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HerrBrau posted:At my income level and with the likelihood that my income will continue going upward, does it still make sense to be contributing to Roth accounts?
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Jul 12, 2010 22:23
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gvibes posted:401(k) v Roth is basically a bet as to what your tax bracket will be now versus when you withdraw (i.e., retirement). Personally, I think that our tax rates will need to markedly increase, so I think the Roth is a great idea. If you have the means, I highly recommend it. It's also a bet as to whether or not Roth IRA distributions will be taxed in the future. I kinda doubt they will be (I contribute the full amount to a Roth every year), but that doesn't mean it isn't something to consider.
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Jul 12, 2010 22:43
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HerrBrau posted:This may be a dumb question, but let's say I leave my job and roll my 401k into an IRA - is that subject to the annual contribution limit? If so, what do people with a 401k worth over $5k do? The $5k limit is on contributions. Your 401k rollover would be considered a rollover, separate from a contribution. As such the $5k limit doesn't apply. HerrBrau posted:I expect to surpass the Roth IRA contribution limits within a year or two (unless I move out of NYC!), so does it even make sense to do that - or just leave it as a traditional IRA? Not sure what you mean here. The $5k limit on contributions is a limit to all Roth and traditional IRA's you might have, not $5k to Roth and $5k to the trad. If you want to contribute more than $5k to your retirement in a year then refer to the OP: quote:1) Contribute to 401(k) up to employer match waar fucked around with this message at 00:40 on Jul 13, 2010 |
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Jul 13, 2010 00:37
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waar posted:Not sure what you mean here. The $5k limit on contributions is a limit to all Roth and traditional IRA's you might have, not $5k to Roth and $5k to the trad. If you want to contribute more than $5k to your retirement in a year then refer to the OP: I think he meant to say he's going to exceed the income limit (and thus not be able to make any contributions).
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Jul 13, 2010 01:01
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flowinprose posted:I think he meant to say he's going to exceed the income limit (and thus not be able to make any contributions). I'll eventually surpass the income limit in the fairly short term, so I'm wondering if converting my Traditional IRA to Roth only to need to convert it again when I surpass the limit makes any sense at all. I'm thinking it doesn't.
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Jul 13, 2010 01:39
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HerrBrau posted:Right. Once you make over the Roth threshold, you don't need to convert it to a regular IRA. Open a new IRA account at your existing fund provider, and put new funds into that. You can have both types of accounts open at the same time.
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Jul 13, 2010 03:53
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Once you go over the Roth threshold I'm pretty sure a traditional IRA won't do anything for you either though. Your best bet at that point IIRC is to max the 401k first and then just do a taxable investment account if you want to go beyond that.
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Jul 13, 2010 08:45
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Ok, thanks for the tips. Plenty to think about!
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Jul 13, 2010 12:05
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If you're going to do a taxable investment account, you might as well consider roth rollovers. It's more legwork on your end, but especially on the front end of your earning years you can save quite a bit on taxes. You can do this by opening a non-deductible IRA, funding it to the full 5000 or whatever, and then rolling it over to a Roth. You'll need to pay taxes on the gains, but if you do it after a single year that won't be all that significant, and you'll be set from there. Keep doing it year after year for as long as you want. My wife is a doctor in residency, and as soon as she's done with it she and I will be hitting the joint limit. At that point what we'll do is at the start of the year we'll throw 5 grand a piece into a non-deductible IRA in a money market account. Then we'll roll them over into our Roth accounts pretty much immediately (also to a money market account), and then we'll move the money out of the money market and into whatever funds/stocks we wish every month thereafter. Best of both worlds.
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Jul 13, 2010 12:17
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I'm interested in second opinions on changing my 401(k) allocations and balances, which I haven't touched in a long time. Here is my current 401(k): pre:Symbol Fund Balance (%) Allocation Expenses and management fees VIIIX VANG INST INDEX PLUS 28.31% 30% 0.02% VIEIX VANG EXT MKT IDX INS 20.42% 20% 0.04% ARTVX ARTISAN SM CAP VALUE 14.72% 20% 0.96% JMVAX PERKINS MID CP VAL I 10.91% 10% 0.78% FGCKX FID GROWTH CO K 10.48% 10% 0.65% TCMMX TCM SM MID CAP GRTH 8.52% 10% 0.80% ? VANGUARD TARGET 2040 6.63% 0% ? Total: 100% 88.73% Domestic Stock 1.94% Foreign Stock 0.02% Bonds 2.57% Short-Term 6.63% Unknown 0.12% Other I picked most of these things about five years ago or so, based more or less entirely on previous performance and low fees. When I first started working here I just dumped everything into the Vanguard 2040, but moved my allocations out of it after a year. I left the balance there, though. I have a broad range of choices in my 401(k). Target funds: Vanguard Target (2005 through 2050), plus "Vanguard Target Retirement Income Trust I" Index funds: -stock SPARTAN INTL INDEX VANG EXT MKT IDX INS VANG INST INDEX PLUS -bond VANG TOT BD MK IS PL CORE OPTIONS & <mycompany's> COMMON STK FD -Stock Investments FID LOW PRICED STK K DODGE & COX STOCK FID GROWTH CO K FID DISCIPLND EQ K FID CONTRAFUND K FID WORLDWIDE <mycompany's> COMMON STK FD DODGE & COX INTL STK ARTISAN INTL ARTISAN SM CAP VALUE LZRD EMRG MKTS EQ IS PERKINS MID CP VAL I TCM SM MID CAP GRTH -Blended Fund Investments FID BALANCED K -Bond Investments PIM TOTAL RT INST GALLIARD STABLE VAL Other: "Brokeragelink" I'm 35, looking to retire in 30 years. I am married with no kids (and no plans for kids), my wife has a very modest retirement which is unlikely to see a lot of contributions in the near or medium future. I bought a house in December, so I'm now making a major investment into real estate, so I want to avoid real estate in my 401(k). I feel that I'm fairly tolerant of risk, but my current investment is far too heavily weighted towards domestic stocks. I also want to move more heavily into international stocks. I seem to have a ton of options. This "Brokeragelink" thing seems like it allows me to invest in almost anything on the market, which is amazing, but I need to investigate whether there are fees involved (I suspect there are), and given the range of funds available, I'm not sure I need to bother with that. What I am interested in hearing is opinions on the current funds I'm in, and any standouts among the ones I'm able to move into within the plan. (By the way, although the company I work for is great, I feel just being employed by them is more than enough exposure to their performance; I'm not going to buy company stock with my retirement plan.) I figure after reallocating, I want something like: 25% bonds 50% domestic stocks 25% foreign stocks Of domestic stocks, I want a broad spread between small, medium, and large caps, but given I have 30 years before retirement, I feel less inclined towards blue chips and would rather favor small and mid-cap value and growth. Of bonds, I'd like to go less for low-yield treasuries and more for a broader range of corporate and government bonds. I can look up symbols for any of the listed options if they are unclear. Oh yeah: my company matches 50% of my contributions up to 6% of my salary, so I am and always have been contributing 6% of my salary to maximize that match, and I'm not likely to change that.
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Jul 13, 2010 19:36
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slap me silly posted:Even in the last crash only a couple of money market funds dipped below $1 thanks to Lehman Bros, and I don't think they got lower than $0.97 or so before they were bailed out.
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Jul 13, 2010 22:52
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Can't tell from what you said - you actually got 98% of the money back, or you only got it back on paper and you have to wait for this to close before you can do anything with it? It's been nearly two years, I hope it's the former. Gah
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Jul 14, 2010 00:13
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slap me silly posted:Can't tell from what you said - you actually got 98% of the money back, or you only got it back on paper and you have to wait for this to close before you can do anything with it? It's been nearly two years, I hope it's the former. Gah
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Jul 14, 2010 14:08
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If the markets look like they are dipping again how do you handle that with retirement accounts assuming you are going to have them for 30+ years. Should you try and switch to something that is going to weather it better, go to cash and try to buy in when things are low before they start to rise back up or just leave it alone? I assume you can rebalance or change any of your holdings within your accounts as much as you want as long as you dont move the money elsewhere? (Canada)
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Jul 16, 2010 18:38
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It's pointless to guess what the market is going to do or what will "weather it best". Instead, choose a diverse portfolio according to your preferred position on the risk/return curve: stocks/bonds, domestic/foreign, value/growth. Then if you keep your allocations constant you'll find yourself buying stuff when its prices fall. For example you would have been buying lots of stocks in late 2008 to avoid getting a bond-heavy portfolio. Read the Four Pillars book. I don't know what the Canadian rules are, but I've never had a problem rebalancing in the US. There may be some limits I haven't encountered.
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Jul 16, 2010 18:49
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Right. Studies (which I am too lazy to google and link to) have shown that, overall, people who try to time the market with their retirement portfolio tend to underperform those who pick a diversified portfolio and just leave it be. When the market is down, you are buying cheaper shares. Unless you're going to retire very soon (like in the next 5-10 years?), you are probably better off just buying those cheap shares, and getting the benefit when the market recovers of dollar-cost averaging. Also, no feedback at all on my funds questions?
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Jul 16, 2010 19:35
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asmallrabbit posted:If the markets look like they are dipping again how do you handle that with retirement accounts assuming you are going to have them for 30+ years. Should you try and switch to something that is going to weather it better, go to cash and try to buy in when things are low before they start to rise back up or just leave it alone? I assume you can rebalance or change any of your holdings within your accounts as much as you want as long as you dont move the money elsewhere? (Canada) It's the basic decision between buy and hold and market timing. I practice the latter. Part of it is just a personal philosophy - for better or worse, I can't stomach watching my portfolio plummet and do nothing about it (see: the years 1999 - 2009). It's certainly more difficult to time the market than it is to buy a stock or ETF or mutual fund and sell it 40 years later, but there can be a reward to it.
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Jul 17, 2010 01:26
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S&P500's annualized return from 1/1/1999 to 12/31/2008 was -1.5% (not adjusted for inflation). Just out of curiosity, what was yours? Edit: Leper, in your place I would try to find 3-4 index funds that meet those goals without getting into the complexities of whatever the borkerlink is. But I know less about those funds than you do and you obviously have a clue, so I didn't bother to pipe up... slap me silly fucked around with this message at 01:51 on Jul 17, 2010 |
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Jul 17, 2010 01:49
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slap me silly posted:S&P500's annualized return from 1/1/1999 to 12/31/2008 was -1.5% (not adjusted for inflation). Just out of curiosity, what was yours? I was just giving an example there, as I haven't been investing for that long. The portfolio system that I do follow outperformed the S&P by 113% over the past ten years. Of course that wasn't all just market timing, it was stock picking as well, so it'd kind of tough to compare the two. It's not anything really complicated either, just a combination of three indicators, two based on moving averages and one based on new lows.
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Jul 17, 2010 04:23
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Sorry, I was being snarky to make the point that most people who try to time the market fail. Even the best active fund managers don't maintain good performance over more than 5-8 years, for various reasons. However I also understand the appeal of loving around with market fundamentals, time series, indicators, etc., so cool to hear that it has been working out for you so far.
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Jul 17, 2010 05:05
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slap me silly, yeah, I figured folks might not comment for exactly those reasons. I guess I just have to do more homework and then make a decision. As to market timing: I view it as added risk (of underperforming the market) with added potential rewards (potentially outperforming the market), just like all investing. The difference for me is that this is my retirement money. I absolutely can't afford to make a blunder somewhere and piss away half my retirement money. If I want to play on the market and try to beat it and get rich, I need to do that with money I can afford to risk; hence, I have my retirement fund that is sacrosanct, and I have a stock broker account with cash in it that is "play money". (Or I would, if I hadn't just bought a house...) But people's situations are different. If you're younger than me, or your retirement portfolio is larger (so you feel you can shoulder more risk), or whatever, then go ahead; learn as much as you can, and then make educated guesses (the best anyone can do). Just be aware that a lot of very smart and well-educated people underperform - sometimes disastrously - despite all their market saavy.
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Jul 17, 2010 17:49
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Leperflesh posted:As to market timing: I view it as added risk (of underperforming the market) with added potential rewards (potentially outperforming the market), just like all investing. The difference for me is that this is my retirement money. I absolutely can't afford to make a blunder somewhere and piss away half my retirement money. If I want to play on the market and try to beat it and get rich, I need to do that with money I can afford to risk; hence, I have my retirement fund that is sacrosanct, and I have a stock broker account with cash in it that is "play money". (Or I would, if I hadn't just bought a house...) Yes, that's a very good point. While I may be a fan of market timing, in terms of practicing what I preach, maybe only 10% - 20% of my retirement money is in a portfolio of stocks which I choose in conjunction with market timing. I don't know if I would be comfortable with the majority of my retirement in a setup like that, but I also haven't been investing for all that long, so maybe that will change when I get older. Of course the older I get the closer to retirement I get, so probably not!
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Jul 19, 2010 19:04
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Can anyone offer any advice on specific stocks to add to my non-retirement portfolio, which I am building up with the plan of living off dividend income at some point in the next 4-10 years? I am currently holding:
The main things I'm missing, I think, are:
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Jul 21, 2010 20:01
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Are you trying to be diversified? It seems like you're heavily into industrial, energy, and consumer products, but you're lacking anything in a wide swath of sectors (tech, financial, healthcare, services, utilities, etc.) Does all your income have to be from dividends? You could get income from bonds, CDs, etc. as well...
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Jul 21, 2010 21:37
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Leperflesh posted:Are you trying to be diversified? It seems like you're heavily into industrial, energy, and consumer products, but you're lacking anything in a wide swath of sectors (tech, financial, healthcare, services, utilities, etc.) I already own junk bonds. I additionally listed a total bond market fund on my buy list. I already own a utility stock (NEE). I also listed financial companies on my buy list. I am not particularly interested in healthcare, and the tech sector would be fine if there was a good looking company that wasn't overpriced and generated some amount of cashflow. CD's are not attractive in general, and especially now. They also would belong in a retirement account for tax efficiency, as would the large majority of any bonds I would ever hold.
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Jul 21, 2010 22:22
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Droo posted:I already own junk bonds. I additionally listed a total bond market fund on my buy list. Are CD's really less tax efficient than dividend stocks in the face of the current situation with qualified dividends disappearing (barring congressional action) at the end of this year? Junk bonds are equally tax inefficient if you don't own those in a retirement account. I will try to save you some effort by pointing out that in this thread you're not likely to find much advice on picking individual stocks. That is because in the long term (which is what this thread is about), picking individual stocks will increase your risk astronomically with very little (if any) evidence that your return will increase accordingly.
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Jul 21, 2010 22:54
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flowinprose posted:Are CD's really less tax efficient than dividend stocks in the face of the current situation with qualified dividends disappearing (barring congressional action) at the end of this year? Possibly they go away, possibly they are renewed at 20% instead of 15%. Either way, CD rates are poo poo right now and for the foreseeable future, with no protection from inflation. flowinprose posted:Junk bonds are equally tax inefficient if you don't own those in a retirement account. Yes, that's what I just said. I'm glad we agree. flowinprose posted:I will try to save you some effort by pointing out that in this thread you're not likely to find much advice on picking individual stocks. That is because in the long term (which is what this thread is about), picking individual stocks will increase your risk astronomically with very little (if any) evidence that your return will increase accordingly. Picking individual stocks can be much cheaper and accomplish the same thing as buying a large cap US fund. For example, I could buy equal weights of the published top 25 holdings of the Vanguard Dividend Appreciation Index http://portfolios.morningstar.com/fund/holdings?t=VDAIX®ion=USA&culture=en-US for $200 and leave them alone for 10 years. This will save me between $30,000 and $60,000 over an example 10 year period with a $1-$2 million account in fund management fees with no particular expectation of a difference (good or bad) in gross performance. In addition to the savings in fees, I will have slightly more control of short and long term "pass through" capital gains timing by avoiding mutual funds. I am not trying to "beat the market", I am trying to buy quality stocks for the rest of my life without pissing away thousands of dollars in management fees to people who, quite frankly, are just as likely to have no clue what they are doing as any average person. As you can see, I am more than happy to pay a mutual fund management fee for things that are much more difficult to emulate, like an emerging market small cap fund. I do enjoy that you think the only way to own a diverse stock portfolio for "the long term" is through a mutual fund.
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Jul 22, 2010 02:11
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CD rates are lovely (and pretty much always have been and always will be). There's really only a few reasons to invest in CD's: safety, stability, and relative liquidity. Those properties are valuable in retirement, when your cash flow needs to be stable and safe. Tax efficiency is a problem, yes, but I was simply trying to point out that tax efficiency is problem with many investment options, and thus is cancelled out of the equations when making a decision on what to invest in. When you're comparing junk bonds to CD's, they are taxed the same, so questions like price stability, default risk, expenses, and inflation (which you now point out as a problem, and I agree it is a big one with CD's) are what matter.Droo posted:I do enjoy that you think the only way to own a diverse stock portfolio for "the long term" is through a mutual fund. You're putting words in my mouth. My comments regarding stock picking were not as much a statement of my own opinions as they were an observation of the general range of opinions you can expect from this thread. If you have a million dollars at your disposal, then you certainly have the necessary capital to throw around to build your own individual stock portfolio. Replicating an existing index fund if you have the necessary capital to do so relatively cheaply probably would be a better choice than buying the fund itself. However, you were asking for advice in picking specific stocks, which is much different than taking an index and replicating it.
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Jul 22, 2010 04:09
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Droo posted:Picking individual stocks can be much cheaper and accomplish the same thing as buying a large cap US fund. For example, I could buy equal weights of the published top 25 holdings of the Vanguard Dividend Appreciation Index http://portfolios.morningstar.com/fund/holdings?t=VDAIX®ion=USA&culture=en-US for $200 and leave them alone for 10 years. This will save me between $30,000 and $60,000 over an example 10 year period with a $1-$2 million account in fund management fees with no particular expectation of a difference (good or bad) in gross performance. compare Vanguard index fund returns to their respective indexes (actual index has no expense ratio) and you will see that the expense ratio is virtually eliminated and in often cases overcome (see an old William Bernstein article on Efficient Frontier or Vanguard's website for comparison between fund and index returns). This is accomplished through securities lending revenue, arbitrage (divergence between stocks and stock futures), and smart transactional skills. All benefits that you as an individual investor miss out on. Your estimate of money saved in fees is grossly overestimated in the real world when factoring everything (my guess is that at best, it is still a negative savings going DIY, when dealing with the VTI ETF at 0.07% expense ratio). And your time and reduced diversification is a cost. This should not come as a surprise considering Vanguard operates at cost, has had excellent history of execution, and has huge assets and institutional benefits. 80k fucked around with this message at 07:50 on Jul 22, 2010 |
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Jul 22, 2010 07:08
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If I might be so bold; if Droo has a million dollars to invest, he can afford better, more personalized advice than he's likely to find in even this very excellent thread on an internet comedy website. Particularly with his combative attitude. A financial adviser can be paid to ignore it. That said, he asked for specific stocks. Specifically, quote:# A real estate income-type company like O. I am waiting awhile before buying to see if commercial real estate gets nailed like everyone claims it will, and I'm not in a hurry. For "a dividend paying bank stock", I'd suggest that with financial reform laws pending and a lot of fallout from the financial crisis still floating down, nobody would be wise to pick a particular bank out as being especially solid. The same thing applies to real estate, only more so. Staple American names... pepsi and macdonalds are very solid (americans aren't going to stop buying burgers or sugar water, no matter the financial climate) but I'd guess they're both solidly international companies now, with profits that are tied to international growth and performance. So... maybe Kellogg? They pay a regular 37.5 cent dividend 4 times a year and, looking at 10 years of history, that number has steadily climbed from 25 cents 10 years ago without a missed dividend. At $50 a share, their P/E is at 15. Their competetor, General Mills, is a better value at $35 a share and now paying 28 cent dividends, but its history is spottier (a missed dividend in '06). They just had a 2:1 split on June 9, so maybe that is a factor to consider. P/E at 15.6. Kraft is in the same business and another solid American food brand. It's trading at $29, paying 4x 29 cent dividends a year, P/E at 16.6. Getting out of food and into consumer & industrial goods, how about 3M? They've increased their dividend to 4x53 cents in 2010, trading at $82 with a P/E of 16.3. I don't think they've missed a dividend, or lowered the dividend, since they started paying them in the late 80s. How do you feel about Intel? They're tech, obviously, but they're sure as poo poo not going anywhere, they have gobs of money and are paying 15.75 cent dividends this year, stock is at $21, P/E 12.73. I dunno. It seems like there's plenty of choices out there. Not sure what criteria to use to pick, beyond "well known, pays dividends, isn't going away". I know nothing about bond funds, so I won't hazard a guess there.
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Jul 22, 2010 08:20
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So I keep reading articles like this: http://news.morningstar.com/articlenet/article.aspx?id=344484 which suggest that BND (which I use for my bond allocation) isn't really the best way to get bond exposure, mainly (I think) because market weights leads to overweighting those entities which have the most debt. Is there any way of using Vanguard bond ETFs to improve my bond allocations? I wouldn't really know any other way of weighting besides market weights. (I mention Vanguard ETFs because that's where I have my brokerage account so I can buy them commission-free). This question is basically just academic for me, as I'm just starting out with a very small Roth IRA account, but I'm still interested to know what people think about the best way to get diversified bond exposure.
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Jul 24, 2010 19:57
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Droo posted:Can anyone offer any advice on specific stocks to add to my non-retirement portfolio, which I am building up with the plan of living off dividend income at some point in the next 4-10 years? I like ETFs VNQ for REITS Dividend I like VZ or T, PGX or PGF isn't bad You are on the right track there BND, is what I went with. I would throw in a VWO, maybe GXC if you like china. I'd put something towards Europe if it is still down, I was looking a VE for my next buy, VEU would be nice if you want a diverse ETF
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Jul 25, 2010 20:33
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I hope Vanguard adds more ETFs soon. I understand why they would only offer what they have mutual funds of, but something like PGX from Vanguard would be great.
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Jul 25, 2010 21:20
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I am looking for some long term guidance. A buddy of mine set up my 401k contributions a while ago, but I'd like to know if I should change them. I am 27 years old, earning $98,000/year. I am contributing 19% towards my 401k which currently has about $23,400 in it (was contributing less before). The contributions are currently: Vanguard Wellington Fund - Admiral Shares 5.00% LifePath Index 2050 Fund M 10.00% Equity Index Fund T 20.00% Invesco U.S. Mid Cap Value Portfolio 25.00% Fidelity Diversified International Fund 40.00% Which apparently has been working well since I see a lot of green in the pretty chart and underneath it says: Your cumulative personal rate of return during this period: 31.9198% (Annualized Return: 19.4472%) Total net investments made during this period: $15,949.81 Change in market value over this period: $19,338.86 My buddy suggested scaling the international fund back a little and dumping the rest into the 2050 fund. What do you think I should do? Also forgive my lack of math but does anyone have a quick estimate on what percentage I need to contribute to max my 401k evenly across the year?
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Jul 26, 2010 16:36
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FateFree posted:I am looking for some long term guidance. A buddy of mine set up my 401k contributions a while ago, but I'd like to know if I should change them. .15 * 98,000 = 14,700 / 52 = $282.69 per week ($565.38 if you get paid bi-weekly) It's best to pay this off as early in the year as you can, though. Eke out extra compound interest. (If your company matches you, then things get a little more complicated. You'll want to make sure you're always putting in enough for your company to match. This will require more math to figure out.)
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Jul 27, 2010 01:05
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What does the thread suggest for a 50 year old who doesn't have much saved away (somewhere in the 60-120K area). I realize that he's going to have to work in some capacity for most of his life but I'm trying to get him pointed in the right direction. My understanding that hes got most of what he has so far in an IRA but what should he do with the income he will be pulling in here on out? Is it better to max out IRA/401k? Should he be looking at funds? If so, is it a matter of just choosing a reputable company and working from there?
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Jul 31, 2010 17:03
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Long term investing questions to follow in later posts, but for now I have a general savings question: I set up my current savings account (which I wouldn't touch except to buy a house or make any other large and completely necessary purchases) when I got my first actual job a couple of years ago. I mainly wanted to make sure I'd have easy access to it until I determined how much I needed to have in my checking account. Now I'm accustomed to the amount I need to keep in my checking account, and I feel like I'm going to need to get my savings out of Chase bank so I can make more than 0.01% interest (seriously?). Keep in mind I may need to move sometime soon, far away possibly, and I still want the money relatively easily in case I buy a house. Does this rule out credit unions? Am I better off finding some kind of online-only savings account?
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Aug 2, 2010 05:37
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Hello investing gurus! I have been enjoying all of your intelligent comments in this thread so far, from the 13 pages I've gotten through. I have a tricky Roth IRA / tax situation. I just graduated from grad school and am currently unemployed (surprise!). My wife has a job but no 401k yet. We have a few years' worth of maxed IRA contributions sitting in ING. The problem is, we filed our income taxes as married (separate) last year, and my wife is currently signed up for married (separate) deductions from her employer's pay checks. I just realized that because of filing as married (separate), we are basically ineligible for a Roth IRA until we file jointly. My question is, will she simply have to go to her employer and asked to change the deductions from her paycheck from separate to single, or are we already hosed for this whole year? Or does it even matter what deductions her job takes out (maybe the actual return is the only thing that counts and the IRS will just charge us the difference?) Also, if she changes to filing jointly, will we still be able to contribute to a Roth IRA for 2010? I guess the ultimate question here is: how and when is income filing status determined for Roth IRA eligibility? Finally, since I stopped working in May when I graduated I will only be able to open an Roth IRA in my wife's name until some fool hires me, correct? Thanks a million* *(minus .25 ER)
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Aug 2, 2010 07:19
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JKicker posted:Hello investing gurus! I have been enjoying all of your intelligent comments in this thread so far, from the 13 pages I've gotten through. Getting the deductions changed will help you get less/no refund (or a huge refund or whatever your goal is), but the IRS doesn't really care. When you file, they'll either refund or charge the difference between what you owe and what you've already given them. While it wouldn't be great if you got stuck with a huge delta at the end, there's no legal consequence of being off by a lot. Your tax status for the year is determined when you file. Next Feb/March/April when you file your taxes, you can file as married jointly and that's that. Any contributions that you make in the mean time can be made just fine (you don't need to file jointly before you make the contributions), and when you files taxes jointly that'll be the end of it. Finally, I don't know if it's got a specific name, but spouses can make contributions to IRA's using the other spouses income. It's perfectly fine. Also, if you earned money at all in the calendar year 2010, then you've got even less to worry about as the IRS doesn't care when in the year you earned it. Since you worked through May, you probably earned enough to fund the thing yourself - timing doesn't matter.
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Aug 2, 2010 11:51
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Here's one for ya. Let's say hypothetically, I'll get a ~$90k tax exemption for working over seas for a majority of the year (so that'll effectively mean I'll be earning tax free for the year). Would it be to my benefit to contribute everything (after my $5k Roth IRA contribution) to the after tax 401(k) option for that year? Would there be any reason to contribute to the before tax option?
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Aug 2, 2010 14:21
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