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SeaWolf posted:One more question: To the best of my knowledge it's stuck there until she changes employers.
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Apr 15, 2012 03:04
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I believe first time homenuyers can withdraw up to 100k. But, that may just be Roth IRA or something.
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Apr 16, 2012 15:47
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Zeitgueist posted:So I have a quick question regarding parking some money in a low risk bond fund with Fidelity or Vanguard. It's pretty easy. If you sell a fund, it takes about 1-3 business days to settle in your account. This depends on what time of day you sold (before the close of the markets for instance) and whether the fund is in-house or from another family. For instance, if you are at Fidelity and sell a Fidelity fund, it will settle the same business day. From there, it takes about 2-3 business days for an ACH transfer to your external bank account. You will want to link one after you open an account though. They may make you verify two small deposits. Basically I'd say you should be able to get the cash into your own bank account within 5 days. To play it safe I'd set aside 7-10 business days though. Worth pointing out that Fidelity has something called a Cash Management Account you can setup. It's free and works just like a checking account. They'll send you free checks and a free debit card. There is no minimum I believe as long as you have a certain amount held at Fidelity. It's nice to have in case you run into an emergency and need cash right away. You can sell your funds and instead of waiting for the ACH, you can run to an ATM machine or write a check off the account.
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Apr 17, 2012 02:11
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I am 24 and I work for a company that doesn't offer a 401K. It is kind of a bummer but I grossed over 80K with them last year and realistically should be looking at 6 figures this year. I have maxed out my Roth IRA the last two years. I am happy with what that is doing right now. I got 340 shares of GE for 14.32 one year and the next I got into Pimco High Income Fund (PHK) which has been ok. I also have an investment account with ING where I have been dicking around with the market. I'm 10% down right now but I am in no hurry to sell, as long as in the end I get out ahead of what I would have gotten by having it sit in a savings account I will be happy. Recently I opened up an account with Vanguard. Getting into VFORX, VEIEX, VFINX for the minimums. I have a large chunk of change in savings with ING earning .8% interest. I will be buying a car outright soon and after and 6 months of emergency savings I should have about 10K that I would be looking to invest. Call it a five year or longer investment. Maybe I use it as part of a down payment on a house or maybe it sits until I retire. If I need cash fast I would sell off some stock before dipping into this fund. What sort of investment should I be looking at?
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Apr 17, 2012 20:46
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Sound_man posted:I have maxed out my Roth IRA the last two years. I am happy with what that is doing right now. I got 340 shares of GE for 14.32 one year and the next I got into Pimco High Income Fund (PHK) which has been ok. 12 years ago GE stock was $60/share. Four years ago it was $30/share. After the crash it plummeted to $6 and it has wavered between $15-20 for the past three years. Their dividend is also nothing to write home about. The quarterly statements from your IRA fund probably look great right now but this is not a stock I would plan my retirement on.
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Apr 19, 2012 17:36
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I know you are able to roll over balances from previous employers' 401(k) programs to your new employer. I'm curious, though, if there is any sort of limit on how long you have to do it, or how many past employers' funds you can roll over. There's a strong chance that I'm going to end up on a third, fourth, possibly even fifth employer this year, each one with its own 401(k). (Pharma is astonishingly fickle as an employer.) Meanwhile, I've got 401(k) funds with my current employer and my previous one (who has barred me from performing a rollover until December 2012 for violating a round-trip transfer rule between two of their Vanguard funds). Is there any sort of limitation on how far back down the tree of employers your rollovers can go?
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Apr 19, 2012 18:18
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I can think of no reason why you would roll them over into anything other than an individual IRA regardless.
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Apr 19, 2012 18:26
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I rolled over a 401(k) that I had forgotten about into an IRA account 4 years after I left. There isn't a limit.
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Apr 19, 2012 18:39
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MrKatharsis posted:12 years ago GE stock was $60/share. Four years ago it was $30/share. After the crash it plummeted to $6 and it has wavered between $15-20 for the past three years. Their dividend is also nothing to write home about. The quarterly statements from your IRA fund probably look great right now but this is not a stock I would plan my retirement on. Would you suggest selling at $20-$25 a share and rolling it into a higher yielding fund?
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Apr 19, 2012 20:24
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I'd suggest rolling it into a more stable fund. Individual stocks are pretty volatile for long-term/retirement savings. It's trading at $19 right now and may well go up in the short term, but the timing is your call.
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Apr 19, 2012 20:38
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Sound_man posted:Would you suggest selling at $20-$25 a share and rolling it into a higher yielding fund? I would suggest using that money and just buying an S&P index fund.
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Apr 19, 2012 21:03
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Sound_man posted:Would you suggest selling at $20-$25 a share and rolling it into a higher yielding fund? Put it into some sort of index or mutual fund. You might still own a little bit of GE through the fund, but if/when GE goes bankrupt you'll also own parts of the companies that will make a ton of profit off their former customers. If you want to trade individual stocks that's awesome and you should do it. We even have a thread with a ton of other people doing it here. But your retirement investing should be very different from your individual stock investing - you should be focused on "slow and steady" for your retirement funds.
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Apr 19, 2012 23:34
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A GIANT PARSNIP posted:But your retirement investing should be very different from your individual stock investing - you should be focused on "slow and steady" for your retirement funds. Gotcha I see what your saying and it makes sense. I'll keep an eye on DNP and EAD for a while.
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Apr 20, 2012 00:12
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Gangsta Lean fucked around with this message at 04:34 on Oct 2, 2012 |
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Apr 20, 2012 04:50
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I'm in my mid-twenties and will for the first time be eligible for an employer 401(k) plan starting next month. I have the option of contributing to a pretax 401(k), to an after-tax Roth 401(k), or to some combination of the two. The employer match is the same regardless. Could someone explain in broad strokes under what circumstances contributing to a pretax plan is advantageous, and vice-versa? I understand the practical differences between a regular 401(k) and a Roth, but I just don't know how best to analyze which one is better for me.
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Apr 20, 2012 15:17
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So. My wife and I each currently have two Roth IRAs each with a principal $5000 for tax year 2011 invested and they're both currently fully invested in the target retirement 2060 funds. The plan was to use the ROTH IRA's as a short term investment vehicle. We would like to use that principle to make a down payment on a home or some other investment in the future. So I'm going to assume putting all of our money in a 2060 fund (90%) stocks was a bad idea. What fund would you guys suggest that has low risk and moderate growth?
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Apr 20, 2012 16:50
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Orange_Lazarus posted:So.
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Apr 20, 2012 16:51
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Actie posted:I'm in my mid-twenties and will for the first time be eligible for an employer 401(k) plan starting next month. I have the option of contributing to a pretax 401(k), to an after-tax Roth 401(k), or to some combination of the two. The employer match is the same regardless. I'll see what I can do. The most practical way to see the difference is to calculate the future value of the accounts and your running tax bill. If we assume no taxes, the value of an account at retirement would be given by the future value of an annuity formula: code:FV is the future dollar value PMT is the regularly invested amount i is the rate of return per compounding period, and n is the number of periods. If we assume that you make a $5000 contribution in a lump sum at the end of every year for 40 years, with an average annual rate of return of 5%, the value of the account will be: code:code:If there were not tax advantages at all, then the we would see taxation both on contributions at rate tw, and withdrawals at tw, and the new formula for calculating the account value at retirement would be: code:code:code:For the Traditional IRA, contributions are tax free. So tw = 0%, and tr = 25% This shakes out to: code:This shakes out to: code:If we set the statutory rate for tr = 15%, then we would see: code:However, if we change tr to 35%, then: code:So by now it should be obvious that your marginal tax rate in retirement is the single most important variable to consider here. If your marginal rate is going to be lower during retirement than it is during your working years, then the IRA/401k makes more sense. If your rate will be higher, then the ROTH makes more sense. How do you know which will be the case? Well, you can try to predict the future of tax law 40 years from now and run the numbers under any taxation, growth, and time line scenario that you please, but good luck predicting the tax law even for the next 5 years. You shouldn't think of the ROTH versus Traditional question as an optimization problem, but rather as an opportunity to hedge against this uncertainty. If you decide to go with the ROTH 401k through your employer, open a personal traditional IRA, and if you go with the 401k through your employer, open a personal ROTH IRA. Or split your contributions evenly to both options at work. It's your choice. I hope this helps. I spent waaaay too much time on it. bam thwok fucked around with this message at 20:49 on Apr 20, 2012 |
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Apr 20, 2012 18:19
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bam thwok posted:Masterly explanation of traditional v Roth. That was extremely helpful and also awesome. Thank you for going through that step by step. You're right that, given one's lack of information about the future of taxes and even the future of one's own income trajectory (how can I possibly predict whether my marginal tax rate will be higher in 40+ years?), this should be a question of how best to hedge. Unfortunately, I don't think opening a personal Roth IRA is a very strong hedge for me (assuming I went with the traditional 401k through my employer, which was originally my inclination). My understanding is that I could contribute only $5000 to it, whereas I can contribute up to $17000 to my traditional 401k. Actually, if I'm reading this correctly, then it seems I cannot contribute to a Roth IRA at all, because my AGI will be greater than $68k and my employer offers a 401k. In light of that, maybe I will just split down the middle for my Roth and traditional 401(k)s. And then, if I've got money to spare . . . traditional IRA?
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Apr 20, 2012 22:01
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Well keep in mind a Roth IRA isn't a deduction.
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Apr 20, 2012 22:08
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You can contribute to a Roth IRA up to around 107k (in 2011) MAGI. From there you can contribute less than $5000, up to a MAGI of around 122k where you can no longer contribute. You can contribute to a traditional IRA on a gazaillion dollar income. You can no longer DEDUCT those contributions after a MAGI of 60-some k. As far as I know you can never deduct contributions to a Roth IRA. Edit - Traditional IRA deducibility phases out starting at 56k and completely at 66k. Unless your employer does not offer 401k, 403b, etc. Then they are all deductible. All figures are for single filers. I can't believe I know all this crap, taxes were a pain in the rear end this year. Infinotize fucked around with this message at 22:31 on Apr 20, 2012 |
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Apr 20, 2012 22:26
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Infinotize posted:You can contribute to a Roth IRA up to around 107k (in 2011) MAGI. From there you can contribute less than $5000, up to a MAGI of around 122k where you can no longer contribute. Additionally, no matter how much you make, you can make a $5000 nondeductible contribution to a traditional IRA, and then roll over that traditional IRA into a Roth IRA to get around the income restriction. Hooray for tax loopholes!
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Apr 20, 2012 23:01
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I really need some tax help/opinions. If you sell all your shares in an ETF, is the entire amount plus gains considered income to be added with any other taxable income for the year (on line 43)? In 2010, I sold some ETFs in my Scottrade account so I could consolidate and simplify into only a few funds in that account. All the money was reinvested within days for slight total loss (but with some gains here and there). So today, I received a letter from IRS saying that since only the small gains were claimed as income (Form D, short and long term prices) that my taxable income for the year was grossly under represented -- and I now owe back taxes. This sucks.
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Apr 20, 2012 23:20
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substitute posted:I really need some tax help/opinions. If you sell all your shares in an ETF, is the entire amount plus gains considered income to be added with any other taxable income for the year (on line 43)? Did you report the entire sale amount, followed by cost basis, to figure out the gains? Or did you just put in the gains (and just do a hack job on Schedule D)? As long as you reported all sales from 1099-B, and then accurately filled out cost basis, you should be OK. My guess is you botched Schedule D. Read the instructions more carefully.
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Apr 20, 2012 23:42
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80k posted:Did you report the entire sale amount, followed by cost basis, to figure out the gains? Or did you just put in the gains (and just do a hack job on Schedule D)? Holy poo poo. Both short term and long term purchase dates were just listed on single lines as "various" and then the gain/loss. No individual funds were listed with cost and gain/loss. This is through my father's CPA... so I'll be talking to them Monday morning. I've never even met the main CPA, because my taxes are so simple every year and my dad just takes mine along with his business stuff.
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Apr 21, 2012 00:31
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NJ Deac posted:Additionally, no matter how much you make, you can make a $5000 nondeductible contribution to a traditional IRA, and then roll over that traditional IRA into a Roth IRA to get around the income restriction. Hooray for tax loopholes! I'm a total neophyte at this stuff, but I can't wrap my head around this at all. What's the point of contributing directly to a Roth IRA at all if I can just convert a traditional to a Roth at my whim?
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Apr 21, 2012 05:28
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Actie posted:I'm a total neophyte at this stuff, but I can't wrap my head around this at all. What's the point of contributing directly to a Roth IRA at all if I can just convert a traditional to a Roth at my whim? You pay taxes on the converted amount.
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Apr 21, 2012 14:10
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Guy Axlerod posted:You pay taxes on the converted amount. So in effect you get taxed twice? And what determines the size of the tax burden—my income? The size of the conversion?
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Apr 21, 2012 15:09
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Unless you were over the income limits, you did not pay taxes on your Traditional IRA contributions. When you convert the Traditional IRA money to a Roth IRA, the converted amount is treated as income.
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Apr 21, 2012 15:15
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You all are forgetting about the tax basis. When you contribute to a traditional IRA, you don't pay income tax on that money, so it has $0 tax basis. When you convert to a Roth IRA, the entire value of the account is taxed. Unless of course, you are over the income limit to deduct the contribution. In this case, you do pay taxes on the amount, so your contribution to your traditional IRA has a $5000 tax basis. If you were to convert it immediately to a Roth, you would not pay tax (this is the loophole), since you have an asset worth $5000, and you have already paid $5000 in taxes. If you wait, and you convert once the value of your account has risen, you will pay income tax on that gain. The point of contributing to a Roth IRA instead of a traditional IRA is that the gains would be tax free in a Roth, whereas they are taxed upon conversion if you use a traditional. Also, the whole loophole described above was the result of the law changing to remove the income limit on Roth conversions, and is a pretty glaring loophole, as Roth contributions still have an income limit. Presumably congress will fix it someday, and you may no longer be eligible for converting your traditional to a Roth.
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Apr 21, 2012 15:47
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Tewdrig posted:The point of contributing to a Roth IRA instead of a traditional IRA is that the gains would be tax free in a Roth, whereas they are taxed upon conversion if you use a traditional. Also, the whole loophole described above was the result of the law changing to remove the income limit on Roth conversions, and is a pretty glaring loophole, as Roth contributions still have an income limit. Presumably congress will fix it someday, and you may no longer be eligible for converting your traditional to a Roth. Wow, that is a pretty substantial loophole, and I'm surprised it has already lasted two years. So here's the question. Let's assume that I'm single and that my 2012 MAGI will be greater than 68k—meaning my contribution to a traditional IRA would not be tax deductible (because my employer offers a 401k plan)—but less than 110k, meaning I could contribute to a Roth IRA if I so desired. I assume a lot of folks reading this are in this situation. In this case, there's no reason to put 5k in a traditional IRA, is there? Only the Roth would be tax-advantaged, in that I wouldn't owe taxes on any gains. Whereas for the traditional, I'd have to pay taxes both on the 5k contribution and on the gains. I realize that so long as the loophole exists, I could convert without penalty. But why should someone even bother going through those hoops? Especially since the opportunity might disappear, if/when Congress intervenes. Put more simply: is there any reason to contribute to a traditional instead of a Roth, assuming you earn too much to deduct the contribution anyway?
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Apr 21, 2012 18:11
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Actie posted:Put more simply: is there any reason to contribute to a traditional instead of a Roth, assuming you earn too much to deduct the contribution anyway? There is no income limit to contribute to a traditional IRA. So anyone with earned income can do it. But if you're above the deduction limit it's pointless to do this as it is already taxed money that will be taxed again on withdrawal. Hence the traditional to Roth conversion; if it's in all cash and you convert right after deposit, since there are no gains and it's already taxed, converting should not cost anything in taxes. So now you have a Roth IRA even though you're past the contribution limit (and if you make too much to contribute to a Roth you'll probably be in a high tax bracket in retirement). Example: doctor in private practice has mAGI of 200,000. can't contribute to roth, but can make nondeductable contribution to traditional IRA (so this is already taxed). then, a week after depositing money, recharacterize to Roth IRA. now they have a tax-free retirement account even though they make too much.
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Apr 21, 2012 23:13
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PsychoAndy posted:There is no income limit to contribute to a traditional IRA. So anyone with earned income can do it. But if you're above the deduction limit it's pointless to do this as it is already taxed money that will be taxed again on withdrawal. Hence the traditional to Roth conversion; if it's in all cash and you convert right after deposit, since there are no gains and it's already taxed, converting should not cost anything in taxes. So now you have a Roth IRA even though you're past the contribution limit (and if you make too much to contribute to a Roth you'll probably be in a high tax bracket in retirement). Right. But my question pertained to someone who is above the deduction limit for a traditional but below the contribution limit for the Roth. So if the end goal would be to put that 5k into a Roth (via the conversion loophole), then someone in my position would just stick the money in the Roth directly—because we can. I was wondering whether this overlooked anything—say, some advantage to the traditional I don't know about. But I assume not.
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Apr 22, 2012 05:49
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Nope you've got it. The loophole is only for those who make more than the ROTH limit.
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Apr 22, 2012 09:56
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How do I tell, at the beginning of the year, whether I'm going to hit the roth limit? I mean, I can just contribute 5k to my Roth IRA, and then...maybe I'll get a raise, maybe I'll get a bonus, etc. What happens if I contribute 5k and then hit the limit (which if I understand it, means I can contribute less than 5k but not 0)? Do I remove money from my IRA? Do I pay extra taxes on it? Do I get the IRS sent to my house?
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Apr 22, 2012 14:43
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silvergoose posted:How do I tell, at the beginning of the year, whether I'm going to hit the roth limit? I mean, I can just contribute 5k to my Roth IRA, and then...maybe I'll get a raise, maybe I'll get a bonus, etc. What happens if I contribute 5k and then hit the limit (which if I understand it, means I can contribute less than 5k but not 0)? Do I remove money from my IRA? Do I pay extra taxes on it? Do I get the IRS sent to my house? I just had to do this this year. I started 2011 and 2012 well under the income limit and tossed the $5k in early January as I usually do, then a whole bunch of stuff happened at work and shot me past the limits for Roths! It turns out it's pretty simple to fix, but took me a bit to find the google keyword I was looking for. You're going to recharaterize your contribution from a Roth to a traditional IRA. http://www.investopedia.com/articles/retirement/03/092403.asp It only took me three extra steps: 0) Open up an empty Traditional IRA with Vanguard (or your preferred IRA provider). 1) Call up Vanguard and tell them you'd like to recharacterize your 201X Roth contribution to a traditional IRA. They'll ask you want funds you want to pull the money from and what funds you'd like to contribute them to in the new Traditional IRA. They'll also pull any gains generated from that contribution as well and place them in the Traditional IRA. 2) When it's time to file taxes, you'll have to file a form 8606 and declare the traditional IRA contributions as non-deductible. devilmouse fucked around with this message at 16:12 on Apr 22, 2012 |
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Apr 22, 2012 14:55
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devilmouse posted:1) Call up Vanguard and tell them you'd like to recharacterize your 201X Roth contribution to a traditional IRA. They'll ask you want funds you want to pull the money from and what funds you'd like to contribute them to in the new Traditional IRA. They'll also pull any gains generated from that contribution as well and place them in the Traditional IRA. Is there a penalty to recharacterizing? Do you have to pay taxes on any Roth gains?
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Apr 22, 2012 15:35
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Actie posted:Is there a penalty to recharacterizing? Do you have to pay taxes on any Roth gains? No, because Traditional IRAs get taxed on withdrawal. The recharacterization, however, is filed as non-deductible, whereas generally traditionally IRAs are deductible.
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Apr 22, 2012 16:14
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I am trying to adjust my Fidelity 401k investments because right now all I have is their Fidelity Freedom 2050 targeted retirement fund (FFFHX) which is apparently crap. A few years ago I stopped contributing to that (no company match) and started a Roth IRA at Vanguard, but I'd like to start contributing to my 401k again, I just want it to not be a lovely fund. My Vanguard contributions go into their 2050 target fund, VFIFX, which has a decent expense ratio and Morningstar rating (though it has underperformed the market this year pretty consistently for reasons I don't understand). I would prefer a simple investment option that I don't have to constantly juggle for my Fidelity, but I don't want to be putting my money into a lovely fund. They have a couple indexed funds with low ratios but I'm not sure how many funds in what categories I should be going for. I'm not even sure if the Rating Category is what I should be concerned with, or what they mean really. Here are two comparisons I did on their site, one based on Morningstar rating and the other on expense ratio:   Help? Edit: I'm 26, single, make around 80k (gross, 55-60k net), have 20k+ in savings, 25k+ in investments between Vanguard and Fidelity, and don't have any large purchases like a house planned in the near future. Edit2: The Spartan Total Market and Extended Market funds, does that mean that they are broad investment funds? Would something like those be an ok investment to just hold one fund? If I'm not doing the targeted retirement fund, how many funds should I be holding? Should I be holding multiple funds even if I'm doing a targeted retirement fund (like at Vanguard)? sighnoceros fucked around with this message at 15:29 on Apr 23, 2012 |
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Apr 23, 2012 14:47
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GOONS ARE MEAN
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So I'm in the process of finally opening a Roth IRA. My question at this point, is would it be wiser to open a CD IRA or a Savings IRA? The only benefit I can see from the CD is that if I get a 60-month term, I get a 1.00 rate whereas the savings IRA has a rate of 0.80%. I'm 25 if it matters, and will likely not begin taking money out of this thing for at least 25-30 years.
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Apr 23, 2012 19:56
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