Our Portfolio, One Year After Our EJ "Jailbreak"

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Topic Author
pedalman701
Posts: 75
Joined: Wed Jul 01, 2020 7:12 pm

Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Now that it's been almost a year since we evaded the clutches of EJ, I feel confident to post our portfolio in the requested format.

Emergency funds: Three months of expenses, $6K in a CD, will move this to my Roth IRA pay off the smaller car loan after the CD matures.

Debt: 1 car loan:
1.95% APR, Principal Balance: $6900
2.45% APR, Principal Balance: $22,200

We own our home free and clear. Our two kids have already been to college, no student loans on our part. No credit card debt; we pay off the charges as soon as they post.

Tax Filing Status: Married Filing Jointly

Tax Rate: 12% Federal, 0% State

State of Residence: Texas

Age: Him - 61
Her - 60 (Homemaker, no outside job)

Desired Asset allocation: 65% stocks / 35% bonds
Desired International allocation: 10% of stocks

Please provide a hint as to the size of your current total portfolio:
Low six-figures

Current retirement assets
I’m using this spreadsheet for my portfolio percentages:
https://www.doughroller.net/investing/a ... readsheet/

Taxable - Vanguard (Self-directed)
0.00% Cash
24.30% Vanguard Total Bond Market Index Fund ETF BND 0.04
8.36% Vanguard Total International Stock Index Fund ETF VXUS 0.08
30.98% Vanguard Total Stock Market Index Fund ETF VTI 0.03

Taxable - Ally Invest (Managed Portfolio, no fee)
1.01% Cash
0.03% Vanguard Total International Bond Index Fund ETF BNDX 0.08
0.03% iShares 7-10 Year Treasury Bond ETF IEF 0.15
0.03% iShares 5-10 Yr Investment Grade Corporate Bd ETF IGIB 0.06
0.03% Vanguard Mortgage-Backed Secs Idx Fund ETF VMBS 0.05
0.72% Vanguard Developed Markets Index Fund ETF VEA 0.05
0.17% Vanguard Emerging Markets Stock Index Fund ETF VWO 0.10
0.40% iShares Core S&P Mid-Cap ETF IJH 0.07
0.14% iShares Core S&P Small-Cap ETF IJR 0.07
0.83% iShares Core S&P 500 ETF IVV 0.04

The Ally account is being transferred to our taxable Vanguard account.

2021/07/01: Edited to reflect changes

His Pension
Texas TRS, Tier 2, have satisfied the Rule of 80, plan to work at least 7 more years to increase monthly benefit
I won't have SS due to GPO and Windfall Provision, no COLA
Monthly expenses would be covered

His Roth IRA at Vanguard
1.44% Vanguard Developed Markets Index Fund ETF VEA 0.05
1.47% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX 0.04
0.00% Cash

I’m funding this Roth from a side gig, not my better-paying day job. Will use the taxable account to fill up any space each year.
I plan on continuing my side gig after retirement from my day job, so Roth contributions will hopefully continue.

Her Traditional IRA at Vanguard
21.47% Vanguard Target Retirement 2025 Fund Investor Shares VTTVX 0.14
11.66% Vanguard Total Bond Market Index Fund Admiral Shares VBTLX 0.05
0.00% Cash

Will start moving her tIRA money out of VTTVX into her Roth over time before our income tax rate goes up to 15%.

Her Roth IRA at Vanguard
1.78% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX 0.04

2021/07/06: Edit to reflect changes
_______________________________________________________________
Contributions

New annual Contributions
$7000 his Roth IRA (I don’t usually have enough new money for the full contribution)
$7000 her tIRA Roth IRA

Questions:
Is my 65/35 asset allocation realistic?

After the Ally holdings transfer to the taxable Vanguard account, should I just exchange those for more shares of BND, VXUS and VTI?
I've answered my own question from advice received to date.
Last edited by pedalman701 on Wed Jul 21, 2021 10:12 am, edited 11 times in total.
A Recovering Jonesoholic | 55% US/10% Intl/35% Bonds
User avatar
gwe67
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by gwe67 »

Keep rolling with BND, VXUS and VTI. It's somewhat better to have BND in tax deferred, but with total portfolio in low 6 figures, that's not a big deal.

TRS pension is non-COLA, and without SS, I'd be worried about inflation in retirement.

The fees on VTTVX are higher than BND, VXUS and VTI.

Fund the Roths to the max before anything else.

Dave says pay off the cars.
VTI 48%, VXUS 12%, BND 40%
HomeStretch
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by HomeStretch »

Consider using the Taxable account (dividends, sales) to fully fund your Roth IRA each year. The Roth account will grow tax free.

If spouse is the beneficiary of your Roth IRA, spouse should contributing (even a small amount) to a Roth IRA now to start the 5-year clock on initial Roth IRAs (assuming this is spouse’s initial Roth IRA). I *believe* that if spouse elects to treat the inherited Roth IRA as spouse’s own, that spouse must satisfy the 5-year requirement in order to withdraw Roth IRA earnings tax free.

What is your projected Federal marginal tax rate in retirement when receiving pension income and SS benefits for spouse, if any? Do you plan to leave any of your estate to a qualified charity or to make QCDs (Qualified Charitable Contributions)? I am wondering whether it makes sense for both of you to contribute to Roth IRAs or to both contribute to Traditional IRAs or to continue splitting between the two as you are currently doing.
Last edited by HomeStretch on Tue Jun 29, 2021 3:30 pm, edited 1 time in total.
Topic Author
pedalman701
Posts: 75
Joined: Wed Jul 01, 2020 7:12 pm

Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

gwe67 wrote: Tue Jun 29, 2021 3:02 pm Keep rolling with BND, VXUS and VTI. It's somewhat better to have BND in tax deferred, but with total portfolio in low 6 figures, that's not a big deal.

TRS pension is non-COLA, and without SS, I'd be worried about inflation in retirement.

The fees on VTTVX are higher than BND, VXUS and VTI.

Fund the Roths to the max before anything else.

Dave says pay off the cars.
Wow, that was fast! :happy

The reason I put VTTVX in her tIRA was to keep it on a set-it-and-forget-it mode for her.

We're chipping away at the cars. We tend to keep them long after they are paid for, so a car loan is infrequent for us.

Thanks for the insight.
A Recovering Jonesoholic | 55% US/10% Intl/35% Bonds
Topic Author
pedalman701
Posts: 75
Joined: Wed Jul 01, 2020 7:12 pm

Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

HomeStretch wrote: Tue Jun 29, 2021 3:07 pm Consider using the Taxable account (dividends, sales) to fully fund your Roth IRA each year. The Roth account will grow tax free.
That's currently how we fund her tIRA. I wasn't sure if it would make sense to do the same for my Roth.

Thank you.
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lakpr
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by lakpr »

pedalman701 wrote: Tue Jun 29, 2021 2:52 pm I’m funding this Roth from a side gig, not my better-paying day job.

Her Traditional IRA at Vanguard
34.06% Vanguard Target Retirement 2025 Fund Investor Shares VTTVX 0.14
_______________________________________________________________
Contributions

New annual Contributions
$3000 his Roth IRA (I don’t usually have enough new money for the full contribution)
$7000 her tIRA
I seriously suggest that you do not make contributions to a Traditional IRA, either for yourself or your wife, while you are in the 12% bracket. Pay taxes at the 12% now. In 4 more years, the 12% bracket is set to sunset, and the lowest bracket at that time would be 15%. You will only be saving 12% now and paying 15% later, while you can pay the 12% now and enjoy 0% later.

You do not also need an emergency fund, being that both are over the age of 51, your IRA itself counts as your emergency fund. Take that $12k that is in EF right now, and maximize the Roth IRAs for both yourself and your wife.

What is the 11-month no-penalty CD paying? 0.5%? Meanwhile you have the car loans (I know another poster brought it up and you already answered, but still ...) paying 2.45%, nearly 5 times the interest you are earning on the CD. What is the purpose of the CD, and why can't his/her IRA serve the same purpose, given that there are no penalties for withdrawing from the IRA for either of you any more?
Topic Author
pedalman701
Posts: 75
Joined: Wed Jul 01, 2020 7:12 pm

Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

lakpr wrote: Tue Jun 29, 2021 3:18 pm
pedalman701 wrote: Tue Jun 29, 2021 2:52 pm I’m funding this Roth from a side gig, not my better-paying day job.

Her Traditional IRA at Vanguard
34.06% Vanguard Target Retirement 2025 Fund Investor Shares VTTVX 0.14
_______________________________________________________________
Contributions

New annual Contributions
$3000 his Roth IRA (I don’t usually have enough new money for the full contribution)
$7000 her tIRA
I seriously suggest that you do not make contributions to a Traditional IRA, either for yourself or your wife, while you are in the 12% bracket. Pay taxes at the 12% now. In 4 more years, the 12% bracket is set to sunset, and the lowest bracket at that time would be 15%. You will only be saving 12% now and paying 15% later, while you can pay the 12% now and enjoy 0% later.

Good point. Thanks for the extra pair of eyes.

You do not also need an emergency fund, being that both are over the age of 51, your IRA itself counts as your emergency fund. Take that $12k that is in EF right now, and maximize the Roth IRAs for both yourself and your wife.

What is the rationale behind not have an EF after age 51? Currently, we sleep better at night with an EF, but I'm always willing to change when new information is presented.

What is the 11-month no-penalty CD paying? 0.5%? Meanwhile you have the car loans (I know another poster brought it up and you already answered, but still ...) paying 2.45%, nearly 5 times the interest you are earning on the CD. What is the purpose of the CD, and why can't his/her IRA serve the same purpose, given that there are no penalties for withdrawing from the IRA for either of you any more?

At the time, I set up the CD because the rate (0.75%) was better than at our credit union. But the logic you present still holds.
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jimkinny
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by jimkinny »

You have had suggestions for the 3 fund portfolio although it was not named. Here is more information about it.
https://www.bogleheads.org/wiki/Three-fund_portfolio

Unless a holding makes up at least 5-10% of a portfolio I would sell it in order to simplify. But, pay attention to taxes and decide if the cost of capital gains taxes is worth the simplicity, here are the tax rates. You may not have to pay much cap gains taxes but be careful and stay at the long term rate for your situation.
[urlhttps://www.bogleheads.org/wiki/Capital_gains_distribution][/url]

I pretty much agree with the above posts that suggested paying off loans. It doesn't make a lot of sense to pay a higher interest rate on a loan and then loan money in a bond fund at a lower rate. The one very good reason to keep money in a bond fund instead of paying off a mortgage is sleeping at night.
Last edited by jimkinny on Tue Jun 29, 2021 3:47 pm, edited 1 time in total.
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gwe67
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by gwe67 »

pedalman701 wrote: Tue Jun 29, 2021 3:37 pm
lakpr wrote: Tue Jun 29, 2021 3:18 pm
pedalman701 wrote: Tue Jun 29, 2021 2:52 pm What is the rationale behind not have an EF after age 51? Currently, we sleep better at night with an EF, but I'm always willing to change when new information is presented.
Kids are launched. Roth contributions can be withdrawn without tax/penalty. Also you have credit cards, potential HELOC, and taxable accounts.
VTI 48%, VXUS 12%, BND 40%
Topic Author
pedalman701
Posts: 75
Joined: Wed Jul 01, 2020 7:12 pm

Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

gwe67 wrote: Tue Jun 29, 2021 3:40 pm
pedalman701 wrote: Tue Jun 29, 2021 3:37 pm
lakpr wrote: Tue Jun 29, 2021 3:18 pm
pedalman701 wrote: Tue Jun 29, 2021 2:52 pm What is the rationale behind not have an EF after age 51? Currently, we sleep better at night with an EF, but I'm always willing to change when new information is presented.
Kids are launched. Roth contributions can be withdrawn without tax/penalty. Also you have credit cards, potential HELOC, and taxable accounts.
I guess I've never thought of those as means of emergency funding. Thanks.
A Recovering Jonesoholic | 55% US/10% Intl/35% Bonds
Topic Author
pedalman701
Posts: 75
Joined: Wed Jul 01, 2020 7:12 pm

Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

jimkinny wrote: Tue Jun 29, 2021 3:40 pm You have had suggestions for the 3 fund portfolio although it was not named. Here is more information about it.
https://www.bogleheads.org/wiki/Three-fund_portfolio

Unless a holding makes up at least 5-10% of a portfolio I would sell it in order to simplify. But, pay attention to taxes and decide if the cost of capital gains taxes is worth the simplicity, here are the tax rates. You may not have to pay much cap gains taxes but be careful and stay at the long term rate for your situation.
[urlhttps://www.bogleheads.org/wiki/Capital_gains_distribution][/url]

I pretty much agree with the above posts that suggested paying off loans. It doesn't make a lot of sense to pay a higher interest rate on a loan and then loan money in a bond fund at a lower rate. The one very good reason to keep money in a bond fund instead of paying off a mortgage is sleeping at night.
Thanks for the observation.
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pasadena
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pasadena »

I second maxing out your Roth IRA, and contributing to a Roth IRA for her instead of tIRA, since you're in a low tax bracket, it's better than traditional. In the same spirit, I would explore doing Roth conversions of her tIRA every year up to the top of the 12% bracket, if you still have some room in there.

Regarding your EF - you're both older than 59.5, so you can withdraw money from your Roth at any time, tax- and penalty free. So it's just a matter of where your EF is located, and Roth is always better than taxable or HYSA. With a portfolio in the low 6 figures fully accessible, and a fairly moderate risk, I'd probably invest it, but you can always use a money market fund.

Once you've done that, or if you decide not to, use your taxable account to max out both Roths every year.

I wouldn't pay off the loans. The APRs are low.
Topic Author
pedalman701
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Thank you, Pasadena. :happy

My Roth is less than 5 years old, but I track my contributions for each year. I understand that I can remove my contributions without penalty, but with the caveat that once a contribution is removed, you can't replace it for that same year at a later date.
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lakpr
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by lakpr »

pedalman701 wrote: Tue Jun 29, 2021 3:37 pm What is the rationale behind not have an EF after age 51? Currently, we sleep better at night with an EF, but I'm always willing to change when new information is presented.
Sorry, that was a typo, I meant age 61. After the age of 59.5, any withdrawals from the IRA / 401k plan / 403b plan etc. are penalty free. Since that huge pot of money is available for you at any time you want, there is no separate need for an emergency fund. For younger folks, that 10% penalty on 401k withdrawals is a huge deterrent. Although there are techniques such as Rule of 55, Rule of 72t, etc. that can eliminate the penalty, it is still a workaround.
pasadena
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pasadena »

pedalman701 wrote: Tue Jun 29, 2021 4:01 pm Thank you, Pasadena. :happy

My Roth is less than 5 years old, but I track my contributions for each year. I understand that I can remove my contributions without penalty, but with the caveat that once a contribution is removed, you can't replace it for that same year at a later date.
When did you make your first contribution (or was it a conversion?)?

Your caveat is correct, but it also applies to the money you don't contribute every year... whether it comes from your taxable account or your HYSA, please don't lose that precious Roth space!
Topic Author
pedalman701
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

My first contribution was in 03/2020. No conversions involved.
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Topic Author
pedalman701
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

The idea of converting her tIRA into a Roth is interesting. But we would have to do it a bit at a time, since that account holds $75K.

Many thanks to all of you for your perspectives. :sharebeer
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retiredjg
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

Before doing anything, I think you need to take a look at just where in the 12% bracket you are. Let us know if you need help with that.

The reason you need to know it is that it may be the $7k in tIRA contributions that are getting you into the 12% bracket in the first place. If it takes $5k to get you into that low bracket, then only $2k should go into Roth IRA. Does that make sense?

Like most of investing, an emergency fund is part financial and part emotional. Money could be taken penalty free from her tIRA if needed. This will increase your taxable income and trigger taxes. Money (contributions, not earnings yet) could be taken from His Roth IRA and this would not trigger taxes but the Roth IRA is not yet large enough to help a great deal.

The point is that you have money available so you may "need" less emergency money than you think. But, I would not reduce the emergency fund if having it helps you sleep at night.

In a case like this, you could go ahead and put some of the emergency fund in His Roth IRA and keep it in a short term bond or money market. It could still serve as emergency fund inside the Roth IRA.

Regarding Roth conversions, just putting money into Her Roth IRA is essentially the same as doing Roth conversions. If you have space in the 12% bracket, I would just do some Roth contributions.

Is my 65/35 asset allocation realistic?
It is on the aggressive side in my book. Not stupid aggressive though as long as you are working. However, as you get closer to retirement, I would add more bonds. You don't want a market downturn just before retirement to prevent you from retiring when you want.

After the Ally holdings transfer to the taxable Vanguard account, should I just exchange those for more shares of BND, VXUS and VTI?
Maybe. Are you actually at your desired allocation? If not, put the money into the asset class you have too little of.

His Pension
Texas TRS, Tier 2, have satisfied the Rule of 80, plan to work at least 7 more years
What does this mean in terms of the size of your pension? Will the pension cover most of your living expenses? Do you want to work 7 more years or do you just think you need to work 7 more years?
Topic Author
pedalman701
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Joined: Wed Jul 01, 2020 7:12 pm

Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

retiredjg wrote: Wed Jun 30, 2021 7:30 am Before doing anything, I think you need to take a look at just where in the 12% bracket you are. Let us know if you need help with that.

Sure, I could use some help learning how to determine that.

The reason you need to know it is that it may be the $7k in tIRA contributions that are getting you into the 12% bracket in the first place. If it takes $5k to get you into that low bracket, then only $2k should go into Roth IRA. Does that make sense?

Like most of investing, an emergency fund is part financial and part emotional. Money could be taken penalty free from her tIRA if needed. This will increase your taxable income and trigger taxes. Money (contributions, not earnings yet) could be taken from His Roth IRA and this would not trigger taxes but the Roth IRA is not yet large enough to help a great deal.

The point is that you have money available so you may "need" less emergency money than you think. But, I would not reduce the emergency fund if having it helps you sleep at night.

We discussed this, and agree that at this stage a large EF in savings/CDs is counter-productive.

In a case like this, you could go ahead and put some of the emergency fund in His Roth IRA and keep it in a short term bond or money market. It could still serve as emergency fund inside the Roth IRA.

Regarding Roth conversions, just putting money into Her Roth IRA is essentially the same as doing Roth conversions. If you have space in the 12% bracket, I would just do some Roth contributions.

I'm assuming you are referring to distributions from her tIRA into a Roth for her?
Is my 65/35 asset allocation realistic?
It is on the aggressive side in my book. Not stupid aggressive though as long as you are working. However, as you get closer to retirement, I would add more bonds. You don't want a market downturn just before retirement to prevent you from retiring when you want.

I am needing to rebalance, so this might be a good time to do that.
After the Ally holdings transfer to the taxable Vanguard account, should I just exchange those for more shares of BND, VXUS and VTI?
Maybe. Are you actually at your desired allocation? If not, put the money into the asset class you have too little of.
His Pension
Texas TRS, Tier 2, have satisfied the Rule of 80, plan to work at least 7 more years
What does this mean in terms of the size of your pension? Will the pension cover most of your living expenses? Do you want to work 7 more years or do you just think you need to work 7 more years?

If I were to retire tomorrow, our monthly expenses (including car payments) would be covered. I want to work a few more years because the monthly benefit is based on the average of the 5 highest annual salary rates I receive. More service time = bigger monthly benefit. I work in an IT position for a community college. I don't hate my job, so I want to continue for a bit.
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retiredjg
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

pedalman701 wrote: Thu Jul 01, 2021 10:11 am Regarding Roth conversions, just putting money into Her Roth IRA is essentially the same as doing Roth conversions. If you have space in the 12% bracket, I would just do some Roth contributions.

I'm assuming you are referring to distributions from her tIRA into a Roth for her?
No, I meant if you put future contributions into Roth IRA instead of tIRA, you accomplish the same thing as doing conversions from tIRA to Roth IRA.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by Vanguard User »

pedalman701 wrote: Tue Jun 29, 2021 2:52 pm Now that it's been almost a year since we evaded the clutches of EJ, I feel confident to post our portfolio in the requested format.

Emergency funds: Six months of expenses, $12K in HYSA and 11-month no-penalty CD

Debt: 2 car loans, 1.95% APR, Principal Balance: $6900
2.45% APR, Principal Balance: $22,200

We own our home free and clear. Our two kids have already been to college, no loans on our part. No credit card debt; we pay off the charges as soon as they post.

Tax Filing Status: Married Filing Jointly

Tax Rate: 12% Federal, 0% State

State of Residence: Texas

Age: Him - 61
Her - 60 (Homemaker, no outside job)

Desired Asset allocation: 65% stocks / 35% bonds
Desired International allocation: 13% of stocks

Please provide a hint as to the size of your current total portfolio:
Low six-figures

Current retirement assets
I’m using this spreadsheet for my portfolio percentages:
https://www.doughroller.net/investing/a ... readsheet/

Taxable - Vanguard (Self-directed)
0.10% Cash
24.39% Vanguard Total Bond Market Index Fund ETF BND 0.04
8.57% Vanguard Total International Stock Index Fund ETF VXUS 0.08
31.53% Vanguard Total Stock Market Index Fund ETF VTI 0.03

Taxable - Ally Invest (Managed Portfolio, no fee)
1.01% Cash
0.03% Vanguard Total International Bond Index Fund ETF BNDX 0.08
0.03% iShares 7-10 Year Treasury Bond ETF IEF 0.15
0.03% iShares 5-10 Yr Investment Grade Corporate Bd ETF IGIB 0.06
0.03% Vanguard Mortgage-Backed Secs Idx Fund ETF VMBS 0.05
0.72% Vanguard Developed Markets Index Fund ETF VEA 0.05
0.17% Vanguard Emerging Markets Stock Index Fund ETF VWO 0.10
0.40% iShares Core S&P Mid-Cap ETF IJH 0.07
0.14% iShares Core S&P Small-Cap ETF IJR 0.07
0.83% iShares Core S&P 500 ETF IVV 0.04

The Ally account is being transferred to our taxable Vanguard account.

2021/07/01: Edited to reflect changes

His Pension
Texas TRS, Tier 2, have satisfied the Rule of 80, plan to work at least 7 more years
Won't have SS due to GPO and Windfall Provision

His Roth IRA at Vanguard
1.44% Vanguard Developed Markets Index Fund ETF VEA 0.05
0.01% Cash

I’m funding this Roth from a side gig, not my better-paying day job.

Her Traditional IRA at Vanguard
34.06% Vanguard Target Retirement 2025 Fund Investor Shares VTTVX 0.14
_______________________________________________________________
Contributions

New annual Contributions
$3000 his Roth IRA (I don’t usually have enough new money for the full contribution)
$7000 her tIRA

Questions:
Is my 65/35 asset allocation realistic?

After the Ally holdings transfer to the taxable Vanguard account, should I just exchange those for more shares of BND, VXUS and VTI?
I was with EJ for 15 years. I left last month.
Topic Author
pedalman701
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Vanguard User wrote: Thu Jul 01, 2021 2:09 pm I was with EJ for 15 years. I left last month.
It will feel better as time goes by. No regrets here. :happy
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by Vanguard User »

pedalman701 wrote: Thu Jul 01, 2021 2:36 pm
Vanguard User wrote: Thu Jul 01, 2021 2:09 pm I was with EJ for 15 years. I left last month.
It will feel better as time goes by. No regrets here. :happy
Indeed. I was paying starting 5.75% FL and over 0.50% ER on American Funds Class A. What did you have there?
Topic Author
pedalman701
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Pretty much the same as you.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by Vanguard User »

pedalman701 wrote: Thu Jul 01, 2021 2:43 pm Pretty much the same as you.
Your FA probably made things complicated for you by putting you in bunch of funds right?
Topic Author
pedalman701
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Yup, that he did:

MFIS MONEY MARKET INVESTMENT SHARES
ATBYX AC INTM-TRM TAX-FREE BD Y
TFEBX AMERN TAX-EX BOND OF AMER F3
BNMLX BR NATIONAL MUNICIPAL K
BBMUX BRIDGE BUILDER MUNICIPAL BOND
EGFIX EDGEWOOD GROWTH I
HDGFX HARTFORD DIVIDEND & GROWTH F
JDPNX JANUS HENDERSON MID CAP VAL N
JFMXX JPM FEDERAL MONEY MARKET I
PTYIX TRP TAX-FREE HIGH-YIELD I
EFG ISHARES MSCI EAFE GROWTH ETF
SCZ ISHARES MSCI EAFE SMALL CAP ET
EFV ISHARES MSCI EAFE VALUE ETF
IWV ISHARES RUSS 3000 ETF
VEA VANGUARD FTSE DEV MKTS ETF
VUG VANGUARD GROWTH ETF
VO VANGUARD MID CAP ETF
VB VANGUARD SMALL CAP ETF
VTV VANGUARD VALUE ETF
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by Vanguard User »

pedalman701 wrote: Thu Jul 01, 2021 3:53 pm Yup, that he did:

MFIS MONEY MARKET INVESTMENT SHARES
ATBYX AC INTM-TRM TAX-FREE BD Y
TFEBX AMERN TAX-EX BOND OF AMER F3
BNMLX BR NATIONAL MUNICIPAL K
BBMUX BRIDGE BUILDER MUNICIPAL BOND
EGFIX EDGEWOOD GROWTH I
HDGFX HARTFORD DIVIDEND & GROWTH F
JDPNX JANUS HENDERSON MID CAP VAL N
JFMXX JPM FEDERAL MONEY MARKET I
PTYIX TRP TAX-FREE HIGH-YIELD I
EFG ISHARES MSCI EAFE GROWTH ETF
SCZ ISHARES MSCI EAFE SMALL CAP ET
EFV ISHARES MSCI EAFE VALUE ETF
IWV ISHARES RUSS 3000 ETF
VEA VANGUARD FTSE DEV MKTS ETF
VUG VANGUARD GROWTH ETF
VO VANGUARD MID CAP ETF
VB VANGUARD SMALL CAP ETF
VTV VANGUARD VALUE ETF
So all these funds had front load?
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

The Vanguard ETFs would not have a front load. I'm not sure an ETF can have a front load....but who knows?
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

I'm just glad that I'm keeping more of my money now.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by Vanguard User »

retiredjg wrote: Thu Jul 01, 2021 3:59 pm The Vanguard ETFs would not have a front load. I'm not sure an ETF can have a front load....but who knows?
Thought the goal of EJ FA is to make commission off every fund?
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by Sahara »

pedalman701 wrote: Thu Jul 01, 2021 10:11 am
retiredjg wrote: Wed Jun 30, 2021 7:30 am Before doing anything, I think you need to take a look at just where in the 12% bracket you are. Let us know if you need help with that.

Sure, I could use some help learning how to determine that.
The top of the bracket for 12% married was $80,250 in 2020- that's taxable income.

In the simplest form, add back the standard deduction of 24,800 and you could have an AGI below $105,050 and remain in the 12% bracket.
You can validate these numbers with your 2020 Form 1040 and then try to replicate to project 2021 and how close you may come.

Does that make sense?

This site is helpful for playing with some of these numbers.

https://www.mortgagecalculator.org/calc ... ulator.php
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

pedalman701 wrote: Thu Jul 01, 2021 10:11 am
retiredjg wrote: Wed Jun 30, 2021 7:30 am Before doing anything, I think you need to take a look at just where in the 12% bracket you are. Let us know if you need help with that.
Sure, I could use some help learning how to determine that.
Sorry, I forgot to answer that part. :happy

Look at line 15 on your 2020 tax return. This is your "taxable income". It is after all your deductions. It is also the number used to determine the tax bracket for your ordinary income.

The top of the 12% bracket was $80,250 for married filing jointly in 2020. You got to that number partly because of the deductible contributions to her tIRA.

How far under that number were you? Just a little bit? Several thousand dollars? If your income is similar to last year, this will help determine how much of Her next IRA contribution can go into Roth IRA without pushing you into the next bracket.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

retiredjg wrote: Thu Jul 01, 2021 7:31 pm
pedalman701 wrote: Thu Jul 01, 2021 10:11 am
retiredjg wrote: Wed Jun 30, 2021 7:30 am Before doing anything, I think you need to take a look at just where in the 12% bracket you are. Let us know if you need help with that.
Sure, I could use some help learning how to determine that.
Sorry, I forgot to answer that part. :happy

Look at line 15 on your 2020 tax return. This is your "taxable income". It is after all your deductions. It is also the number used to determine the tax bracket for your ordinary income.

The top of the 12% bracket was $80,250 for married filing jointly in 2020. You got to that number partly because of the deductible contributions to her tIRA.

How far under that number were you? Just a little bit? Several thousand dollars? If your income is similar to last year, this will help determine how much of Her next IRA contribution can go into Roth IRA without pushing you into the next bracket.
$80,250 - $24,202 = $56,048
If I understand you correctly, we have more than enough runway to start filling a Roth to the full $7K per year if our income does not rise dramatically.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

Yes,it looks like you have lots of room to fill your Roth IRAs without going into the next tax bracket.

However, there are a couple of things to check first. With income that low, you may be eligible for the Saver's Credit or the Earned Income Credit. Changing contributions from traditional to Roth might make you less eligible or not eligible for these credits. You probably would not want to give up these credits.

Are you getting either of these tax credits?
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Yes, the Saver's Credit.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

I think you might be in the 10% Tier for the Saver's credit. Do you know?
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

No, I don't.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

Do you do your own taxes?
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Yes, with TurboTax.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

Filling up His Roth IRA is not going to change your Saver's credit. However, reducing Her tIRA contributions might. Is the credit large enough that you want to go to some trouble to keep?

If yes, you could continue to contribute to Her tIRA (since it is only $75k now) and then do Roth conversions later on when you are still in a low bracket but no longer eligible for the Saver's credit.

However, if the credit is very small - say $200 - it might be better to go ahead and put at least some of her tIRA into Roth IRA because the earnings in the Roth IRA will never be taxed.

Kind of running on gut feelings so far, not on any calculations.

Since you do your own taxes, you could just subtract increments of $1k from her tIRA contribution in turbo tax and see how that affects the Saver's credit. Either don't save it or do it on a copy return so your real return is not lost.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

Of course, you never have to do Roth conversions on Her tIRA if you don't want to. It can be good to have some money in tIRA.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by MrBobcat »

pedalman701 wrote: Thu Jul 01, 2021 3:53 pm Yup, that he did:

MFIS MONEY MARKET INVESTMENT SHARES
ATBYX AC INTM-TRM TAX-FREE BD Y
TFEBX AMERN TAX-EX BOND OF AMER F3
BNMLX BR NATIONAL MUNICIPAL K
BBMUX BRIDGE BUILDER MUNICIPAL BOND
EGFIX EDGEWOOD GROWTH I
HDGFX HARTFORD DIVIDEND & GROWTH F
JDPNX JANUS HENDERSON MID CAP VAL N
JFMXX JPM FEDERAL MONEY MARKET I
PTYIX TRP TAX-FREE HIGH-YIELD I
EFG ISHARES MSCI EAFE GROWTH ETF
SCZ ISHARES MSCI EAFE SMALL CAP ET
EFV ISHARES MSCI EAFE VALUE ETF
IWV ISHARES RUSS 3000 ETF
VEA VANGUARD FTSE DEV MKTS ETF
VUG VANGUARD GROWTH ETF
VO VANGUARD MID CAP ETF
VB VANGUARD SMALL CAP ETF
VTV VANGUARD VALUE ETF
I left 2 years ago, your post makes me want to compare the complicated mess I was in to now. I want to say 20ish different stocks and 15ish different funds (if not more).

I'm now running 45%VTI 20%VXUS and 35%BND... so much easier and way less expensive.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

retiredjg wrote: Fri Jul 02, 2021 10:02 am Of course, you never have to do Roth conversions on Her tIRA if you don't want to. It can be good to have some money in tIRA.
I was considering rebalancing by moving some of the VTTVX funds into bonds in the tIRA via VBTLX. Then I could move the rest to a Roth for her with equities, over time. She liked the idea of having at least some of the tax-deferred funds dodging a future 15% tax rate.
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Topic Author
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

retiredjg wrote: Fri Jul 02, 2021 10:00 am Filling up His Roth IRA is not going to change your Saver's credit. However, reducing Her tIRA contributions might. Is the credit large enough that you want to go to some trouble to keep?

If yes, you could continue to contribute to Her tIRA (since it is only $75k now) and then do Roth conversions later on when you are still in a low bracket but no longer eligible for the Saver's credit.

However, if the credit is very small - say $200 - it might be better to go ahead and put at least some of her tIRA into Roth IRA because the earnings in the Roth IRA will never be taxed.
Our credit from Form 8880 was only $239. Not exactly a king's ransom. :wink:
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by retiredjg »

Not a king's ransom, but it is free money....something you can't get in a lot of places.

The question is whether a contribution to Roth IRA would produce more tax free income. Of course it will but it also costs more in taxes to get there so that it can produce the tax free income...so I'm not sure which is the better route to take.

If you decide to play with turbo tax and find out how much can be diverted to Roth vs how much you get in the Saver's credit that might be interesting. In the meantime, use some of the extra emergency fund to top off His Roth. Getting money into Roth at only 12% is a good thing.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Agreed. I really do appreciate the insight on this.

Thank you to everyone.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by placeholder »

pedalman701 wrote: Tue Jun 29, 2021 4:01 pm My Roth is less than 5 years old, but I track my contributions for each year. I understand that I can remove my contributions without penalty, but with the caveat that once a contribution is removed, you can't replace it for that same year at a later date.
One narrow exception is that you can replace the money within 60 days and have it count as an indirect rollover with the one per 12 months rule applying.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

placeholder wrote: Fri Jul 02, 2021 7:18 pm
pedalman701 wrote: Tue Jun 29, 2021 4:01 pm My Roth is less than 5 years old, but I track my contributions for each year. I understand that I can remove my contributions without penalty, but with the caveat that once a contribution is removed, you can't replace it for that same year at a later date.
One narrow exception is that you can replace the money within 60 days and have it count as an indirect rollover with the one per 12 months rule applying.
Good to know. Thank you.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Edited the OP to reflect a few changes made post-feedback.
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Re: Our Portfolio, One Year After Our EJ "Jailbreak"

Post by pedalman701 »

Vanguard User wrote: Thu Jul 01, 2021 4:53 pm
retiredjg wrote: Thu Jul 01, 2021 3:59 pm The Vanguard ETFs would not have a front load. I'm not sure an ETF can have a front load....but who knows?
Thought the goal of EJ FA is to make commission off every fund?
Actually, the weapon of choice for EJ is now the AUM account. If they breathe on your account, you are hit with a fee, be it a mutual fund or ETF.
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