Starting towards Fi late- Portfolio help

[Finiamh]

Emergency funds: Yes, at least three months

Debt: Only car loan $14k 6.29% and Mortgage $125.5k 3.875%

Tax Filing Status: Head of household (divorced)

Tax Rate: 24% Federal

State of Residence: TX

Age: 49

Desired Asset Allocation: 80% Total stocks 10% Bonds 10% Cash open to suggestions

Desired International Allocation: none

Total Portfolio Size: Approximately $98k yes I know


Taxable brokerage

0.2% FSKAX FIDELITY TOTAL MARKET INDEX FUND 0.015%

Work 401k Fidelity
63% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
Company match? Yes, 6% if he contributes 6%,. Currently contributing 10% as of recently.

401k Brokerage Link
24.9% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
0.04% VANGUARD BALANCED INDEX ADMIRAL VBIAX (.07%)
6.3% Cash FDRXX

Rollover IRA
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)




Funds available in his 401(k)
US LG CAP GRTH STOCK
FID 500 INDEX (FXAIX)
BP LG CAP VAL EQ CIT
LOOMIS S/MID CP GR N (LSMNX)
VANG IS EXT MKT IDX
DFA US TARGET VAL I (DFFVX)
AF EUROPAC GROWTH R6 (RERGX)
VG IS TL INTL STK MK
DODGE & COX BAL X (DOXBX)
*Various VANGUARD TARGET funds*
VANGUARD TARGET INC
JH CR PL FXD INC P1
VG IS TOT BD MKT IDX
GALLIARD MGD INC MC



Notes: I'll be starting to max Trad IRA fast starting this month for the year.


Questions:
Starting this late to try for any kind of Fi


I have done a bit from previous suggestions already

1. How do I get my allocation efficiently across current accounts?

2. What bucket(s) get most attention next, other than maxing Trad IRA.

3. Anything else I am not thinking of?

[retired@50]

Emergency funds: Yes, at least three months

Debt: Only car loan $14k 6.29% and Mortgage $125.5k 3.875%

Tax Filing Status: Heal of household (divorced)

Tax Rate: 24% Federal

State of Residence: TX

Age: 49

Desired Asset Allocation: Aggressive JL Collins style of only 500Index, bonds later, No Intls

Desired International Allocation: none

Total Portfolio Size: Approximately $98k yes I know

Taxable

0.2% FDGFX FIDELITY DIVIDEND GROWTH (0.78)

Work 401k Fidelity
63% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
Company match? Yes, 6% if he contributes 6%,. Currently contributing 10% as of recently.

401k Brokerage Link
24.9% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
0.04% VANGUARD BALANCED INDEX ADMIRAL VBIAX (.07%)
6.3% Cash FDRXX

Rollover IRA
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Notes: I'll be starting to max Trad IRA fast starting this month for the year.

Questions:
Starting this late to try for any kind of Fi

1. What am I doing right?

2. What am I doing wrong?

3. I will have enough coming soon to payoff car plus, should I?

4. Didn't start 529 for kiddo and they are a low teen already, what can I do after I get myself settled more to help them in some way?

1. Saving for retirement.

2. a. Holding a high expense ratio dividend fund in your taxable account. Switch it to FSKAX.
2. b. You're also holding cash and a balanced fund (which contains bonds) in your 401k, which goes against your desired asset allocation. However, I think being 100% US stock at your age is unwise, so what do I know...

3. Yes. 6.29% interest for a car is too much.

4. You can fund your own retirement so you're not a burden to your child during your retirement. Paying for college shouldn't be entering your mind with your level of savings. Counsel the child to consider the first two years at a community college, then transfer to a state school. You can also have your child ask about scholarships. Discuss this with the counselors in high school. Learn about your financial aid options.

Regards,

[Finiamh]

Thank you retired@50

I switched FSKAX and removed the kiddo question. Your answer helped.

What is your suggestion for not all stocks 'at my age'? I actually sold most of the balanced fund that was in there as it had a high expense and wanted it doing something else until I figured out what more to do.

[my2p]

You can google and listen to this podcast: "BiggerPockets Money: The Late Starter’s Guide to Financial Independence (Even in Your 50s!)".

Also, check out this Choose FI video "Is it too Late? | NOTHING Saved For Retirement at 50!": https://www.youtube.com/watch?v=FA40xllqAgk

[Finiamh]

You can google and listen to this podcast: "BiggerPockets Money: The Late Starter’s Guide to Financial Independence (Even in Your 50s!)".

Also, check out this Choose FI video "Is it too Late? | NOTHING Saved For Retirement at 50!": https://www.youtube.com/watch?v=FA40xllqAgk

Got them saved to listen to.

Keep suggestions coming

[Wannaretireearly]

Better late than never. Posting here is a great first step. Stick with the thread and I’m sure you’ll find value and determine next steps.

Good luck!

[Finiamh]

Emergency funds: Yes, at least three months

Debt: Only car loan $14k 6.29% and Mortgage $125.5k 3.875%

Tax Filing Status: Heal of household (divorced)

Tax Rate: 24% Federal

State of Residence: TX

Age: 49

Desired Asset Allocation: Aggressive JL Collins style of only 500Index, bonds later, No Intls

Desired International Allocation: none

Total Portfolio Size: Approximately $98k yes I know

Taxable

0.2% FDGFX FIDELITY DIVIDEND GROWTH (0.78)

Work 401k Fidelity
63% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
Company match? Yes, 6% if he contributes 6%,. Currently contributing 10% as of recently.

401k Brokerage Link
24.9% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
0.04% VANGUARD BALANCED INDEX ADMIRAL VBIAX (.07%)
6.3% Cash FDRXX

Rollover IRA
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Notes: I'll be starting to max Trad IRA fast starting this month for the year.

Questions:
Starting this late to try for any kind of Fi

1. What am I doing right?

2. What am I doing wrong?

3. I will have enough coming soon to payoff car plus, should I?

4. Didn't start 529 for kiddo and they are a low teen already, what can I do after I get myself settled more to help them in some way?

1. Saving for retirement.

2. a. Holding a high expense ratio dividend fund in your taxable account. Switch it to FSKAX.
2. b. You're also holding cash and a balanced fund (which contains bonds) in your 401k, which goes against your desired asset allocation. However, I think being 100% US stock at your age is unwise, so what do I know...

3. Yes. 6.29% interest for a car is too much.

4. You can fund your own retirement so you're not a burden to your child during your retirement. Paying for college shouldn't be entering your mind with your level of savings. Counsel the child to consider the first two years at a community college, then transfer to a state school. You can also have your child ask about scholarships. Discuss this with the counselors in high school. Learn about your financial aid options.

Regards,

Tell me more!

[retired@50]

Tell me more!

The way I see it, you've got two basic issues to solve.

1. Funding your own retirement.
2. Getting your kid through college.

As for funding your own retirement, you know you're a bit behind schedule. So, the natural reaction is to try to "catch up". Usually people in this predicament choose to use an overly aggressive asset allocation and hope for the best. It might work, it might not. My approach would be to save more, and invest in an asset allocation that didn't force me to worry. Since asset allocation decisions are personal, I can't really tell you what to do, so I'll point you to some resources that might help.

Wiki page on asset allocation: https://www.bogleheads.org/wiki/Asset_allocation

Vanguard investor questionnaire: https://retirementplans.vanguard.com/VG ... Step=start
The Vanguard link will ask a series of questions, trying to tease out your feelings about risk and return. Once the quiz is concluded, they will make a recommendation about asset allocation based on your answers.

As for getting your kid through college, there are lots of resources to help people who cannot afford college. Look into them. Have your kid look into them. Start asking questions now, so it will seem like "old hat" by the time freshmen year rolls around. Don't be left flat footed, wondering how you missed out on some scholarship money when all your kid would have to do is write a paper about why they want to attend college.

At the moment, you're not in a financial position to pay for college, and if you do, you'll be putting your own retirement in jeopardy. Remember, there are student loans, but there are no retirement loans.

By enabling yourself to live independently in your golden years, this will be a gift to your kid.

Regards,

[ruralavalon]

Welcome to the forum .

Yes, pay off the car loan.

About how much (in dollars) do you believe that you may be able to contribute annually to investing (total, all accounts)?

In my opinion a high rate of contributions is a better strategy for playing catch up, rather than a an aggressive and risky portfolio.

Age 49 is not too late. You can still make a real difference with a good rate of contributions, good diversification with low investing expenses, and tax efficiency.

[DIYtrixie]

By enabling yourself to live independently in your golden years, this will be a gift to your kid.

+1. Securing your own financial stability in your old age is a far greater gift to your child than helping to cover their college costs.

[Finiamh]

Thank you all for the input!

With your help I have rearranged my allocation desires and would like information on that now. Plus other questions have been answered.

Etiquette wise should I do a new post?

[retired@50]

Etiquette wise should I do a new post?

No, you can just edit the original post.

You may want to keep some of the original remarks intact and show the edits, but that's not really "required".

Regards,

[ruralavalon]

About how much (in dollars) do you believe that you may be able to contribute annually to investing (total, all accounts)?

Thank you all for the input!

With your help I have rearranged my allocation desires and would like information on that now. Plus other questions have been answered.

Etiquette wise should I do a new post?

You can simply add this 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.

[Finiamh]

About how much (in dollars) do you believe that you may be able to contribute annually to investing (total, all accounts)?

Thank you all for the input!

With your help I have rearranged my allocation desires and would like information on that now. Plus other questions have been answered.

Etiquette wise should I do a new post?

You can simply add this 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.

Done, and thank all of you again!

[Finiamh]

[Thread merged into here --admin LadyGeek]

After some help here, I have a rearranged ask:

Emergency funds: 3 months

Debt: Mortgage $125.5k 3.875%

Tax Filing Status: Head of household (divorced)

Tax Rate: 24% Federal

State of Residence: TX

Age: 49

Desired Asset Allocation: 75% stocks 20% Bonds 5% Cash? Open to suggestions

Desired International Allocation: none

Total Portfolio Size: Approximately $98k



Taxable brokerage $200
0.2% FSKAX FIDELITY TOTAL MARKET INDEX FUND 0.015%

Work 401k Fidelity $62.5k
63% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Company match? Yes, 6% if he contributes 6%,. Currently contributing 10% as of recently.

401k Brokerage Link $24.9k
24.9% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
6.3% Cash FDRXX

Rollover IRA $11.4k
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity $100
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)




Funds available in his 401(k)

US LG CAP GRTH STOCK .328

FID 500 INDEX (FXAIX) .015

VG IS TOT BD MKT IDX .027

BP LG CAP VAL EQ CIT 0.5

LOOMIS S/MID CP GR N (LSMNX) 0.8

VANG IS EXT MKT IDX .037

DFA US TARGET VAL I (DFFVX) 0.29

AF EUROPAC GROWTH R6 (RERGX) 0.47

VG IS TL INTL STK MK .065

DODGE & COX BAL X (DOXBX) 0.42

*Various VANGUARD TARGET funds*
VANGUARD TARGET INC 0.065

JH CR PL FXD INC P1 0.17

GALLIARD MGD INC MC 0.34



Notes: I'll be starting to max Trad IRA


Questions:

1. Best rebalance act?

2. Do I need Brokerage Link anymore? Company waves annual fee

3. Possibly coming into about $20k from inheritance, if I do, what should I do with it?

4. Anything else I am not thinking of?

[retired@50]

Questions:

1. Best rebalance act?

2. Do I need Brokerage Link anymore? Company waves annual fee

3. Possibly coming into about $20k from inheritance, if I do, what should I do with it?

4. Anything else I am not thinking of?

1. Put the bond allocation you desire (20%) in the "Work 401k" since that's the biggest account, you'll be able to re-balance inside that account with no tax consequences. For your bond fund in that plan, I'd use "VG IS TOT BD MKT IDX .027". This is probably the institutional version of Vanguard's total bond market index fund.
To accomplish this, you'll need to sell some of the S&P 500 fund FXAIX in the "Work 401k" and use the proceeds to buy the bond fund, also in the "Work 401k".

2. I don't know. Is Brokerage Link from a former employer, or is it part of your current 401k plan?

3. Worry about that when it happens. If it does, you could indirectly put it into your retirement savings by upping your contribution rate to the 401k plan unless or until you've hit the annual maximum. Since upping the contribution rate at work will shrink your paycheck by a bit, you could tap into the inheritance money for living expenses, if necessary.

4. Nothing jumps out at me.

Edit: typo.

Regards,

[lakpr]

Lose your mortgage asap. As "Head of Household", your standard deduction in 2024 is $21,900. But the mortgage interest is only $4,863. Add the SALT limit, your itemized deductions are $14,863. So you will be taking the standard deduction on your tax return.

In other words, just to break even on the 3.875% rate being charged by your mortgage, you need to earn 3.875%/ ( 1 - 24% ) = 5.09% on your investments.

Until recently, that would have been a neutral proposition with T-bills yielding about 5%. But after the Fed's rate cut, most of those yields are dropping, and I'd be hard pressed to find any CD yielding more than 4.5%.

You are also indicating a desire to invest 20% in bond funds. The Total Bond Fund's yield as of today is 3.99%. In other words, if you invest 20% of your portfolio in bond funds, you are in effect borrowing from your home at 5%, then turning around and lending that same money at 4% (both yields in pretax terms). Instead, calculate your total intended annual contributions, and then prepay your mortgage by 20% of that amount. You are and will be assuming the same exact risk, but you are getting higher returns.

[Finiamh]

You are also indicating a desire to invest 20% in bond funds. The Total Bond Fund's yield as of today is 3.99%. In other words, if you invest 20% of your portfolio in bond funds, you are in effect borrowing from your home at 5%, then turning around and lending that same money at 4% (both yields in pretax terms). Instead, calculate your total intended annual contributions, and then prepay your mortgage by 20% of that amount. You are and will be assuming the same exact risk, but you are getting higher returns.

Thank you! Should I reconsider the 20% in general?

[Finiamh]

Questions:

1. Best rebalance act?

2. Do I need Brokerage Link anymore? Company waves annual fee

3. Possibly coming into about $20k from inheritance, if I do, what should I do with it?

4. Anything else I am not thinking of?

1. Put the bond allocation you desire (20%) in the "Work 401k" since that's the biggest account, you'll be able to re-balance inside that account with no tax consequences. For your bond fund in that plan, I'd use "VG IS TOT BD MKT IDX .027". This is probably the institutional version of Vanguard's total bond market index fund.
To accomplish this, you'll need to sell some of the S&P 500 fund FXAIX in the "Work 401k" and use the proceeds to buy the bond fund, also in the "Work 401k".

2. I don't know. Is Brokerage Link from a former employer, or is it part of your current 401k plan?

3. Worry about that when it happens. If it does, you could indirectly put it into your retirement savings by upping your contribution rate to the 401k plan unless or until you've hit the annual maximum. Since upping the contribution rate at work will shrink your paycheck by a bit, you could tap into the inheritance money for living expenses, if necessary.

4. Nothing jumps out at me.

Edit: typo.

Regards,

Thank you!!!

Brokerage Link is with current 401k. Was thinking either going all back to 401k or going all Brokerage Link to simplify things.

That might affect your answer for #1 as well if I go all Brokerage Link.

[lakpr]

You are also indicating a desire to invest 20% in bond funds. The Total Bond Fund's yield as of today is 3.99%. In other words, if you invest 20% of your portfolio in bond funds, you are in effect borrowing from your home at 5%, then turning around and lending that same money at 4% (both yields in pretax terms). Instead, calculate your total intended annual contributions, and then prepay your mortgage by 20% of that amount. You are and will be assuming the same exact risk, but you are getting higher returns.

Thank you! Should I reconsider the 20% in general?

I usually go by the thumb rule of "Age-20" in bonds, so by that yardstick you should be at 70:30. Then again, the amount you intend to invest in fixed income is up to your risk tolerance. 20% in bonds is a reasonable starting point ...

[HomeStretch]

… Notes: I'll be starting to max Trad IRA …

Your TIRA contribution will likely not be deductible.

… Rollover IRA $11.4k
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity $100
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%) …

Do you have any basis in your current TIRA balances? This is reported on Form 8606.

Your 401k plan has good low-ER funds. If it accepts rollovers in, consider rolling your pretax TIRA balances into the plan. This will allow you to do an annual backdoor Roth (see BH wiki page link, below) which is a conversion of a non-deductible TIRA contribution to a Roth IRA. The Roth IRA will grow tax free. If not familiar with it, read the wiki section on Form 8606 closely.
https://www.bogleheads.org/wiki/Backdoor_Roth

[retired@50]

Brokerage Link is with current 401k. Was thinking either going all back to 401k or going all Brokerage Link to simplify things.

That might affect your answer for #1 as well if I go all Brokerage Link.

Given the fact that your normal 401k choices are decent, I'd just use them.

Funds available in his 401(k)

FID 500 INDEX (FXAIX) .015

VG IS TOT BD MKT IDX .027

VANG IS EXT MKT IDX .037

VG IS TL INTL STK MK .065

I would limit myself to the choices listed above.

Regards,

[LadyGeek]

Finiamh - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.

(Thanks to the member who reported the post and provided a link to this thread.)

[ruralavalon]

How much (in dollars) do you believe that you might be able to contribute annually (total, all accounts)?

Emergency funds: Yes, at least three months

Debt: Only car loan $14k 6.29% and Mortgage $125.5k 3.875%

Tax Filing Status: Head of household (divorced)

Tax Rate: 24% Federal

State of Residence: TX

Age: 49

Desired Asset Allocation: 80% Total stocks 10% Bonds 10% Cash open to suggestions

Desired International Allocation: none

Total Portfolio Size: Approximately $98k yes I know


Taxable brokerage

0.2% FSKAX FIDELITY TOTAL MARKET INDEX FUND 0.015%

Work 401k Fidelity
63% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
Company match? Yes, 6% if he contributes 6%,. Currently contributing 10% as of recently.

401k Brokerage Link
24.9% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)
0.04% VANGUARD BALANCED INDEX ADMIRAL VBIAX (.07%)
6.3% Cash FDRXX

Rollover IRA
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)




Funds available in his 401(k)
US LG CAP GRTH STOCK
FID 500 INDEX (FXAIX)
BP LG CAP VAL EQ CIT
LOOMIS S/MID CP GR N (LSMNX)
VANG IS EXT MKT IDX
DFA US TARGET VAL I (DFFVX)
AF EUROPAC GROWTH R6 (RERGX)
VG IS TL INTL STK MK
DODGE & COX BAL X (DOXBX)
*Various VANGUARD TARGET funds*
VANGUARD TARGET INC
JH CR PL FXD INC P1
VG IS TOT BD MKT IDX
GALLIARD MGD INC MC



Notes: I'll be starting to max Trad IRA fast starting this month for the year.


Questions:
Starting this late to try for any kind of Fi


I have done a bit from previous suggestions already

1. How do I get my allocation efficiently across current accounts?

2. What bucket(s) get most attention next, other than maxing Trad IRA.

3. Anything else I am not thinking of?

Your employer's 401k plan offers excellent, very diversifed index funds with low expense ratios. In my opinion it's not necessary to use the BroerageLink.

I suggest that you pay off the " car loan $14k 6.29% ".

In my opinion your desired asset allocation is within the range of what is reasonable. I do usually suggest at least 20% of stocks in international stocks.

In your 401k account I suggest using these 3 funds:
1) FID 500 INDEX (FXAIX);
2) VG IS TL INTL STK MK; and
3) VG IS TOT BD MKT IDX.

How much (in dollars) do you believe that you might be able to contribute annually (total, all accounts)?

Because your employer's plan offers excellent, very diversifed index funds with low expense ratios I suggest making maximum annual employee contributions ($23k when under age 50, $30k when age 50) to the 401k account.

[Finiamh]

… Notes: I'll be starting to max Trad IRA …

Your TIRA contribution will likely not be deductible.

… Rollover IRA $11.4k
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity $100
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%) …

Do you have any basis in your current TIRA balances? This is reported on Form 8606.

Your 401k plan has good low-ER funds. If it accepts rollovers in, consider rolling your pretax TIRA balances into the plan. This will allow you to do an annual backdoor Roth (see BH wiki page link, below) which is a conversion of a non-deductible TIRA contribution to a Roth IRA. The Roth IRA will grow tax free. If not familiar with it, read the wiki section on Form 8606 closely.
https://www.bogleheads.org/wiki/Backdoor_Roth

The $100 sitting in the Trad IRA was put in with after tax. Nothing has ever been added after that to this point.

I asked and the employer does allow roll ins. But yes looks like I am over the income limit for TIRA contributions to be deductible. Should I still proceed with "reverse rollover" into the 401k?

Thank you!

[HomeStretch]

… Notes: I'll be starting to max Trad IRA …

Your TIRA contribution will likely not be deductible.

… Rollover IRA $11.4k
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity $100
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%) …

Do you have any basis in your current TIRA balances? This is reported on Form 8606.

Your 401k plan has good low-ER funds. If it accepts rollovers in, consider rolling your pretax TIRA balances into the plan. This will allow you to do an annual backdoor Roth (see BH wiki page link, below) which is a conversion of a non-deductible TIRA contribution to a Roth IRA. The Roth IRA will grow tax free. If not familiar with it, read the wiki section on Form 8606 closely.
https://www.bogleheads.org/wiki/Backdoor_Roth

The $100 sitting in the Trad IRA was put in with after tax. Nothing has ever been added after that to this point.

I asked and the employer does allow roll ins. But yes looks like I am over the income limit for TIRA contributions to be deductible. Should I still proceed with "reverse rollover" into the 401k?

Thank you!

I think it’s worthwhile to do a reverse rollover of your pretax IRA balance in order to be able to do a backdoor Roth annually.

[Finiamh]

… Notes: I'll be starting to max Trad IRA …

Your TIRA contribution will likely not be deductible.

… Rollover IRA $11.4k
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity $100
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%) …

Do you have any basis in your current TIRA balances? This is reported on Form 8606.

Your 401k plan has good low-ER funds. If it accepts rollovers in, consider rolling your pretax TIRA balances into the plan. This will allow you to do an annual backdoor Roth (see BH wiki page link, below) which is a conversion of a non-deductible TIRA contribution to a Roth IRA. The Roth IRA will grow tax free. If not familiar with it, read the wiki section on Form 8606 closely.
https://www.bogleheads.org/wiki/Backdoor_Roth

The $100 sitting in the Trad IRA was put in with after tax. Nothing has ever been added after that to this point.

I asked and the employer does allow roll ins. But yes looks like I am over the income limit for TIRA contributions to be deductible. Should I still proceed with "reverse rollover" into the 401k?

Thank you!

I think it’s worthwhile to do a reverse rollover of your pretax IRA balance in order to be able to do a backdoor Roth annually.

1. Sorry, I might be missing something. If all I have in there is $100, what pre-tax balance are you referring if more contributions aren't deductible. Sorry if I am missing something obvious.

2. My Rollover IRA is all pre-tax, should I roll/convert it to company 401k?

[lakpr]

1. Sorry, I might be missing something. If all I have in there is $100, what pre-tax balance are you referring if more contributions aren't deductible. Sorry if I am missing something obvious.

2. My Rollover IRA is all pre-tax, should I roll/convert it to company 401k?

I am not @HomeStretch, but he is talking about the 11.5% pretax balance in the Rollover IRA. In the eyes of the IRS, there is no difference between a Rollover IRA and a Traditional IRA. They are all one giant Traditional IRA, with little pieces scattered about. Even if both were held at different brokerages altogether, it doesn't mattter.

Either convert all of them (the 11.5% one + $100 one) to Roth IRA if you can absorb the tax hit, or roll the Rollover IRA in its entirety to 401(k), then convert the remaining $100 of non deductible amount to Roth IRA.

[HomeStretch]

… Notes: I'll be starting to max Trad IRA …

Your TIRA contribution will likely not be deductible.

… Rollover IRA $11.4k
11.5% FIDELITY 500 INDEX FUND (FXAIX) (0.015%)

Traditional IRA Fidelity $100
0.11% FIDELITY 500 INDEX FUND (FXAIX) (0.015%) …

Do you have any basis in your current TIRA balances? This is reported on Form 8606.

Your 401k plan has good low-ER funds. If it accepts rollovers in, consider rolling your pretax TIRA balances into the plan. This will allow you to do an annual backdoor Roth (see BH wiki page link, below) which is a conversion of a non-deductible TIRA contribution to a Roth IRA. The Roth IRA will grow tax free. If not familiar with it, read the wiki section on Form 8606 closely.
https://www.bogleheads.org/wiki/Backdoor_Roth

The $100 sitting in the Trad IRA was put in with after tax. Nothing has ever been added after that to this point.

I asked and the employer does allow roll ins. But yes looks like I am over the income limit for TIRA contributions to be deductible. Should I still proceed with "reverse rollover" into the 401k?

Thank you!

I think it’s worthwhile to do a reverse rollover of your pretax IRA balance in order to be able to do a backdoor Roth annually.

1. Sorry, I might be missing something. If all I have in there is $100, what pre-tax balance are you referring if more contributions aren't deductible. Sorry if I am missing something obvious.

2. My Rollover IRA is all pre-tax, should I roll/convert it to company 401k?

Your pretax traditional IRA balances are your rollover IRA + [your traditional IRA balance - basis].
Consider:
1. A reverse rollover of the rollover IRA into the 401k
2. After #1 is completed, convert the small traditional IRA to Roth IRA. You will pay taxes on any earnings. Report on Form 8606.
3. Annual Roth IRA contribution - use a backdoor Roth (and report on Form 8606) in any year where you are above the direct contribution limit.