Lawsuit payout

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v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Lawsuit payout

Post by v8juice » Tue Jul 24, 2018 12:53 pm

Hey everyone,
I recently came across this site in my quest to ensure that I am on the right track with my finances. So the situation that I find myself in is that we recently received a settlement from a lawsuit for $100k tax free because of it being for a personal injury. So now I am trying to decide what the best thing to do with it would be. I have been reading about different things to do but thought I would post on here and see what you all have to say considering my current financial state. I anticipate spending about 5-10K on some home renovations that my wife wants to do.


Emergency funds : no ( but know thats the first thing to do)
Debt: 7K car loan 2.64% Currently paying $1k a month to get it paid off, $264K Mortgage 3.2%
Tax Filing Status: married
Tax Rate: 22% Fed, 4.24% State
State of Residence: AZ
Age: 30

Current retirement assets:

Cash-18k,

(SELF) 401k- 43k
71.81% TRP GRTH STK TRUST B
28.19% TRP RETIRE 2050 C
Company match: 5%
Current contribution: 10%

(SELF) ROTH IRA- $1,800
Just started a few months ago contributing $458.33 each month

(Spouse) Roth 401K- 39K
23.77 VINIX ER .O35
23.52 DODGX ER .52
18.23 RERGX ER .49
12.7 MWTIX ER .44
9.37 BSFIX ER 1.05
8.11 JVMRX ER .77
4.29 WF STABLE RETURN Q ER .523
Company match: 4%
Current contribution: 15%

*401k Available funds*

-International Global-
AF EUROPAC GROWTH R6 (RERGX) 0.49%
VANG TOT INTL STK AD (VTIAX) 0.11%
-Small Cap-
BARON SMALL CAP INST (BSFIX) 1.05%
VANG SM CAP IDX INST (VSCIX) 0.04%
VICTORY S SM CO OP I (VSOIX)0.9%
-Mid Cap-
JH DSCPL VAL MDCP R6 (JVMRX) 0.77%
JPM MID CAP GRTH R6 (JMGMX) 0.76%
-Large Cap-
DODGE & COX STOCK (DODGX) 0.52%
MAINSTAY LG CAP GR I (MLAIX) 0.75%
VANG TOT STK MKT IS (VITSX) 0.035%
VANGUARD INST INDEX (VINIX) 0.035%
-Blended-
VANG TARGET RET 2050 (VFIFX) 0.15%
-Bonds-
WF STABLE RETURN Q 0.523%
METWEST TOT RTN BD I (MWTIX) 0.44%
VANG TOT BD MKT ADM (VBTLX) 0.05%
WF GOVT SECS IS (SGVIX) 0.54%

Other investments

Betterment account- 5k in 90/10 stock to bond mix

Vested Company stock (TMUS) 19k

RSU- 33K

check for 100k next week

AZ PORTFOLIO 2033 (FIDELITY FUND PORT) 529 plan- $1,200

Questions:
1. Looking for some suggestions on cleaning up my Wife's portfolio.
2. What should we be doing that we are not doing?
3. What to do with 100k ( would like to maybe put some towards 529 plan and invest rest)


Thanks in advance for any input or suggestions you might have.

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Duckie
Posts: 6074
Joined: Thu Mar 08, 2007 2:55 pm

Re: Lawsuit payout

Post by Duckie » Tue Jul 24, 2018 8:14 pm

v8juice, welcome to the forum.
v8juice wrote:Current retirement assets:

Cash-18k
Why are you holding cash in taxable for retirement purposes?
(SELF) 401k
What are the options? List the fund names, ticker symbols if available, and the plan expense ratios.
(SELF) ROTH IRA
Where is this held, what custodian? What is it currently invested in?
*401k Available funds*
The best options in her plan are:
  • VANG TOT STK MKT (VITSX) 0.035% -- Complete US stocks
  • VANG TOT INTL STK (VTIAX) 0.11% -- Complete international stocks
  • VANG TOT BD MKT (VBTLX) 0.05% -- US bonds
Betterment account- 5k in 90/10 stock to bond mix
This account is going to complicate your portfolio. I'd get rid of it.
Vested Company stock (TMUS) 19k
Can you sell this?
RSU- 33K
Are these vested yet? Can you sell these now?
AZ PORTFOLIO 2033 (FIDELITY FUND PORT) 529 plan- $1,200
Do you already have kids?
Looking for some suggestions on cleaning up my Wife's portfolio.
She should use only the above three options in her 401k. Which ones and in what ratio depend on the rest of the accounts earmarked for retirement.
What should we be doing that we are not doing?
Are you both maxing your retirement accounts? $18.5K to each 401k and $5.5K to each Roth IRA?
What to do with 100k
  1. Fill your emergency fund.
  2. Pay off the car note.
  3. Set aside the $5K to $10K for home renovations.
  4. Invest the rest OR use some of this to live on while maxing tax-sheltered accounts.

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Tue Jul 24, 2018 9:17 pm

Duckie wrote:
Tue Jul 24, 2018 8:14 pm
v8juice, welcome to the forum.
v8juice wrote:Current retirement assets:

Cash-18k
Why are you holding cash in taxable for retirement purposes?
-I think this was a mistake to put under taxable, its just spread across a few savings accounts
(SELF) 401k
What are the options? List the fund names, ticker symbols if available, and the plan expense ratios.
-Im ok with my 401k set up
(SELF) ROTH IRA
Where is this held, what custodian? What is it currently invested in?
-its in betterment, 90/10 stock bond mix in a bunch of different Vanguard ETFS total ER .08
*401k Available funds*
The best options in her plan are:
  • VANG TOT STK MKT (VITSX) 0.035% -- Complete US stocks
  • VANG TOT INTL STK (VTIAX) 0.11% -- Complete international stocks
  • VANG TOT BD MKT (VBTLX) 0.05% -- US bonds
-Thank you for this, its pretty much the direction i thought would be best. is it ok that she is doing Roth contributions?
Betterment account- 5k in 90/10 stock to bond mix
This account is going to complicate your portfolio. I'd get rid of it.
- got it! So move the money else where...
Vested Company stock (TMUS) 19k
Can you sell this?
-Yes I can. would you just roll it into another more diversified portfolio?
RSU- 33K
Are these vested yet? Can you sell these now?
-Nope they vest over the next 3yrs and each year i get more
AZ PORTFOLIO 2033 (FIDELITY FUND PORT) 529 plan- $1,200
Do you already have kids?
-Yes she is 2.5yrs
Looking for some suggestions on cleaning up my Wife's portfolio.
She should use only the above three options in her 401k. Which ones and in what ratio depend on the rest of the accounts earmarked for retirement.
What should we be doing that we are not doing?
Are you both maxing your retirement accounts? $18.5K to each 401k and $5.5K to each Roth IRA?
- we are not, currently only about half of the 401ks and i just started my roth IRA 2 months ago...
What to do with 100k
  1. Fill your emergency fund.
  2. Pay off the car note.
  3. Set aside the $5K to $10K for home renovations.
  4. Invest the rest OR use some of this to live on while maxing tax-sheltered accounts.

User avatar
ram
Posts: 1101
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: Lawsuit payout

Post by ram » Tue Jul 24, 2018 10:04 pm

Duckie gave you very good advice.
Ram

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Tue Jul 24, 2018 10:05 pm

ram wrote:
Tue Jul 24, 2018 10:04 pm
Duckie gave you very good advice.
Great to Hear! thanks!

User avatar
Duckie
Posts: 6074
Joined: Thu Mar 08, 2007 2:55 pm

Re: Lawsuit payout

Post by Duckie » Tue Jul 24, 2018 10:13 pm

v8juice wrote:
Duckie wrote:
v8juice wrote:Cash-18k
Why are you holding cash in taxable for retirement purposes?
-I think this was a mistake to put under taxable, its just spread across a few savings accounts
So this $18K could be considered part of your emergency fund.
-Im ok with my 401k set up
Your 401k has a growth stock fund and a target-date fund. Mixing balanced funds with individual funds is not the best thing.
(SELF) ROTH IRA
Where is this held, what custodian? What is it currently invested in?
-its in betterment, 90/10 stock bond mix in a bunch of different Vanguard ETFS total ER .08
I'd get out of this, too. Move to Vanguard, Fidelity or Schwab.
is it ok that she is doing Roth contributions?
Yes. There are two articles by tfb about this: I think the two of you fall in the second category.
Betterment account- 5k in 90/10 stock to bond mix
This account is going to complicate your portfolio. I'd get rid of it.
- got it! So move the money else where...
Yes. Open a taxable brokerage account at Vanguard, Fidelity or Schwab.
Vested Company stock (TMUS) 19k
Can you sell this?
-Yes I can. would you just roll it into another more diversified portfolio?
Yes. Add it to the taxable brokerage account.
RSU- 33K
Are these vested yet? Can you sell these now?
-Nope they vest over the next 3yrs and each year i get more
Do you plan to sell as soon as allowed?

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Tue Jul 24, 2018 10:36 pm

Duckie wrote:
Tue Jul 24, 2018 10:13 pm
v8juice wrote:
Duckie wrote:
v8juice wrote:Cash-18k
Why are you holding cash in taxable for retirement purposes?
-I think this was a mistake to put under taxable, its just spread across a few savings accounts
So this $18K could be considered part of your emergency fund.
- Not really, its what i use to pay the credit cards and bills, so its not in a dedicated do not touch account.
-Im ok with my 401k set up
Your 401k has a growth stock fund and a target-date fund. Mixing balanced funds with individual funds is not the best thing.
-oh ok I was happy with the returns so far so assumed it was good but here are the available funds
- TRP EQUITY INCOME Large Cap 0.5%
TRP GRTH STK TRUST B Large Cap 0.45%
VANG INST INDEX PLUS (VIIIX) Large Cap 0.02%
AMG TS MID CAP GTH Z (TMDIX) Mid-Cap 0.98%
TRP US MDCP VAL EQ Mid-Cap 0.64%
VANG EXT MKT IDX INS (VIEIX) Mid-Cap 0.06%
CONESTOGA SM CAP IS (CCALX) Small Cap 1.12%
WM BLAIR SM CP VAL I (BVDIX) Small Cap 1.29%
AF EUROPAC GROWTH R6 (RERGX) International 0.49%
DODGE & COX INTL STK (DODFX) International 0.63%
VANG DEV MKT IDX IS (VTMNX) International 0.06%
TRP STABLE VALUE Stable Value 0.194%
LS PLUS FIXED INCOME Income 0.324%
NB HIGH INC BOND R6 (NRHIX) Income 0.62%
VANG TOT BD MKT INST (VBTIX) Income 0.04%
VANG INFL PROT INST (VIPIX) Other 0.07%

(SELF) ROTH IRA
Where is this held, what custodian? What is it currently invested in?
-its in betterment, 90/10 stock bond mix in a bunch of different Vanguard ETFS total ER .08
I'd get out of this, too. Move to Vanguard, Fidelity or Schwab.
is it ok that she is doing Roth contributions?
Yes. There are two articles by tfb about this: I think the two of you fall in the second category.
-Thank you for this will read tonight
Betterment account- 5k in 90/10 stock to bond mix
This account is going to complicate your portfolio. I'd get rid of it.
- got it! So move the money else where...
Yes. Open a taxable brokerage account at Vanguard, Fidelity or Schwab.
Vested Company stock (TMUS) 19k
Can you sell this?
-Yes I can. would you just roll it into another more diversified portfolio?
Yes. Add it to the taxable brokerage account.
RSU- 33K
Are these vested yet? Can you sell these now?
-Nope they vest over the next 3yrs and each year i get more
Do you plan to sell as soon as allowed?
I havent in the past but think its a good idea to do so going forward.

I answered some of your questions above but they are not showing in blue....just so you dont miss those

So New question is when you say open a taxable account at say vanguard, you would just open an account and invest the funds into ETFS similar to those you mentioned for the 401K? and do a mix so that across all accounts you have the desired mix?

I also forgot an account that I just remembered about
Thrift savings plan- 17K
G Fund Government Securities 6.48%
F Fund Fixed Income Index 5.06%
C Fund Common Stock Index 68.84%
S Fund Small Cap Stock Index 14.90%
I Fund International Stock Index 4.72%
---Average expense ratio is .33
Im contributing to this as well but should I increase my 401K and stop contributing to this one?

FoolMeOnce
Posts: 358
Joined: Mon Apr 24, 2017 11:16 am

Re: Lawsuit payout

Post by FoolMeOnce » Tue Jul 24, 2018 10:50 pm

v8juice wrote:
Tue Jul 24, 2018 10:36 pm
So New question is when you say open a taxable account at say vanguard, you would just open an account and invest the funds into ETFS similar to those you mentioned for the 401K? and do a mix so that across all accounts you have the desired mix?
Most people seem to recommend achieving your desired asset allocation by viewing all your accounts as a whole, so all your bonds might be in a 401k while all your international equities are in taxable. Some prefer having each account track the desired allocation, so you will have bonds, US equities, international equities, or anything else in your desired allocation in each account at the desired percentages. That makes things more complicated, though.

Read here: https://www.bogleheads.org/wiki/Asset_a ... e_accounts,

And here: https://www.bogleheads.org/wiki/Tax-eff ... _placement

navyitaly
Posts: 238
Joined: Fri Jun 13, 2014 7:18 am

Re: Lawsuit payout

Post by navyitaly » Tue Jul 24, 2018 11:01 pm

is the settlement $100k or your proceeds net of legal expenses, attorney fees, medical liens $100k..big difference...ie the settlement is closer to $300k..

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BL
Posts: 8458
Joined: Sun Mar 01, 2009 2:28 pm

Re: Lawsuit payout

Post by BL » Tue Jul 24, 2018 11:19 pm

v8juice wrote:
Tue Jul 24, 2018 10:36 pm

I also forgot an account that I just remembered about
Thrift savings plan- 17K
G Fund Government Securities 6.48%
F Fund Fixed Income Index 5.06%
C Fund Common Stock Index 68.84%
S Fund Small Cap Stock Index 14.90%
I Fund International Stock Index 4.72%
---Average expense ratio is .33
Im contributing to this as well but should I increase my 401K and stop contributing to this one?
If you check again, I believe you will find the ER on these funds is 0.033%, about 1/10 of what you quoted.

TSP funds are very low-cost, and well worth investing the maximum. Some would put most of their bonds into the G fund, which is unique.

You don't need to have everything in every account. (If you do, then a single target date fund in each would make sense.) Vanguard's Total International has a more complete fund than this one.

User avatar
Duckie
Posts: 6074
Joined: Thu Mar 08, 2007 2:55 pm

Re: Lawsuit payout

Post by Duckie » Wed Jul 25, 2018 12:09 am

v8juice wrote:
Duckie wrote:
v8juice wrote:-Im ok with my 401k set up
Your 401k has a growth stock fund and a target-date fund. Mixing balanced funds with individual funds is not the best thing.
-oh ok I was happy with the returns so far so assumed it was good but here are the available funds
The best options are:
  • VANG INST INDEX (VIIIX) 0.02% -- Large caps, 80% of US stocks
  • VANG EXT MKT INDEX (VIEIX) 0.06% -- Mid/small caps, 20% of US stocks
  • VANG DEV MKT INDEX (VTMNX) 0.06% -- Developed markets, 80% of international stocks
  • VANG TOT BD MKT INDEX (VBTIX) 0.04% -- US bonds
Since your wife has a Roth 401k it would be better if her account held stocks and you had the bonds in your pre-tax 401k and TSP.
New question is when you say open a taxable account at say vanguard, you would just open an account and invest the funds into ETFS similar to those you mentioned for the 401K? and do a mix so that across all accounts you have the desired mix?
Either ETFs or mutual funds are fine. The best options in a taxable account are a total US stock market index fund and a total international stock market index fund. If you need bonds in taxable (and you don't) then a tax-exempt muni bond fund would be suitable.
I also forgot an account that I just remembered about
Thrift savings plan- 17K
<snip>
Im contributing to this as well but should I increase my 401K and stop contributing to this one?
Keep contributing to the TSP. I'd put it all in the G Fund.

It looks like you have:
  • Taxable -- $74K ($50K lawsuit remainder + liquidated $5K Betterment & $19K company stock)
  • His 401k -- $43K
  • His TSP -- $17K
  • Her Roth 401k -- $39K
  • His Roth IRA -- $2K
By "lawsuit remainder" I mean what's left after setting up your emergency fund, paying off the car note, and budgeting the home renovations.

What is your desired Asset allocation across all accounts earmarked for retirement?

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Wed Jul 25, 2018 11:29 am

navyitaly wrote:
Tue Jul 24, 2018 11:01 pm
is the settlement $100k or your proceeds net of legal expenses, attorney fees, medical liens $100k..big difference...ie the settlement is closer to $300k..
Yep proceeds after everything is 100K

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Wed Jul 25, 2018 11:41 am

Duckie wrote:
Wed Jul 25, 2018 12:09 am
v8juice wrote:
Duckie wrote:
v8juice wrote:-Im ok with my 401k set up
Your 401k has a growth stock fund and a target-date fund. Mixing balanced funds with individual funds is not the best thing.
-oh ok I was happy with the returns so far so assumed it was good but here are the available funds
The best options are:
  • VANG INST INDEX (VIIIX) 0.02% -- Large caps, 80% of US stocks
  • VANG EXT MKT INDEX (VIEIX) 0.06% -- Mid/small caps, 20% of US stocks
  • VANG DEV MKT INDEX (VTMNX) 0.06% -- Developed markets, 80% of international stocks
  • VANG TOT BD MKT INDEX (VBTIX) 0.04% -- US bonds
Since your wife has a Roth 401k it would be better if her account held stocks and you had the bonds in your pre-tax 401k and TSP.
-So would this change the funds that I choose in her account from what you mentioned yesterday? So in my 401K I would change to most in the VBTIX and hers would be most in the stock funds you mentioned.
New question is when you say open a taxable account at say vanguard, you would just open an account and invest the funds into ETFS similar to those you mentioned for the 401K? and do a mix so that across all accounts you have the desired mix?
Either ETFs or mutual funds are fine. The best options in a taxable account are a total US stock market index fund and a total international stock market index fund. If you need bonds in taxable (and you don't) then a tax-exempt muni bond fund would be suitable.
I also forgot an account that I just remembered about
Thrift savings plan- 17K
<snip>
Im contributing to this as well but should I increase my 401K and stop contributing to this one?
Keep contributing to the TSP. I'd put it all in the G Fund.
-So the TSP is treated like a 401K? does what i contribute to that count towards the 18.5k max for 401K or is it per account?

It looks like you have:
  • Taxable -- $74K ($50K lawsuit remainder + liquidated $5K Betterment & $19K company stock)
  • His 401k -- $43K
  • His TSP -- $17K
  • Her Roth 401k -- $39K
  • His Roth IRA -- $2K
By "lawsuit remainder" I mean what's left after setting up your emergency fund, paying off the car note, and budgeting the home renovations.

What is your desired Asset allocation across all accounts earmarked for retirement?
- from what i have been reading, for right now it looks like the 80/20 split is a good spot to be for the next while.
Answers are up in the yellow again
Also want to thank you so much for this help!

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Duckie
Posts: 6074
Joined: Thu Mar 08, 2007 2:55 pm

Re: Lawsuit payout

Post by Duckie » Wed Jul 25, 2018 7:16 pm

v8juice wrote:
Duckie wrote:Since your wife has a Roth 401k it would be better if her account held stocks and you had the bonds in your pre-tax 401k and TSP.
-So would this change the funds that I choose in her account from what you mentioned yesterday? So in my 401K I would change to most in the VBTIX and hers would be most in the stock funds you mentioned.
See below.
Keep contributing to the TSP. I'd put it all in the G Fund.
-So the TSP is treated like a 401K? does what i contribute to that count towards the 18.5k max for 401K or is it per account?
Yes, the TSP is very similar to a 401k. The $18.5K max is total. TSP, 401k, and 403b plans all have a combined $18.5K total. A 457b plan on the other hand is an extra $18.5K.
What is your desired Asset allocation across all accounts earmarked for retirement?
- from what i have been reading, for right now it looks like the 80/20 split is a good spot to be for the next while.
You have a desired AA of 80 stocks, 20% bonds, and unknown international. I'll pick 30% of stocks in international for the following example. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. You could have:

Taxable at Vanguard -- $74K -- 42%
42% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

His 401k -- $43K -- 25%
12% (VIIIX) Vanguard Institutional Index Fund Institutional Plus Shares (0.02%)
3% (VIEIX) Vanguard Extended Market Index Fund Institutional Shares (0.06%) <--This could be skipped.
10% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

His Thrift Savings Plan -- $17K -- 10%
10% (N/A) G Fund (0.033%)

Her Roth 401k -- $39K -- 22%
22% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His Roth IRA at Vanguard -- $2K -- 1%
1% (VLXVX) Vanguard Target Retirement 2065 Fund (0.15%) <--Because of fund minimums. Once this hits $3K swap out for:
1% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.17%)

Something to think about.

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Thu Jul 26, 2018 10:50 am

Duckie wrote:
Wed Jul 25, 2018 7:16 pm
v8juice wrote:
Duckie wrote:Since your wife has a Roth 401k it would be better if her account held stocks and you had the bonds in your pre-tax 401k and TSP.
-So would this change the funds that I choose in her account from what you mentioned yesterday? So in my 401K I would change to most in the VBTIX and hers would be most in the stock funds you mentioned.
See below.
Keep contributing to the TSP. I'd put it all in the G Fund.
-So the TSP is treated like a 401K? does what i contribute to that count towards the 18.5k max for 401K or is it per account?
Yes, the TSP is very similar to a 401k. The $18.5K max is total. TSP, 401k, and 403b plans all have a combined $18.5K total. A 457b plan on the other hand is an extra $18.5K.
What is your desired Asset allocation across all accounts earmarked for retirement?
- from what i have been reading, for right now it looks like the 80/20 split is a good spot to be for the next while.
You have a desired AA of 80 stocks, 20% bonds, and unknown international. I'll pick 30% of stocks in international for the following example. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. You could have:

Taxable at Vanguard -- $74K -- 42%
42% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

His 401k -- $43K -- 25%
12% (VIIIX) Vanguard Institutional Index Fund Institutional Plus Shares (0.02%)
3% (VIEIX) Vanguard Extended Market Index Fund Institutional Shares (0.06%) <--This could be skipped.
10% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

His Thrift Savings Plan -- $17K -- 10%
10% (N/A) G Fund (0.033%)

Her Roth 401k -- $39K -- 22%
22% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His Roth IRA at Vanguard -- $2K -- 1%
1% (VLXVX) Vanguard Target Retirement 2065 Fund (0.15%) <--Because of fund minimums. Once this hits $3K swap out for:
1% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.17%)

Something to think about.
Hey I appreciate this so so much! It definitely provides me with a good example and visual way to understand. Thank you so much for your help on that.

Last question I promise...
The 529 plan, would you allocate any of this to that or invest a little each month?

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Duckie
Posts: 6074
Joined: Thu Mar 08, 2007 2:55 pm

Re: Lawsuit payout

Post by Duckie » Thu Jul 26, 2018 6:57 pm

v8juice wrote:The 529 plan, would you allocate any of this to that or invest a little each month?
I'm not sure what you mean when you write "would you allocate any of this to that". The 529 is not part of your retirement portfolio and has a different purpose and time frame. If you mean you want to put some of the $100K in the 529 plan and reduce the 42% taxable at Vanguard, that's fine. Just don't put too much there. Your retirement has a higher priority than your child's college education. As someone once said, "You can borrow for college, you can't borrow for retirement."

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ruralavalon
Posts: 14277
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Location: Illinois

Re: Lawsuit payout

Post by ruralavalon » Thu Jul 26, 2018 7:28 pm

v8juice wrote:
Tue Jul 24, 2018 12:53 pm
Hey everyone,
I recently came across this site in my quest to ensure that I am on the right track with my finances. So the situation that I find myself in is that we recently received a settlement from a lawsuit for $100k tax free because of it being for a personal injury. So now I am trying to decide what the best thing to do with it would be. I have been reading about different things to do but thought I would post on here and see what you all have to say considering my current financial state. I anticipate spending about 5-10K on some home renovations that my wife wants to do.


Emergency funds : no ( but know thats the first thing to do)
Debt: 7K car loan 2.64% Currently paying $1k a month to get it paid off, $264K Mortgage 3.2%
Tax Filing Status: married
Tax Rate: 22% Fed, 4.24% State
State of Residence: AZ
Age: 30

Current retirement assets:

Cash-18k,

(SELF) 401k- 43k
71.81% TRP GRTH STK TRUST B
28.19% TRP RETIRE 2050 C
Company match: 5%
Current contribution: 10%

(SELF) ROTH IRA- $1,800
Just started a few months ago contributing $458.33 each month

(Spouse) Roth 401K- 39K
23.77 VINIX ER .O35
23.52 DODGX ER .52
18.23 RERGX ER .49
12.7 MWTIX ER .44
9.37 BSFIX ER 1.05
8.11 JVMRX ER .77
4.29 WF STABLE RETURN Q ER .523
Company match: 4%
Current contribution: 15%

*401k Available funds*

-International Global-
AF EUROPAC GROWTH R6 (RERGX) 0.49%
VANG TOT INTL STK AD (VTIAX) 0.11%
-Small Cap-
BARON SMALL CAP INST (BSFIX) 1.05%
VANG SM CAP IDX INST (VSCIX) 0.04%
VICTORY S SM CO OP I (VSOIX)0.9%
-Mid Cap-
JH DSCPL VAL MDCP R6 (JVMRX) 0.77%
JPM MID CAP GRTH R6 (JMGMX) 0.76%
-Large Cap-
DODGE & COX STOCK (DODGX) 0.52%
MAINSTAY LG CAP GR I (MLAIX) 0.75%
VANG TOT STK MKT IS (VITSX) 0.035%
VANGUARD INST INDEX (VINIX) 0.035%
-Blended-
VANG TARGET RET 2050 (VFIFX) 0.15%
-Bonds-
WF STABLE RETURN Q 0.523%
METWEST TOT RTN BD I (MWTIX) 0.44%
VANG TOT BD MKT ADM (VBTLX) 0.05%
WF GOVT SECS IS (SGVIX) 0.54%

Other investments

Betterment account- 5k in 90/10 stock to bond mix

Vested Company stock (TMUS) 19k

RSU- 33K

check for 100k next week

AZ PORTFOLIO 2033 (FIDELITY FUND PORT) 529 plan- $1,200

Questions:
1. Looking for some suggestions on cleaning up my Wife's portfolio.
2. What should we be doing that we are not doing?
3. What to do with 100k ( would like to maybe put some towards 529 plan and invest rest)


Thanks in advance for any input or suggestions you might have.
A little more information would be helpful.

Is there a reason your spouse does not have an IRA?

How much would it take in an emergency fund to cover 3 months of basic living expenses?

How stable are your jobs, your employers, and the industries you each work in?

How much (in dollars) are you each contributing annually to the 401ks?

Will either or both of you be eligible for a significant pension?

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

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Thu Aug 09, 2018 4:31 pm

Duckie wrote:
Wed Jul 25, 2018 7:16 pm
v8juice wrote:
Duckie wrote:Since your wife has a Roth 401k it would be better if her account held stocks and you had the bonds in your pre-tax 401k and TSP.
-So would this change the funds that I choose in her account from what you mentioned yesterday? So in my 401K I would change to most in the VBTIX and hers would be most in the stock funds you mentioned.
See below.
Keep contributing to the TSP. I'd put it all in the G Fund.
-So the TSP is treated like a 401K? does what i contribute to that count towards the 18.5k max for 401K or is it per account?
Yes, the TSP is very similar to a 401k. The $18.5K max is total. TSP, 401k, and 403b plans all have a combined $18.5K total. A 457b plan on the other hand is an extra $18.5K.
What is your desired Asset allocation across all accounts earmarked for retirement?
- from what i have been reading, for right now it looks like the 80/20 split is a good spot to be for the next while.
You have a desired AA of 80 stocks, 20% bonds, and unknown international. I'll pick 30% of stocks in international for the following example. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. You could have:

Taxable at Vanguard -- $74K -- 42%
42% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

His 401k -- $43K -- 25%
12% (VIIIX) Vanguard Institutional Index Fund Institutional Plus Shares (0.02%)
3% (VIEIX) Vanguard Extended Market Index Fund Institutional Shares (0.06%) <--This could be skipped.
10% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

His Thrift Savings Plan -- $17K -- 10%
10% (N/A) G Fund (0.033%)

Her Roth 401k -- $39K -- 22%
22% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His Roth IRA at Vanguard -- $2K -- 1%
1% (VLXVX) Vanguard Target Retirement 2065 Fund (0.15%) <--Because of fund minimums. Once this hits $3K swap out for:
1% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.17%)

Something to think about.
All right so I have received the money and here is what I have done so far...
Taxable at vanguard-- 50K in VTSAX
His 401K--- 17.5k VBTIX 26K VIIIX
TSP--- 17k G fund
Her Roth 401k---39K VTIAX
emergency find---15k

Now I still have the 21K in company stock as we saw a really good increase the last week and expected to keep going so holding that for a bit longer then will sell and move to Vanguard taxable. I also have not moved everything into the Vanguard account just yet, probably will move over another 20-25K in to the VTSAX. Next step would be to fund our both our Roth IRA'S fully for this year, now what kind of funds would I want in those? I would contribute the full $5500 each year. Thanks

User avatar
Duckie
Posts: 6074
Joined: Thu Mar 08, 2007 2:55 pm

Re: Lawsuit payout

Post by Duckie » Thu Aug 09, 2018 5:48 pm

v8juice wrote:Next step would be to fund our both our Roth IRA'S fully for this year, now what kind of funds would I want in those?
Vanguard Total International Stock up to the 24% (or whatever is desired) AA and then Vanguard Total Stock Market.

v8juice
Posts: 9
Joined: Tue Jul 24, 2018 11:18 am

Re: Lawsuit payout

Post by v8juice » Fri Aug 10, 2018 11:09 am

perfect thank you!

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