfer from Raymond James to Schwab.

You want to open an individual brokerage account at Schwab, do an "in-kind" transfer to Schwab, and then sell the investments after transfer to Schwab.

What investments do you currently have in the Raymond James account? What is the unrealized capital gain/loss status and amount in each of those investments? How long have you held each investment?

You may want to sell some of those Raymond James investments this year, and some next year, depending on tax issues. You want to do this in a way that creates little if any income tax liability. I think that the Schwab office might help you with this.
Last edited by ruralavalon on Sat May 02, 2020 9:46 am, edited 1 time in total.
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bryansmile
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Re: Poor Publix employee seeking 401k investment advice

Post by bryansmile » Sat May 02, 2020 9:45 am

OP, A reminder that when you sell your RJ shares you'd report realized long term capital gains on your 2020 tax returns. Your RJ unrealized long term capital gains are currently around $11k (38k-27k), if you sell all RJ shares, you pay 0% on realized LT capital gains up to ($40k - your 2020 income), and 15% on the rest, which I estimate based on your 2019 income will be lower than what you'd have paid to RJ each year for their fees. Not bad at all for an one time expense!

At Schwab, I would go with a ROTH IRA account. Yes, it's after tax money (no amended tax return), but all your future gains and withdrawals are tax free. The earnings over 30 years can be very significant, even double your contributions.
Also, with traditional IRA if you withdraw before you are 59.5, you'd have to pay a penalty in addition to taxes. With ROTH IRA contributions (not earnings though) you can withdraw it anytime without penalty. Just an extra layer of flexibility.
Last edited by bryansmile on Sat May 02, 2020 10:05 am, edited 2 times in total.

bryansmile
Posts: 279
Joined: Wed Feb 12, 2014 10:14 am

Re: Poor Publix employee seeking 401k investment advice

Post by bryansmile » Sat May 02, 2020 9:51 am

ruralavalon wrote:
Sat May 02, 2020 9:31 am


What investments do you currently have in the Raymond James account? What is the unrealized capital gain/loss status and amount in each of those investments? How long have you held each investment?
OP provided screen shots in his first post.

Topic Author
ralphboy
Posts: 33
Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Sat May 02, 2020 10:03 am

As of now:
PROFIT Plan........................$13,876.30
401(k) SMART Plan.................$9,914.29
Employee Stock Purchase Plan...$3,000
RJ.....................................$37,340.79
=====================================
Total.................................$64,131.38
You need to have copies of the tax basis information for your investments before starting the transfer from Raymond James to Schwab
Under "Tax Reporting" and "Documents" in my RJ account, I see a 2019 COMPOSITE STATEMENT OF 1099 FORMS for February. Is this what I need?
What investments do you currently have in the Raymond James account? What is the unrealized capital gain/loss status and amount in each of those investments? How long have you held each investment?
Not sure how long I had the investments but I had the RJ account since 2014. I think most of these things were from then.
My RJ portfolio statement from March 31 to April 30:

Cash & Cash Alternatives
...............................Quantity...................Value..........Estimated Annual Income
CLIENT INTEREST....................................$3,186.69.......$0.32
PROGRAM
0.01% - Selected Sweep
Option

Mutual Funds
NUVEEN HIGH YIELD.......187.950.................$2,948.94.......$165.77
MUNICIPAL BOND FUND
CLASS I N/L (NHMRX)
===============================================
Mutual Funds Total $2,948.94 (Value) and a $(287.57) loss

Exchange-Traded Products (ETPs)
FIRST TRUST DORSEY.......177.000................$5,240.97......$33.81
WRIGHT FOCUS 5 ETF
(FV)

GLOBAL X SOCIAL
MEDIA INDEX ETF (SOCL).....200.000..............$6,849.40

INVESCO BUYBACK
ACHIEVERS ETF (PKW)........100.000..............$5,444.00......$105.60

INVESCO NASDAQ.............100.000..............$14,671.00
INTERNET ETF (PNQI)
==============================================
Exchange-Traded Products Total $32,205.37 (Value) and $12,019.85 gain

==============================================
Portfolio Total $38,341.00 (Value), $11,732.28 gain, and $305.50 estimated annual income

Income
04/01/2020 Dividend - Nontaxable
NUVEEN HIGH YIELD MUNICIPAL
BOND FUND CLASS I N/L
(NHMRX)
$.07401 per share x 187.950 shares
Amount $13.91

04/30/2020 Interest - Taxable
Cash held in CIP
30 days average balance $3,270.10
average rate .010%
Amount $0.03

Income Total $13.94

Expenses
04/15/2020 Fee
Cash
2Q Fees for 091/366 Days at
1.97% on $34,264.23

Expenses Total $(167.81)

typical.investor
Posts: 1998
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sat May 02, 2020 8:36 pm

bryansmile wrote:
Sat May 02, 2020 9:45 am
OP, A reminder that when you sell your RJ shares you'd report realized long term capital gains on your 2020 tax returns. Your RJ unrealized long term capital gains are currently around $11k (38k-27k), if you sell all RJ shares, you pay 0% on realized LT capital gains up to ($40k - your 2020 income), and 15% on the rest, which I estimate based on your 2019 income will be lower than what you'd have paid to RJ each year for their fees. Not bad at all for an one time expense!
2019 was about $30,000 correct? So if 2020 is similar and you sell RJ selected funds, you'd have 15% taxes on about $2k or so. There might be some short term gains in there too that you would pay the marginal rate on 22% on.

If you use an IRA, you can subtract $6,000 from your income, and you wouldn't have that 15% taxes on about $2k or so.

Or you can sell only some of the stock in the RJ account, so your total taxable income (salary + dividends+ capital gains - deductions) doesn't go above $39,400. Then you wouldn't have 15% taxes on about $2k or so. Then sell the rest of the RJ funds in 2021. In other words, break up the capital gains to stay in the 0% bracket. This strategy is if you choose the ROTH IRA.
bryansmile wrote:
Sat May 02, 2020 9:45 am
At Schwab, I would go with a ROTH IRA account. Yes, it's after tax money (no amended tax return), but all your future gains and withdrawals are tax free. The earnings over 30 years can be very significant, even double your contributions.
Also, with traditional IRA if you withdraw before you are 59.5, you'd have to pay a penalty in addition to taxes. With ROTH IRA contributions (not earnings though) you can withdraw it anytime without penalty. Just an extra layer of flexibility.
That's a good point about flexibility in emergencies and ability to use contributions.

IRA with deductions or Roth IRA, there is no bad choice there.

It's really sad to me that RJ is charging so much and giving so little advice.

typical.investor
Posts: 1998
Joined: Mon Jun 11, 2018 3:17 am

Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sat May 02, 2020 8:58 pm

ruralavalon wrote:
Sat May 02, 2020 9:31 am
What is the unrealized capital gain/loss status and amount in each of those investments? How long have you held each investment?
Raymond James shows them as long term.
ralphboy wrote:
Sat May 02, 2020 10:03 am

Under "Tax Reporting" and "Documents" in my RJ account, I see a 2019 COMPOSITE STATEMENT OF 1099 FORMS for February. Is this what I need?
I don't believe that shows positions you haven't sold.

You can see unrealized capital gains/losses in the "Investment Gain Loss Column" here:

https://i.imgur.com/JgbB2W1.jpg

Save your monthly statement. It shows cost basis (how much you invested) and unrealized gains. It doesn't show when you purchased the fund though. You tax person will need to know that too, but maybe the picture above of your account showing "long term" will suffice.

If you can find a screen shot showing when the funds were purchased, that'd be best I think.

Hopefully the cost basis info will just transfer over. I've had good luck at Schwab with that.
ruralavalon wrote:
Sat May 02, 2020 9:31 am
You may want to sell some of those Raymond James investments this year, and some next year, depending on tax issues. You want to do this in a way that creates little if any income tax liability. I think that the Schwab office might help you with this.
That is a good point, but Schwab can't give tax advice.

Either use a traditional IRA to reduce income and keep yourself in the 0% (long term) capital gains bracket, or break up sales into two years if you choose the ROTH.

motorcyclesarecool
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Re: Poor Publix employee seeking 401k investment advice

Post by motorcyclesarecool » Sat May 02, 2020 9:50 pm

ralphboy wrote:
Fri May 01, 2020 11:41 am
I would cash out $12,000 of the RJ account and put it into a Traditional IRA at Schwab. $6,000 for “2019” and $6000 for “2020”.
I already did my taxes and received $1200. If I file an amended tax return do I have to pay the person to do my taxes again? How much more of a refund do you think I would get back? If I remember correctly, I was told that I got a bigger refund because I just made it under $30,000 for my income.
Ok, this might have escaped the notice of almost everybody else: OP might have income that is nearing a tax cliff. Cashing out all his RJ money at once would potentially just about double his annual income.

As such, I would strongly recommend:
1. being very cautious in cashing out all of your RJ at once, because it might cost you at tax time.
2. Transfer your RJ stuff to Schwab, then only cash out what you put into your Traditional IRA.
3. Yes, if you choose to contribute to your Traditional IRA for 2019 you’ll have to pay to file amended taxes. You’re also likely to qualify for a bigger refund and the Saver’s Credit, so that would lessen the hit.
4. Once the dust has settled and the RJ assets have been transferred “in kind” to Schwab, being very choosy about what you cash out when. You will pay far less tax on long term capital gains for shares held longer than a year. I don’t want you to stumble into a big tax bill.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

typical.investor
Posts: 1998
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Re: Poor Publix employee seeking 401k investment advice

Post by typical.investor » Sat May 02, 2020 10:27 pm

motorcyclesarecool wrote:
Sat May 02, 2020 9:50 pm
ralphboy wrote:
Fri May 01, 2020 11:41 am
I would cash out $12,000 of the RJ account and put it into a Traditional IRA at Schwab. $6,000 for “2019” and $6000 for “2020”.
I already did my taxes and received $1200. If I file an amended tax return do I have to pay the person to do my taxes again? How much more of a refund do you think I would get back? If I remember correctly, I was told that I got a bigger refund because I just made it under $30,000 for my income.
Ok, this might have escaped the notice of almost everybody else: OP might have income that is nearing a tax cliff. Cashing out all his RJ money at once would potentially just about double his annual income.
Yes, taxes are a concern but annual income would not double by cashing out RJ money.

There are $12,000 in gains. 15% capital gains start after $39,400 or so.

So total income would be $30k + $12k.

If a traditional IRA is used it would be $24k ($30k - $6k deduction) + $12k

If a traditional IRA and gains are broken up over several is could be something like:

2020 $24k + $6k
2021 $24k + $6k

Also, if a traditional IRA is used, there should be more of a 2019 tax refund and income would be $6,000 less.

There are any number of ways to do this, but annual income would not double

Topic Author
ralphboy
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Joined: Thu Apr 23, 2020 7:09 pm

Re: Poor Publix employee seeking 401k investment advice

Post by ralphboy » Sun May 03, 2020 4:55 am

typical.investor wrote:
Sat May 02, 2020 8:58 pm
Save your monthly statement. It shows cost basis (how much you invested) and unrealized gains. It doesn't show when you purchased the fund though.
I found this in my account.

https://i.imgur.com/E3HKU4I.jpg

https://i.imgur.com/Om805wN.jpg

https://i.imgur.com/VUN3k8T.jpg

https://i.imgur.com/FBXtnMC.jpg
Yes, if you choose to contribute to your Traditional IRA for 2019 you’ll have to pay to file amended taxes. You’re also likely to qualify for a bigger refund and the Saver’s Credit, so that would lessen the hit.
I found the 1040-X form. Do I just write in line 1 for income deductions A. Original amount $30,000 B. Net change $6,000 C. Correct amount $24,000.
Can I just mail this off and avoid having to see my tax person?

https://www.irs.gov/pub/irs-pdf/f1040x.pdf

One more thing, let's say in the future that I need to withdraw some money. Which account should I take the money out of? Does that depend on my type of IRA?

If I have regular account and traditional IRA---> withdraw money out of regular account

If I have regular account and roth IRA---> withdraw money out of roth

Is this correct?

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