Distribution taxes

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skibikerun
Posts: 2
Joined: Mon Sep 09, 2019 9:46 pm

Distribution taxes

Post by skibikerun » Mon Sep 09, 2019 10:14 pm

First time poster here. I pay myself salary and distributions and save approximately 30% of distributions for taxes. I'd love to simplify my life and set this 30% aside in as high-yield an account as possible. Short term, so I don't really want to put it in anything really volatile, but I'm thinking a high yield savings account or money market. Not expecting to get anything more than 2.5%. This will help me separate my accounts and not accidentally touch anything until it's time. Thoughts or suggestions?

Silk McCue
Posts: 2875
Joined: Thu Feb 25, 2016 7:11 pm

Re: Distribution taxes

Post by Silk McCue » Tue Sep 10, 2019 7:21 am

Welcome to Bogleheads!

There is no complex analysis needed here. You should do exactly what you propose.

Cheers

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Wiggums
Posts: 1372
Joined: Thu Jan 31, 2019 8:02 am

Re: Distribution taxes

Post by Wiggums » Tue Sep 10, 2019 7:44 am

Silk McCue wrote:
Tue Sep 10, 2019 7:21 am
Welcome to Bogleheads!

There is no complex analysis needed here. You should do exactly what you propose.

Cheers
I agree.

I have some short term money in the Vanguard money market, capital one 360 and Ally. Just hunt around for the terms that are right for you. Credit Unions often have good rates.

Good luck to you.

Cyanide123
Posts: 160
Joined: Sun May 05, 2019 9:14 am

Re: Distribution taxes

Post by Cyanide123 » Tue Sep 10, 2019 9:54 am

If you want the highest rate, vio bank which is the online division of midfirst Bank offers 2.52% right now.

Ally interface is better but apy at 1.9.

Discover is a really nice 0 fee for everything online bank that has a 2.0 percent apy right now.

No brainier though about putting that money in a high yield savings until taxes are due

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Stinky
Posts: 1724
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Distribution taxes

Post by Stinky » Tue Sep 10, 2019 3:00 pm

skibikerun wrote:
Mon Sep 09, 2019 10:14 pm
First time poster here. I pay myself salary and distributions and save approximately 30% of distributions for taxes. I'd love to simplify my life and set this 30% aside in as high-yield an account as possible. Short term, so I don't really want to put it in anything really volatile, but I'm thinking a high yield savings account or money market. Not expecting to get anything more than 2.5%. This will help me separate my accounts and not accidentally touch anything until it's time. Thoughts or suggestions?
Welcome to the Forum! Glad that you found us.

I'm fine with putting the money in a money market fund or high yield savings. You definitely don't want anything more volatile.

I presume that you're paying quarterly estimated taxes. If so, realize that your interest income will be pretty nominal, because you're cleaning out the account with every quarterly tax payment. But that's no reason not to do what you're talking about. (That's what I do. :happy )

Best of luck to you.
It's a GREAT day to be alive - Travis Tritt

Topic Author
skibikerun
Posts: 2
Joined: Mon Sep 09, 2019 9:46 pm

Re: Distribution taxes

Post by skibikerun » Tue Sep 10, 2019 10:21 pm

Thanks all! Just nice to have some extra confidence in your steps!

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