BFC Newbies Thread: 33% of the interest paid is tax delectable

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > BFC Newbies Thread: 33% of the interest paid is tax delectable

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Boris Galerkin: Dec 17, 2011; I don't understand why I can't harass people online. Seriously, somebody please explain why I shouldn't be allowed to stalk others on social media!

I used Ally exclusively and closed it cause I was done with them and opened the SoFi account. Not really trying to game any systems. But now I�m just gonna take my paycheck and walk into the first big bank with a local branch here and just open whatever account with them, fees be damned, and get rid of this SoFi account.

E: The stupidest thing is even if I could get my company to split my paycheck into $2000 checks it�ll still take me some days to deposit it all with the low $2000 limit.

Boris Galerkin fucked around with this message at 01:03 on Jul 11, 2023

# ? Jul 11, 2023 01:00

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# ? Jun 9, 2024 18:03

eddiewalker: Apr 28, 2004; Arrrr ye landlubber

You�re allowed to have more than one bank.

# ? Jul 11, 2023 01:13

mrmcd: Feb 22, 2003; Pictured: The only good cop (a fictional one).

My last job my stock RSUs had a 1 year cliff and for some stupid reason that never made any sense the broker administering the program could only send you the proceeds from your first sale via paper check.

So I got a check in the mail for like $35k and Capital One just let me deposit it via the mobile app lol. It felt so dirty at the time but it worked.

# ? Jul 11, 2023 06:27

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

You can try calling the bank and saying "hey look, I need to do a big deposit, can you disable the $2000 limit for me please?" I'm not familiar with deposit limits, but withdrawal limits are usually in place to prevent fraud, so if you let them know about a planned transaction in advance, they're generally happy to turn the limits off temporarily.

Why would a bank not want to receive large check deposits?

# ? Jul 12, 2023 00:39

H110Hawk: Dec 28, 2006

It's a new customer fraud thing.

# ? Jul 12, 2023 01:19

Super-NintendoUser: Jan 16, 2004; COWABUNGERDER COMPADRES; Soiled Meat

I posted earlier about RSU and ESPP. I actually start a new job that offers all this, and it's a new think. I wanted to get some input or goon lulz at just situation and get some guidance. I have an appointment with my accountant/financial guy, but I like to get some context and other opinions so when I talk to him I'm more informed.

The new job pays slightly more, but it has a ESPP and RSU, so I'm a little pumped to have a chance at more income. First, here's my budget etc:

code:

	
Savings		10000				
401k		120000
IRA		40000				

Salary		150000				
Bonus		  15000 (paid  half in March and Sept, will likely be pro-rated)
Paycheck 1	  4300
Paycheck 2	  4300
Monthly Net  8600  

Spouse Income    600-1000/month (sporadic, so I don't budget it)	

Extra			 -400.00	
Week1			 -400.00	
Week2			 -400.00	
Week3			 -400.00	
Week4			 -400.00	

Weekly Expenses	 -2000.00		
						
Mortgage		-2100.00	
Cell			 -100.00
Internet		  -40.00
Dry Cleaners		  -50.00	
Pest Control		  -75.00	
Haircuts		  -70.00	(for four people it adds up so I budget it)
Youtube Premium/Music	  -23.00	
Life Insurance		  -75.00
Music Lessons 		 -175.00	
Netflix			  -17.00	
Wash Service	          -40.00	
Subscribe and Save       -125.00 (we do a bulk purchase once of month of dry goods/cleaning supplies/etc)
CC1 Minimum Payment	 -125.00 (total balance $12,000, 0% APR until 07/2024)	
CC2 Minimum Payment	  -50.00 (total balance $8,000, 0% APR until 06/2024)
HELOC Int Only		~-400.00 (total balance $50,000 8% APR, 6 years of draw left)
Annual Expenses Bill    -1050.00

Monthly Expenses -4515.00

Total Income   8600
Total Expenses 6515

Surplus	       2085

Some context:

Spouse and I are 40, and we have two kids 11 and 7.
We both work, but my wife is sporadic, so I don't budget her income, and use it to cover unexpected expenses or just save.
I budget $400/wk in expenses, plus a extra week a month for unexpected expenses.
I had opened a 70k HELOC right before COVID to prepare for major renovation of our house, but due to our location/town it's not feasible,
As luck would have it, 2020-2022 had some major medical and home expenses so I had to draw the heloc to the max and draw some savings.
I put 20k of it on 0% APR credit cards for 24 months, so part of the balance is interest free (even though the credit limit is higher, I won't charge more than the HELOC balance so I can just pay off the card when the amount is due)
Spouse's father is very ill, so we had an expensive year traveling back and forth (and my spouse not working) to help get them situated. That has been dealt with and there should be less trips now.
We have no car payment. I work from home, and my wife works just a couple blocks away, so we have a low milage used car, recently paid off.
I track and pre-plan all our major year expenses, and then divide the amount by 12, which I pay to myself each month and save (that's the $1050 annual bill) then I use that money for those bills. This is things like large car insurance payments, quarterly utility bills, saving for car repairs, our yearly vacations, etc).
The surplus I was using to pay down a car loan aggressively (which just paid off last month) and then my plan was to start paying more on the HELOC
I usually put $250 per paycheck into an IRA (this is not reflected in the budget, but it came out of the surplus)
I only budget 2 paychecks a month, there's two months with an extra, but this I don't really budget, I just use it to pay down debt

So all that explained, here how my situation is changing:

old job: 5% 401k match, new job matches only the 401k up to $2000 (not a good 401k)
new job: 150k in stock grant, vesting over 4 years (25% at 1 year, then the rest over each of the next quarters)
new job: 15% ESPP program, max 25k, 90day look back (still waiting on purchase period info, but I think it's quarterly)
the company is a major player in it's technology field and a very stable company rated buy by most analysts.

My goals are 1) to pay down the debt aggressively, and then 2) start saving for my kids college. Looking at the finance prime directive, I'm at the "Pay down moderate interested debt" square. In my case, that's the HELOC @8%.

My plan, which I think is a good idea:

Make minimum payments on the CC/HELOC for now
Switch the 401k to 2%, adding another $250 to my monthly suplus
Stop putting aside money for the IRA
Put the entire surplus into the ESPP, which over a year works out to almost be the max allowed of $25000, or $960/paycheck
As soon as I can sell the stock, cash it out (at least most of it, maybe save 10% just for fun)
Put the first $6500 into the IRA
Put all the remaining into the HELOC
As soon as the first year vests, cash it and put the 30-40k into the CC/HELOC
Put all the bonus money I get into the CC/HELOC
By my math, the CC/HELOC will be totally paid off by next August, and then re-evaluate, and possibly start ESPP ladders to make it more tax favorable.

Thinking out loud:

It's more favorable to hold the ESPP for 18 months tax wise, but I think it's better to diversify as quickly as possible, the taxes won't be as bad as sitting on that debt for longer
the 401k match is very unattractive, I'd rather put what I can into the IRA w/ Vanguard, it's just more cost effective since Vanguard expenses are lower
After getting the debt down, see about increasing the 401k withholding and try to get retirement savings to 15%, but I think a year of paying down debt is better.
I just can't reconcile to have this dept and try to put 15% into my retirement with such a poor match

I know it's a lot, but I wanted to get my thoughts organized before I spoke to my accountant. Any goon thoughts? I can open my own thread if it's preferred.

Super-NintendoUser fucked around with this message at 03:34 on Jul 17, 2023

# ? Jul 17, 2023 03:26

KYOON GRIFFEY JR: Apr 12, 2010; Runner-up, TRP Sack Race 2021/22

From a strategic standpoint you have an absolute poo poo ton of debt, so it makes sense to focus ont hat. Counting your HELOC at 0% because I'm lazy, your debt is eight months of your net pay. I'm not sure I'd count 8% as "moderate" interest debt but my brain has probably been broken by a low interest rate environment. I think your plan generally makes sense, and I agree that you should not attempt to hold your ESPP for 18 months especially since you have an immediate use for that money. Make sure you pay down the credit cards because in some cases the 0% APR promo rate only applies through the window, and if you don't pay down during the 0% window you are on the hook for full-rate interest for the full duration of the window.

The calculation of weekly/monthly/annual expenses is weird but you basically got everything denominated in months so that's fine in the end

# ? Jul 17, 2023 15:24

Super-NintendoUser: Jan 16, 2004; COWABUNGERDER COMPADRES; Soiled Meat

Thanks for the feedback. For sure, it's a lot of debt. I've never carried that before but I really need to get it sorted. I can clarify the annual/monthly/weekly thing, but basically my net is ~8600/month, and my expenses are about ~6500/month. I have specifically noted the 0% expiration on the CC and I'll just use the HELOC to pay them off before it expires. I only used it as a way to keep some of the interest bearing balance off the HELOC. The CC's with those balances themselves are closed/frozen/not inuse, so there's no risk I'll get other charges on them.

# ? Jul 17, 2023 16:23

Medullah: Aug 14, 2003; FEAR MY SHARK ROCKET IT REALLY SUCKS AND BLOWS

Super-NintendoUser posted:

Thanks for the feedback. For sure, it's a lot of debt. I've never carried that before but I really need to get it sorted. I can clarify the annual/monthly/weekly thing, but basically my net is ~8600/month, and my expenses are about ~6500/month. I have specifically noted the 0% expiration on the CC and I'll just use the HELOC to pay them off before it expires. I only used it as a way to keep some of the interest bearing balance off the HELOC. The CC's with those balances themselves are closed/frozen/not inuse, so there's no risk I'll get other charges on them.

Those expenses are huge...if you go into a bit of detail people better at this stuff than me can offer advice. Or if you really want to get serious you can start a progress thread and people can really help.

# ? Jul 17, 2023 16:30

Super-NintendoUser: Jan 16, 2004; COWABUNGERDER COMPADRES; Soiled Meat

Medullah posted:

Those expenses are huge...if you go into a bit of detail people better at this stuff than me can offer advice. Or if you really want to get serious you can start a progress thread and people can really help.

I posted a breakdown below but I can provide some clarity:

I budget 400/wk for groceries, gas, spending money, plus another 400/month for unexpected expenses= 2000/month. In the past, I budgeted 300/wk + 300 extra, but with my new job I wanted to have a bit more. We can revise this down, though, and start at the current level, reducing this to $1500/month
I budget 1100/month for annual large expenses, items that come up once a year or major pre-planned items. I plan them, add them all up, divide by 12 and pay the amount into an account so when they come up, I have the money on hand.
- bi-annual car insurance
- quarterly utilities (it's cheaper if I pay quarterly)
- money for unexpected car repairs ($1000/year)
- money for unexpected home repairs (this is new, I didn't do this before and I want to start)
- yearly vacation budget/ski passes/rentals (we live near a bunch of small ski mountains and all winter we go about every weekend)
mortgage is $2100/month
that's a total of $5200, the remaining $1300 of the $6500 is payments on the CC, and HELOC (~$800) and then $500 in monthly bills, internet, life insurance, etc as I listed below).

I don't think from that perspective for a family of 4 in a HCOL area is too extreme, but I'm open to reducing my budget where I can. We already don't have a car payment, and I could probably reduce vacation budget but skiiing is pretty much the only thing we do, so we like to have a lot of it in the winter.

Super-NintendoUser fucked around with this message at 17:26 on Jul 17, 2023

# ? Jul 17, 2023 17:15

KYOON GRIFFEY JR: Apr 12, 2010; Runner-up, TRP Sack Race 2021/22

The only thing I'll really add on the debt burden is that you better be drat sure that the root causes were unpredictable one-off events. That's a hell of a lot of money to spend (and it's just the debt load, not true cost). It also sounds like you don't have much of an emergency fund for when the inevitable different unpredictable one off events happen again. I would also focus on building up an e-fund with at least a few months of those savings.

I don't think you need to do any kind of extreme budget cuts but you will need to be quite disciplined. There's a balance between budgetary precision and flexibility but I have some concern that 1/3 of your budget is in a handwave category. If you break the budget there, how do you know what caused you to miss? In particular, it's probably advisable to break out discretionary spending money and put a hard cap on that at least.

Also, if your wife can work more in the short term, that would help with breathing room.

# ? Jul 17, 2023 18:15

SpelledBackwards: Jan 7, 2001; I found this image on the Internet, perhaps you've heard of it? It's been around for a while I hear.

Make sure you can actually sell the ESPP right when you get it, or else you run into serious risk being unable to offload it in time to cover your 0% card within the time limit. You may be better off putting nothing into the ESPP, or only half of what you planned, and save up the rest for direct CC repayment. You can always start maxing it next year.

# ? Jul 18, 2023 18:32

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

Is it normal that after I applied for a mortgage, I'd suddenly start getting a ton of spam text messages and emails? Or do I need to go ask USAA what the gently caress?

# ? Jul 18, 2023 18:42

Motronic: Nov 6, 2009

TooMuchAbstraction posted:

Is it normal that after I applied for a mortgage, I'd suddenly start getting a ton of spam text messages and emails? Or do I need to go ask USAA what the gently caress?

Both of those things can be true at the same time, and probably are.

# ? Jul 18, 2023 18:51

Ham Equity: Apr 16, 2013; The first thing we do, let's kill all the cars.; Grimey Drawer

TooMuchAbstraction posted:

Is it normal that after I applied for a mortgage, I'd suddenly start getting a ton of spam text messages and emails? Or do I need to go ask USAA what the gently caress?

It's not USAA (or at least not just USAA), it's the credit reporting agencies.

quote:

Deter trigger leads from the credit bureaus:

1. Register at https://optoutprescreen.com to opt-out of unwanted solicitations for five years (888-5-OPT-OUT)

2. Sign up at the �Do Not Call Registry, https://donotcall.gov, to put an end to those lead call

3. Sign up at https://dmachoice.com to stop loan offers from coming to your physical mailbox.

I sure am glad we don't have the government running the credit reporting agencies and that they're allowed to sell your information to whomever the gently caress they want.

# ? Jul 18, 2023 19:59

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

Fantastic. Thanks, too bad it's too late now.

# ? Jul 18, 2023 20:45

Badger of Basra: Jul 26, 2007

My bank isn�t signed up for it yet (boooo) but for any of y�all whose banks are, have they given you any communication about FedNow? It just launched today.

# ? Jul 20, 2023 18:47

Medullah: Aug 14, 2003; FEAR MY SHARK ROCKET IT REALLY SUCKS AND BLOWS

Badger of Basra posted:

My bank isn�t signed up for it yet (boooo) but for any of y�all whose banks are, have they given you any communication about FedNow? It just launched today.

I work for a Financial Software company and the groups that would utilize it are super excited about it, we put out an announcement that we'll be supporting it. I don't work directly in the core software but a few people I know that do think it's gonna be huge.

# ? Jul 20, 2023 19:02

Badger of Basra: Jul 26, 2007

It seems like it would blow up the whole business model of Venmo and CashApp but I�m not sure if I understand the mechanics of it well enough. All the stuff I�ve seen is for banks rather than consumers

# ? Jul 20, 2023 19:19

Uthor: Jul 9, 2006; Gummy Bear Heaven ... It's where I go when the world is too mean.

Is this why my bank got rid of Pop Money and screwed up my rent payment system?

# ? Jul 20, 2023 20:18

dpkg chopra: Jun 9, 2007; Fast Food Fight; Grimey Drawer

I know that Big Tech and libertarianism have robbed the public sector of top tier talent, but how is the government still putting up sub-Wix level websites in 2023. The FedNow landing is dire.

Edit: https://www.frbservices.org/financial-services/fednow/organizations#fi supposedly Chase has it but I don't see it when I log in

# ? Jul 21, 2023 03:41

H110Hawk: Dec 28, 2006

dpkg chopra posted:

I know that Big Tech and libertarianism have robbed the public sector of top tier talent, but how is the government still putting up sub-Wix level websites in 2023. The FedNow landing is dire.

Edit: https://www.frbservices.org/financial-services/fednow/organizations#fi supposedly Chase has it but I don't see it when I log in

You say this like it's a bad thing.

# ? Jul 21, 2023 03:53

hobbez: Mar 1, 2012; Don't care. Just do not care. We win, you lose. You do though, you seem to care very much

I'm going to go ride my mountain bike, later nerds.

I recently sold a mixed collection of taxable holdings to pile into a three-fund portfolio, resetting my cost basis.

My Roth IRA is maxed. My employer offers a Roth 401k (I've been funding a trad 401k so far while employed there). Luckily, my taxable holdings are far above what I foresee ever needing to draw down in the next 10-20 years. Is it smart to re-liquidate some of the taxable mutual funds to max a yearly Roth 401k contribution? It'd go into one of their reasonable options, a fidelity total stock market fund with a low ER.

The math seems to... math. I've already reset my cost basis, so why not shove 15k into retirement and then pay no taxes when it's worth like 150k in 30 years?

Just wondering if anyone sees any pitfalls here

# ? Jul 21, 2023 04:03

SlapActionJackson: Jul 27, 2006

Are you talking about staeting a mega backdoor? Yes you should do that if you can.

# ? Jul 21, 2023 04:07

hobbez: Mar 1, 2012; Don't care. Just do not care. We win, you lose. You do though, you seem to care very much

I'm going to go ride my mountain bike, later nerds.

SlapActionJackson posted:

Are you talking about staeting a mega backdoor? Yes you should do that if you can.

e: nvm. yes i guess this is kinda what i'm angling for

e2: So, my plan when I asked that question was I was going to just contribute directly to a Roth 401k. Is the point of the "mega back door" that you can only contribute the additional after-tax 43k to specifically a trad 401k before rolling it over to the roth ira/401k? Meaning, it's not an option to contribute beyond the 22500 individual limit by contributing directly to a roth 401k?

if so, how dumb!

hobbez fucked around with this message at 04:37 on Jul 21, 2023

# ? Jul 21, 2023 04:19

SlapActionJackson: Jul 27, 2006

Traditional 401K and Roth 401k share a contribution limit, just like trad/Roth IRA. The sum of 401k contributions to the two can't exceed $22,500. It's not an option to contribute beyond the individual limit by contributing directly to a Roth 401k.

The "mega back door" works around that by making non-deductible after-tax (but not Roth!) contributions, then rolling it over to the Roth. This gives you access to the combined limit of $66,000, which needs to fit your regular/Roth contribution + employer match + mega backdoor money. Your 401k plan needs to be compatible for this to work at all, but those that are tend to allow you to auto-convert after-tax contributions to Roth, automating that part of the process. They tend to not have guardrails on setting up amounts, so be sure to math it all out in advance and stay within the limits.

hobbez posted:

if so, how dumb!

Welcome to the US tax code.

# ? Jul 21, 2023 14:41

Boris Galerkin: Dec 17, 2011; I don't understand why I can't harass people online. Seriously, somebody please explain why I shouldn't be allowed to stalk others on social media!

On my local bank account�s website, if I want to transfer money out of it into another account I need to �link� which it does the old fashioned way where I paste in my other bank�s routing number and account number and then it deposits and withdraws 2 sub-$1 amounts that I need to verify.

On my SoFi account, they offer a service that they say can connect directly to my local bank account and then I can transfer money from the local bank into SoFi through the SoFi website directly.

Am I crazy in thinking that it should be impossible to move money out of the local bank account from the SoFi website because this sounds insane. Or is that just the norm nowadays?

# ? Jul 21, 2023 21:43

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

There's some services that seem to involve you handing over your login information so they can log in on your behalf. Thus far I've been able to avoid using any of them, which is good because the mere concept terrifies me. But the banks love them because they're easy to integrate: the app is just interacting with their standard web UI and scraping the info it needs.

# ? Jul 21, 2023 22:14

SlapActionJackson: Jul 27, 2006

Boris Galerkin posted:

they offer a service that they say can connect directly to my local bank account and then I can transfer money from the local bank into SoFi through the SoFi website directly.

Am I crazy in thinking that it should be impossible to move money out of the local bank account from the SoFi website because this sounds insane. Or is that just the norm nowadays?

That functionality is the norm. This service will be through an aggregator like Plaid and actually represents an industry step in the right direction on security and authentication.

If your local bank is tech-competent you will see a federated login for them (i.e. Plaid never gets your credentials) and Plaid/SoFi just get an access token that lets them do the withdrawals.

# ? Jul 21, 2023 22:53

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

I've applied to a couple of places to get a mortgage, and both have said basically "your last two years of tax returns show next to no income, so no loan for you." This is of course because I started a small business whose somewhat capital-intensive job was to make this videogame, which only happened earlier this year, so my expenses have been high and my income has been just from selling investments. Now that the game's on the market, my income is up a bit, but that's only in 2023, too recent to really count.

Am I likely to be unable to get a margin or bridge loan, too? By my understanding, those are both backed by assets (investments and real estate, respectively), but I don't know what factors the loan companies consider when deciding whether to accept an application.

My credit score is excellent and my savings are good, I just don't have any recent income history.

# ? Jul 22, 2023 00:40

Motronic: Nov 6, 2009

Reasonable rate loans require evidence of the ability of income to repay (doesn't matter if you have liquid assets to cover). So can you get a loan? Probably. Can you get a loan at a rate you should accept? Maybe not. In fact probably not.

Investment income being counted as income for a mortgage is usually like a 2-3 tax returns with consistency thing.

# ? Jul 22, 2023 00:45

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

Motronic posted:

Reasonable rate loans require evidence of the ability of income to repay (doesn't matter if you have liquid assets to cover). So can you get a loan? Probably. Can you get a loan at a rate you should accept? Maybe not. In fact probably not.

Investment income being counted as income for a mortgage is usually like a 2-3 tax returns with consistency thing.

My plan is to repay the loan basically as soon as my current residence is sold, so hopefully the rate won't matter too much. But if they care about my documented income for the asset-backed loans as well (which you're saying they probably will), then I may not even get the loan. Blast.

I have been living off of savings (i.e. selling investments for cash) for the past ~3 years, however the people reviewing my loan applications didn't like what they saw, presumably due to the business expenses. I didn't enquire too closely into exactly how they make their decisions, since I doubt I'll be able to argue them around to a more favorable-to-me viewpoint.

# ? Jul 22, 2023 00:53

Motronic: Nov 6, 2009

TooMuchAbstraction posted:

My plan is to repay the loan basically as soon as my current residence is sold, so hopefully the rate won't matter too much. But if they care about my documented income for the asset-backed loans as well (which you're saying they probably will), then I may not even get the loan. Blast.

Oh, that's totally different. You don't need a conforming loan at all then.

I'm not versed in bridges and loan products like that but it sounds like that's what you should focus on.

# ? Jul 22, 2023 01:00

Lester Shy: May 1, 2002; Goodness no, now that wouldn't do at all!

I hope this is the right thread. I'm as financially illiterate as you can get.

I'm the "non-spouse beneficiary of a deceased retiree." I have two confusing options for how I can receive the benefit.

"1. I instruct TRS to roll over all of the eligible amount of my benefit to a traditional IRA or a Roth IRA as indicated in Part II that will be treated as an inherited IRA.

2. [option 2 is irrelevant because I am not a spouse of the deceased]

3. I do not want to roll over any part of the eligible amount of my benefit. Please pay the entire amount to me. I understand that 20% of the taxable amount of my distribution will be withheld for federal income tax."

Gross pay: 5000
Taxable portion of lump sum payment: 1895.49
Non-taxable portion of lump sum payment: 3104.51
Amount eligible for rollover: 5000

Is it stupid to just eat the $379 and take the lump sum payment? I do not have an IRA. I am in the process of starting a new job that has its own retirement system and all of the associated headaches. I am setting up an estate sale. I have a lot on my plate and basically zero financial IQ. I'm willing to lose $379 just to get this off my docket, but is there something I'm missing?

I know I'm behind the curve on this stuff and should probably have an IRA but I would like to start this new job with as clean a slate as possible and then start working on getting less stupid.

# ? Jul 24, 2023 21:24

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

Saving it for an IRA makes more sense if you don't think you'll need the money before you retire. But you would need to set up the IRA. That's not a huge deal if you already have an account with a company like Vanguard or Fidelity or something, but if you're already short on time/energy, or if you think that $5k will come in handy before you retire, then just take the lump sum.

# ? Jul 24, 2023 21:41

KYOON GRIFFEY JR: Apr 12, 2010; Runner-up, TRP Sack Race 2021/22

You still are required to take RMDs on inherited IRAs. However, I would submit that a process that will take less than an hour of your time is worth 380 in taxes plus whatever additional income you�ll get from keeping the IRA invested as you take RMDs.

Edit: to be perfectly clear the poster above me is wrong in that you will access some of the money immediately. You can decide whether to spread RMDs over a decade or your or the prior account holder�s predicted lifespan.

KYOON GRIFFEY JR fucked around with this message at 22:05 on Jul 24, 2023

# ? Jul 24, 2023 22:02

SlapActionJackson: Jul 27, 2006

Inherited IRAs have distribution requirements. You can't just mix the inherited money with your own IRA assets and save it all until your own retirement.

Given the modest amount of money at stake here, I would absolutely just take the lump-sum distribution and save the headache.

# ? Jul 24, 2023 22:02

Muir: Sep 27, 2005; that's Doctor Brain to you

KYOON GRIFFEY JR posted:

or your or the prior account holder�s predicted lifespan.

That would fall under "[option 2 is irrelevant because I am not a spouse of the deceased]" I believe.

# ? Jul 24, 2023 23:57

Ancillary Character: Jul 25, 2007; Going about life as if I were a third-tier ancillary character

Lester Shy posted:

3. I do not want to roll over any part of the eligible amount of my benefit. Please pay the entire amount to me. I understand that 20% of the taxable amount of my distribution will be withheld for federal income tax."

Please be aware that 20% is WITHHELD for taxes and does not mean that your taxes DUE on this distribution is 20%. You are taxed on this at your full marginal rate, ie., if you make very little and it all falls in the 12% bracket, it's taxed at 12%, but if you get a fat paycheck every week, then it could be taxed at 32% if that's your tax bracket. So if your marginal rate is higher than 20%, make sure you have the money next April to pay the difference with your tax return.

# ? Jul 25, 2023 02:29

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# ? Jun 9, 2024 18:03

Thumbtacks: Apr 3, 2013

It appears I have stalled for too long and just got a letter from a debt collection company over a $7k medical debt we owe the hospital. I fully intend to pay it but I can�t pay it right now. I�ve heard horror stories about debt collection, what is this going to look like for me?

Ideally I�d like to call them and give them a timeframe or explain the situation or set up a monthly payment or something but I�m guessing there are many different varieties or debt collectors and not all of them will be particularly receptive. I believe this one is MediCredit?

I know I have a few options, but I don�t know what I should do first.

# ? Jul 26, 2023 04:24

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > BFC Newbies Thread: 33% of the interest paid is tax delectable

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