Long Term Investing & Retirement: The second best time is now

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Long Term Investing & Retirement: The second best time is now

jfff: Oct 27, 2003; indeed

MrLogan posted:

My wife has an inherited IRA (IRA - BDA). It's from before the 10 year distribution limit law came into affect. If we were to convert it to a ROTH IRA, doesn't it have any consequences other than the tax hit from the conversion?

Can you convert a IRA - BDA?

Non-spousal inherited IRAs aren't eligible for conversion.

# ¿ Jan 24, 2021 16:49

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# ¿ May 18, 2024 16:56

jfff: Oct 27, 2003; indeed

MrLogan posted:

Well, poop.

Does her having it mess up any backdoor ROTH IRA conversions in the future?

I can't imagine that it would, but you may want to check with a tax or investment advisor. All that your spouse can do is withdraw from the Inherited IRA. Since they're not converting any of the RMD from the inherited IRA, there's nothing to report on an 8606 in regards to those distributions. Therefore it shouldn't mess with any other conversions.

# ¿ Jan 24, 2021 18:18

jfff: Oct 27, 2003; indeed

My spouse recently took a position, with a state institution, that offers a 403(b). A few of the providers available are Fidelity, T. Rowe Price, and TIAA. We're leaning towards Fidelity, for no particular reason other than low cost funds, and either 1. put everything into a target date fund (FHTKX or FJTKX) or 2. pick a few fund options (FXAIX, FGCKX, maybe something else) that look good to dump the contribution into.

Are there any Fidelity funds that we should look at? FGCKX seems ridiculous over the last 10 years, but has one of the larger expense ratios I've seen.

She's 20+ years out from retirement.

# ¿ Apr 19, 2021 22:34

jfff: Oct 27, 2003; indeed

H110Hawk posted:

It's an example to fill in the formula, put in whatever you think is correct. We can all reconvene in 0-60 years and discuss which cat food tastes the best. I think it's neat, I always suck at those exotic formulas.

Speaking of exotic formulas, I know I've seen people here? home buying thread? talk about when you should refi. Now that we're vaccinated and feel comfortable being around "other people" (aka a notary public) I'm thinking about a refi but can't remember how to figure out if it makes sense. We're currently at 3.75% 30yr fixed on a $390k mortgage with ~$250k left on it, Principle+Interest is ~$1804. We've paid a bunch extra into it but have stopped.

So far I'm seeing offers around 2.75% 30yr fixed for ~$1600 (Box A+B+C, includes $476 in points / 0.187%). New P+I is $1040.

How do I figure out if this makes sense?

There are mortgage refi calculators online to find out when you'll break even, do a quick search.
You most likely will benefit spectacularly from refinancing.

# ¿ May 20, 2021 16:15

jfff: Oct 27, 2003; indeed

sharkbomb posted:

Can someone help me understand my new 401k plan? I apologize if this is such a softball question, but 401ks are new to me. I just finished medical residency and am now making a good salary. I become eligible for the 401k in October (3 months after starting work).

"Company will make Safe Harbor matching contributions to your account each pay period based on your pre-tax contributions. The amount will equal 100% of the first 4% of your eligible compensation contributed to the Plan."

1. Can some helpful person give an example of what this means for employer contribution? In my situation I'll be able to maximize any potential benefit.

2. I understand the 401k contribution cap is $20,500-- does that include the employer matched portions?

3. What's the easiest way to calculate how much I should be contributing to maximize the match and get to the contribution limit?

Congrats on the job and taking steps to prepare for retirement!

1. If your salary is $100,000 a year and you contribute 4% ($4,000) to a 401k, the company will match your contribution and your 4k is now 8k.
The company will not contribute more than 4%. Their contributions will be pre-tax even if you make post-tax Roth contributions.

2. No. The cap is only for employee contributions.

3. Calculate how many paychecks you will receive for the remainder of the year and then divide that into how much more you can contribute before hitting the cap. If you'll receive 5 paychecks once you're eligible and you have not contributed to a 401k yet this year that's $20,5000 / 5
Next year example, if the cap is 22k next year and you are paid biweekly (26 paychecks per year) you need to contribute $846.15 per paycheck to max out your 401k contribution.
$22,000 / 26 paychecks = $846.15 per paycheck

# ¿ Jul 10, 2022 12:46

jfff: Oct 27, 2003; indeed

Atahualpa posted:

I'm thinking about switching to a HDHP for the first time and had some questions about HSAs:

3) The HDHP in question contributes $900 to the HSA; does that count towards the $3850 limit for 2023? And if I switch trustees, could it have any impact on receiving those contributions?

3a - Yes, employer contributions count towards the limit.
3b - Your employer will likely only contribute to their designated trustee. You can move the money after it's been contributed.

Fidelity posted:

your HSA contribution limit for the year is $3,650 (as it is in 2022) and your employer contributes $1,000, you can only contribute $2,650
https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits

# ¿ Nov 30, 2022 00:38

jfff: Oct 27, 2003; indeed

Another data point from a F500 company -
23 investment options in total including all the TDFs. Highest gross expense ratio for a plan option is 0.995%

TDFs:
Vanguard, 0.065%

Indices:
S&P 500, 0.01%
Russell 2000, 0.01%
ACWI EX US, 0.035%
US Bond, 0.025%
~Mid-Cap1, 0.55%
~Mid-Cap2, 0.95%

The company's plan recently changed from TDFs that ranged between 0.5% - 0.6% to the lower ER Vanguard TDFs.

# ¿ Feb 26, 2023 15:23

jfff: Oct 27, 2003; indeed

Residency Evil posted:

Single employer all year for her. Thanks.

2. Request a Return of Excess Contribution thru HR or Schwab, but probably HR.

# ¿ Nov 9, 2023 02:56

jfff: Oct 27, 2003; indeed

TraderStav posted:

Is it possible to rollover a traditional Ira into a solo 401k? I have both at Schwab and would love to get my traditional Ira's flattened for future back doors.

I presume I also need to get my wife's traditional taken care of too. She has a 403b with Vanguard. Any idea if those generally can accept a traditional Ira rollover?

Thanks!

I can't get a straight answer from my local Schwab branch or find a definitive answer online. Can I fund a Schwab Solo 401k by dropping off a check and paperwork at my local branch? How do you fund your Solo 401k at Schwab?

My spouse had a 403b and we successfully rolled it into a traditional IRA at Schwab. Had to jump through a lot of hoops with the 403b custodian though.

# ¿ Jan 19, 2024 01:12

jfff: Oct 27, 2003; indeed

kumba posted:

Words.

Check out this flowchart!

HSA & FSA - from what I've read there are some exceptions that allow for an HSA & FSA for a family, but generally this is a no-no. You may want to consult a tax pro unless you're positive you and the spouse can contribute to HSA & FSA.

If you're allowed to contribute to a HSA you should max it out (see flowchart above) every year. Put your emergency fund into a HYSA if you haven't already. Make sure you're making use of all your tax-advantaged savings options before putting extra cash into something like a 3-fund portfolio with Vanguard ETFs. Do either of your employers offer an employee stock purchase program?

You're doing great, keep it up!

# ¿ Jan 20, 2024 21:36

jfff: Oct 27, 2003; indeed

Serious_Cyclone posted:

Gah, thanks for this - so booting up an IRA for this work wouldn't actually increase my limit. I thought these could stack with the 401k. Well, that certainly makes the decision easier.

Here's a calculator to determine Employee & Employer contributions you can make to an Individual/Solo 401(k).
https://obliviousinvestor.com/solo-401k-contribution-calculator/

Can also use the IRS Deduction Worksheet for Self-Employed https://www.irs.gov/publications/p560 if you want to double-check the math.

# ¿ Mar 8, 2024 06:09

jfff: Oct 27, 2003; indeed

ZombieCrew posted:

Ive inheritted some IRAs that are managed by Raymond James. Can i just leave them be or do i need to distribute at a certain point? I have another inheritted retirement account i have to distribute. Should i talk to a cpa or someone specific about whats the best way to do it?

Sorry for your loss.

SECURE Act 2.0 changed things related to taking Required Minimum Distributions for inherited IRAs. If you're a non-spouse beneficiary you generally have 10 years to deplete the account. However, there are some some special circumstances which could allow you to take life-expectancy distributions. Some light reading here - https://www.schwab.com/learn/story/...e%2Dyear%20rule

Probably best to talk to a tax accountant to explore your options.

Make sure to find out if the IRAs are Roth or Traditional or some mix, as that will help determine tax implications when you take a distribution.
I'm not familiar with Raymond James, but if the portfolio(s) or fund options aren't to your liking (try to avoid high expense ratios) you could always move the money elsewhere. Vanguard, Fidelity, and Schwab are generally recommended by this thread.

jfff fucked around with this message at 19:40 on Mar 31, 2024

# ¿ Mar 31, 2024 19:30

jfff: Oct 27, 2003; indeed

Residency Evil posted:

Am I asking something crazy?

I may not fully understand what you're asking, but IIRC you can only contribute to a solo 401k as an employER based on your profit from self-employment.

If you're making 30k in profit from self-employment you'd be able to make an employER contribution of ~6k to your solo 401k
https://obliviousinvestor.com/solo-401k-contribution-calculator

Deduction Worksheet for Self-Employed
https://www.irs.gov/publications/p560#en_US_2022_publink10009065

quote:

Enter your net profit from Schedule C (Form 1040), line 31; Schedule F (Form 1040), line 34;* or Schedule K-1 (Form 1065),* box 14, code A.** For information on other income included in net profit from self-employment, see the Instructions for Schedule SE (Form 1040)
* Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b.
** General partners should reduce this amount by the same additional expenses subtracted from box 14, code A, to determine the amount on line 1 or line 2 of Schedule SE (Form 1040).

# ¿ Apr 25, 2024 16:11

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# ¿ May 18, 2024 16:56

jfff: Oct 27, 2003; indeed

Residency Evil posted:

Yup, agreed. So my question is regarding the total 69k limit. Say i contribute 6k as the employER contribution. Theoretically, that leaves me with 69-23-6k=40k of space still.

Can I use that additional 40 k of space to make post tax contributions to my 401k up to the 40k limit? And then convert that to Roth? Even though that 40k is coming from my W2 job?

Short answer, no.

The 23k of employee contributions to your W2 work-related 401k don't count against the employER contributions to your solo 401k. You'd have 69-6=63k of theoretical space leftover in your solo 401k if your self-employment earnings are 30k.

Assuming you mean, '... additional 40 k of space ... my solo 401k'
No, solo 401k contributions are calculated based on the net earnings of the business. You can't use that additional space unless your self-employed business has the earnings/profit that allow for it. You'd need to have ~$360k in profit from self-employment to take advantage of the full 69k of space the solo 401k offers.

# ¿ Apr 25, 2024 23:04

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Long Term Investing & Retirement: The second best time is now