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I believe it is the lesser of $5,000 or your taxable compensation. e: The upper limit and phase out is based on AGI
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Feb 22, 2013 07:25
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Ciaphas posted:Thanks a lot, you've been a huge help! Most personal finance plans recommend somewhere between 3 and 6 months of expenses in a very liquid emergency funds account. I don't know where $5000 fits in your situation, so adjust accordingly. Otherwise the plan seems fine enough. quote:Since the $2500 from savings has already been taxed via payroll, and whatever I get out of my IRA will have its taxes paid from it as you say, I imagine my taxes owed from/to the government for 2012 (or 2013 for that matter) won't change, but do I have to redo the 1040/etc forms anyway? (I only owed $9 this year You will likely want to. Even though it has no effect on your actual tax bill, it does serve as documentation of the contribution. In case you have to withdraw that money sometime in the future, it helps in any potential audit for clear evidence of when your basis was established. quote:(edit) Actually regarding the savings accounts, are withdrawals from Roth contributions processed fast enough for the Roth to be useful as an That depends entirely on who is handling your IRA. Some are fast, some less so; do your homework and pick a place that has fast ones if that is important to you. Any reputable brokerage will tell you up front what their response times are.
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Feb 22, 2013 17:50
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fund). Does this seem a sound starting plan?
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Alright, thanks again for the info. I think I'll leave the IRA where it is since conversion doesn't seem like it'll change much. Also I think I'll not worry about being able to withdraw on a dime; not like $5000 is going to go up much in the Roth compared to just sitting in a savings account at Citibank anyway. What should I look for in a brokerage that's important? My 401k and rollover IRA are through Fidelity thanks to my previous and current employer. They haven't done anything to piss me off, but then I just set both accounts to the 2050 retirement fund and stopped caring, so 
Ciaphas fucked around with this message at 18:37 on Feb 22, 2013 |
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Feb 22, 2013 18:34
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It depends on what you're going to be using the brokerage for. Here is a good place to start.
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Feb 22, 2013 20:07
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Hello! I just got out of the Army and I need to transfer my Thrift Savings Plan (TSP). The problem is I'm really unsure where to begin. What is a reputable company? Do I want a 401k? Roth? IRA? I need something I can add to independent of a job. Preferably with average to high gains.
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Feb 22, 2013 20:23
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My reading of the SIMPLE IRA FAQ on the IRS website is that the $12,000 limit for the year 2013 is for my deferred income only and not the employer match (which is 3%). Is that correct or do I need to reduce my contributions so that I'm not over at the end of the year because of the employer match?
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Feb 23, 2013 03:10
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Where should a Canadian actually, physically deposit savings for a downpayment? Starting in December 2013 we're thinking of putting 750/month for the next five years or so toward a $45000 down payment or maybe a boat or something. After reading a little bit, it seems like I should split it between an RRSP ($3500/year) and a TFSA ($5500/year). However, banks are offering ridiculous 1.5-3% interest on RRSP and TFSA Savings Accounts, even if I choose a GIC, and ING Direct's tax free index mutual fund has a really high MER of like 1.15%. CIBC and Scotiabank are right out. That leaves TD Waterhouse or an online service like Questrade or Scotia iTrade. Is Questrade a good place to start if I want to occasionally manage the asset allocation myself while minimizing expenses and tracking the market? tuyop fucked around with this message at 13:50 on Feb 23, 2013 |
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Feb 23, 2013 13:45
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tuyop posted:Where should a Canadian actually, physically deposit savings for a downpayment?
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Feb 23, 2013 14:57
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cowofwar posted:You shouldn't be investing it over such a short period. If it's for a down payment of sorts in the near future your primary goal should be capital preservation. The difference in Interest rates between GICs, HISA and equities will not be significant enough to warrant the risk over that time frame. So an online savings account like ING Direct? It would be nice to at least keep up with inflation over a 5 year period, wouldn't it?
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Feb 23, 2013 16:55
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tuyop posted:So an online savings account like ING Direct?
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Feb 23, 2013 18:12
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After reading BFC for the past few weeks, I've finally enrolled into my first 401(b). I'm late to the game having just turned 30 but hopefully I can things on track. Quick question... The OP states that at bare minimum, we should be saving 10% of our wage. If my employer matches 50% up to 6%, does that I mean I should put 6% into my 401 and 4% into a Roth IRA?
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Feb 23, 2013 18:20
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It's just a rule of thumb. Run the math on some scenarios if you want to get a better feel for it. Personally, my total retirement savings including 401k match has generally been 15-18% of my gross pay. For you, maxing out your match (total of 9%) plus maxing out your Roth IRA should get you in that range. That would be a decent place to start at age 30, I think. E: Assuming you don't have high interest debt that is
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Feb 23, 2013 18:45
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Hughmoris posted:After reading BFC for the past few weeks, I've finally enrolled into my first 401(b). I'm late to the game having just turned 30 but hopefully I can things on track. Quick question... The OP states that at bare minimum, we should be saving 10% of our wage. If my employer matches 50% up to 6%, does that I mean I should put 6% into my 401 and 4% into a Roth IRA? Yes, however I would slightly caution that 10% is the bare minimum. Given you're a little late (though not very much) I'd strongly consider trying to bump that up to 15-20%. Your future self will thank you. kansas fucked around with this message at 19:23 on Feb 23, 2013 |
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Feb 23, 2013 19:10
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Arrgytehpirate posted:Hello! I just got out of the Army and I need to transfer my Thrift Savings Plan (TSP). The problem is I'm really unsure where to begin. What is a reputable company? Do I want a 401k? Roth? IRA? I need something I can add to independent of a job. Preferably with average to high gains. Actually, I think that TSP just sent out an annual mailer last week discussing this very thing. Make sure to check that out before you do anything. Edit: to answer your other questions, a 401k is only through employers. We can't tell you whether to get a traditional or Roth IRA without knowing more about your income. As to where to go, Vanguard is the standard go-to suggestion. If you don't want to have to pay attention to things, just invest in whichever of their Target Retirement funds is closest to your expected retirement date. Or you can go look at how they allocate their TR fund for your age group and then do it yourself and save a few bucks in expense ratios. Edit 2: make sure your TSP balance has been allocated to something other than the G fund. (Probably an L fund, for your situation.) I saw someone's TSP account recently; she was about 55 and had very little saved, not because she wasn't making contributions but because she never changed the default allocation, which is 100% to the G fund. (The G fund is basically inflation-protected cash and is a horribly conservative investment for a young person.) 10-8 fucked around with this message at 01:38 on Feb 25, 2013 |
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Feb 25, 2013 01:28
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I hate to ask a question that I'm certain gets asked a lot, but I just want to confirm that I've correctly understood. I just got a significant salary increase and so for the first time have money available for retirement saving. I have about 8k in a 403b with TIAA-CREF from an employer that I'm leaving. Based on my understanding: -I should convert the 403b into a Roth and pay the tax bill now. Can I convert it in the 2012 tax year when I will have been in a lower bracket? -I should max out my Roth contribution for my wife and I for 2012 - $10,000 -I should contribute the max my employer will match to my new 401k -I should work to max out my Roth contribution for 2013 If new salary is 70k, I should aim for 7k in contributions across all retirement vehicles.
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Feb 25, 2013 03:30
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kaishek posted:I hate to ask a question that I'm certain gets asked a lot, but I just want to confirm that I've correctly understood. I just got a significant salary increase and so for the first time have money available for retirement saving. I have about 8k in a 403b with TIAA-CREF from an employer that I'm leaving. Based on my understanding: As far as I remember, conversions specifically are only taxable in the year that the conversion was made. kaishek posted:-I should max out my Roth contribution for my wife and I for 2012 - $10,000 Yes, in this order as long as you are sure that you can maximize your employer match before the end of 2013. 7k is low for saving for retirement. You should have at least 15% presumably.
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Feb 25, 2013 08:34
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I ended up going with Schwab's ETF portfolio builder since it meant really low management expenses and no purchase fees. I did their aggressive plan and have 0% bonds and 5% cash. In comparison Schwab's target fund would be ~3% bonds and ~2% cash. And Vanguard's target fund would be 10% bonds and 0% cash. Though I'm wondering if I should buy some bond ETFs with the 5% cash allocation. Is there any reason not to if I'm 30+ years from retirement?
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Feb 26, 2013 16:07
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So, dumb question. How does Vanguard determine how much they charge a customer per share of a fund? Is it the price they set for the fund the night before?
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Feb 26, 2013 18:50
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Orange_Lazarus posted:So, dumb question. How does Vanguard determine how much they charge a customer per share of a fund? Is it the price they set for the fund the night before? If you purchased before market close, it will be the price that it closes at. So you won't know what the price is until after the market closes. Edit: Also, that applies to exchanges between funds. If you purchased via electronic bank transfer, I believe you get the price on the following day's closing price. I am not sure anymore, because I actually get same-day closing price regardless of whether it is exchange or bank transfer, because they give this benefit to customers that have been with them for a while. 80k fucked around with this message at 19:52 on Feb 26, 2013 |
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Feb 26, 2013 19:45
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ntan1 posted:As far as I remember, conversions specifically are only taxable in the year that the conversion was made. Shoot, on the conversion issue. No way around it, though, I didn't leave the job until 2013. And yes, I can't join the 401k until 6 months but then I am pretty sure I can max it. Does 15% supersede the advice in the OP towards 10%? WHY DOES IT TAKE SO MUCH MONEY TO HAVE MONEY LATER AND NOT EAT CATFOOD. edit: but thank you, good to know I am not a total idiot and seem to understand.
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Feb 27, 2013 04:21
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80k posted:If you purchased before market close, it will be the price that it closes at. So you won't know what the price is until after the market closes. Yeah, this is exactly what happened. Thanks again. Sephiroth_IRA fucked around with this message at 17:43 on Feb 27, 2013 |
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Feb 27, 2013 17:35
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Question about choosing an investment company for my retirement investing. I just got an appointment through my university where they will be contributing 7.25% of my current salary to a 403(b). I've been given a choice between using Fidelity or TIAA-CREF, which have very similar investment options, with what seems like similar expenses. Is it a wiser choice to go with Fidelity since there are more options available through them than TIAA-CREF, or will TIAA provide me with some sort of advantage I am unaware of? I was sort of given 2 days to decide this, with NO investment experience whatsoever (beyond listening to stuff on weekend talk radio), so I'm freaking about about making the wrong decision...
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Feb 27, 2013 18:57
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You should be able to switch back and forth between the two if you choose one that ends up being crappy. Or you could split it and consolidate later maybe. Call your retirement dept and ask if you can freely switch later.
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Feb 27, 2013 20:01
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7 Bowls of Wrath posted:I've been given a choice between using Fidelity or TIAA-CREF, which have very similar investment options, with what seems like similar expenses. Is it a wiser choice to go with Fidelity since there are more options available through them than TIAA-CREF, or will TIAA provide me with some sort of advantage I am unaware of? Unless you have a need for the extra options, that shouldn't really come into the picture. Assuming you are looking at fairly basic index funds and whatnot either should work. Figure out what you would want your money in, make sure they both have that option, and look at the fees and expense ratios of your options with each. If one is better than the other, pick it. I also have the choice between these two for my 403(b) and 457(b) and picked TIAA-CREF. Some of the Fidelity funds were pretty close ER wise (like the total US index), but I found that for things like the foreign markets that TIAA-CREF is better by a pretty large margin (over or around 1% in many cases if memory serves). Overall the institutional TIAA-CREF indexes I've picked tend to have just slightly higher ER than the admiral class equivalents in my Vanguard Roth IRA.
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Feb 27, 2013 20:05
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Fancy_Lad posted:Unless you have a need for the extra options, that shouldn't really come into the picture. Assuming you are looking at fairly basic index funds and whatnot either should work. Figure out what you would want your money in, make sure they both have that option, and look at the fees and expense ratios of your options with each. If one is better than the other, pick it. Thanks for the advice, I will get a little more information, but it seems that I can bounce back and forth without too much issue. Ill let it ride in Fidelity for a few months until I can fully read-up on my options and exactly how I want to invest.
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Feb 27, 2013 21:21
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I need some goonly advice regarding my rolled-over IRA. It was a 401k from my first job after college and I'm on job #3 right now (technically it's an internship, so there are no benefits like 401k matching, which is a major reason I haven't looked into my investment options). Currently my ~$4k is sitting in a Fidelity account with 96% in short term, 2% in bonds and 2% in other, which, as a 26-year-old, is not the way it should be. I haven't touched it since it rolled over in early 2011 and I know I should be taking more risks and at least attempting to build it up. The problem is I can't contribute much to it at the moment, but I'm making motions to change that in the next month or so. With that in mind, what should I look at for investment options if I want to be moderately aggressive? I'm running blind here, so if something I said doesn't make sense, let me know and I'll try to clarify. I appreciate any advice.
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Feb 28, 2013 22:48
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Question: If I contribute to a 401k pre-tax, lowering my AGI - won't this negatively reduce my Social Security payments later in life?
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Mar 1, 2013 02:02
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I'm no expert but from the path I've seen the country going financially I think the smartest plan is to assume social security will be a pathetic fraction of what it is now by the time you retire. Rely on yourself and save as much as you can.
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Mar 1, 2013 02:16
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EugeneJ posted:Question: If I contribute to a 401k pre-tax, lowering my AGI - won't this negatively reduce my Social Security payments later in life? No it won't. Check, I think, box 3 on your W2 and it should show a number that includes your retirement pretax contributions.
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Mar 1, 2013 02:22
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EugeneJ posted:Question: If I contribute to a 401k pre-tax, lowering my AGI - won't this negatively reduce my Social Security payments later in life? I would hope not, considering that you did pay social security and medicare taxes on the money you contributed to your 401k.
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Mar 1, 2013 02:26
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I'm not sure if this is a question for here or the tax thread... or both. I noticed this year I'm going to owe a small amount in taxes. The tax program showed me what would happen if I contributed $X to a Traditional IRA - reducing my taxable income and possibly actually returning a refund. I've got some money I'd like to throw towards retirement anyway and I noticed that I can direct roll over money from a traditional IRA to my 457 plan. Though I can't direct deposit it without it coming from a pay check deduction. While I know I'd be essentially deferring taxes on the money... would it be possible to create an T/IRA account to then subsequently roll-over the funds in to my 457 without creating any other issues? Would this be an avenue for me to throw "end of the year" money in to my retirement savings while also reducing taxes and possibly getting something back from Uncle Sam.
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Mar 1, 2013 08:06
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Wouldn't it be better to do the opposite? I'm supposing that a Traditional IRA through a company like Vanguard will have more options and lower fees than your 457. Although, I don't think you can roll your 457 into the IRA until you leave your job. Also, maybe I'm wrong but I don't see there being any downside (all other things equal) in having two separate accounts or a benefit to having just one. If you have $1000 in an IRA earning 10% and 14,000 in a 457 earning 10% then you're going to be earning 10% @ 15,000 whether they're consolidated or not. Sephiroth_IRA fucked around with this message at 14:50 on Mar 1, 2013 |
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Mar 1, 2013 14:47
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Orange_Lazarus posted:Wouldn't it be better to do the opposite? I'm supposing that a Traditional IRA through a company like Vanguard will have more options and lower fees than your 457. Expenses are what they are, but I'm pretty sure that the big advantage of a 457(b) (being able to take money out w/o the 10% penalty without having to reach a particular age) goes away if you roll it into a Traditional IRA with no way to get it back. This may or may not be an issue depending on if you are wanting to retire early, of course...
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Mar 1, 2013 16:53
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Ah I wasn't aware the 457 had distribution rules that differed from the 401k.
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Mar 1, 2013 17:05
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Orange_Lazarus posted:Wouldn't it be better to do the opposite? I'm supposing that a Traditional IRA through a company like Vanguard will have more options and lower fees than your 457. Although, I don't think you can roll your 457 into the IRA until you leave your job. Thanks for the help folks. The main reason I've stuck with my 457 instead of the other options, including a Roth (will likely one day bite me in the rear end with fees/taxes), is because I can withdrawal earlier if I retire earlier. And yeah, I can't roll it over to an IRA as long as I'm an employee here. That being said I guess the thing to do would be to look in to opening a traditional ira without intentions of rolling over (say with Vanguard) as it would maintain it's benefits.
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Mar 1, 2013 21:07
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Piggybacking off the above few posts, I need some advice in regards to diversity -- I work for a local governmental agency, (The Man), and have been with them for a little over 13 years. I am eligible to retire in another 14 years, at age 47. I plan on staying way past that, as my defined benefit with them wouldn't be enough to avoid having to go to work somewhere else. I am fine with this, and am not looking to retire at such a young age anyway and expect I'll still love my job just as much as I do now. I hope, heh. County Plan details - 7% gross salary deposited every paycheck 7% interest applied every Dec 31st, based on the balance at the beginning of the year Employer match of 2.25:1 for my deposits Final benefit based on the account balance, not an average of last x years salary or similar We can not put additional into this account, unfortunately. If I retire at 60 (and assuming no cost of living or wage increases), my deposits would total 393,907, employer matching of 886,291, for a total balance of 1,280,198. This would translate into a monthly benefit of 9,930. In addition to the above, I have a 457(b) through GreatWest. I contribute 100 per paycheck, (twice monthly). I have my 77% go into T Rowe Price 2030 fund (TRRCX), and 23% going into Lazard Emerging Markets Equity (LZEMX). My balance is only at 9,122 due to my small contributions, but I have been happy with the rate of return. (10.04% for the last 12 months, 34.59% for the last three years). Should I be spreading out into a Roth IRA as well, or just funnel an extra 100/month or so into my 457(b). While my DB plan with the County is 'solid', (over 91% fully funded as of the last report 18 months ago), I don't know if I should put my spare funds into the existing 457b or do the IRA thing. Thanks in advance for the input. Madbullogna fucked around with this message at 07:30 on Mar 5, 2013 |
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Mar 5, 2013 07:27
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Not sure if this should be in Newbie thread or not. I am 26 and married (also 26). I am a doctoral student with a master's in Physics pursuing a PhD in Electrical Engineering (same field of research, actually - so same industries would apply - semiconductors, optics, and a host of other related things). I was awarded a Fellowship which increases my pay a bit. I am awaiting word on another fellowship. Graduate school is an enormous opportunity cost in terms of pay. When I am finished, I may or may not find a job in academia, and I may or may not end up underemployed in industry. In any case, my father has offered to get me started in a Roth IRA done through, say Scottrade (what he uses). I have minor revolving credit card debt, my wife has $12,000 remaining in student loans and she makes about 55k a year. I will likely make 22k starting in August. At the moment I make 18k (Stay out of school, folks!). It is difficult to foretell the future, but I feel like I could accept some level of risk giving that I should be at least somewhat competitive in the job market some years down the road. My father is a very reliable and generous person - we have a solid relationship and no history of him 'taking advantage' of us. He has been broke all of his life until the last 8-10 years or so, but still spends almost nothing. The condition of his offer is that he may ask me to pay him the principal back (minus taxes) after I'm settled with a PhD and a job. The idea is that I at least have an account sitting there, bypassing the 'difficult-to-save-because-you-made-a-poor-life-choice' stage. Any advice or recommendations? I would like to invest conservatively from this pool of money. Or would it be reasonable to take risks on a small portion?
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Mar 5, 2013 15:24
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If you give back the principal after grad school, you'd end up with 4-5 years' interest from what, $5000-10000? in a conservative investment. It's not worth the silliness unless there's a decent chance he'll just let you keep it. Ask for a $1000 outright gift instead, and use it to pay off your credit cards. Then with the next $1000 you save, start an IRA on your own and drop in $50/mo - you can handle that on your salary. Uh, depending on the situation with your wife's loans of course.
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Mar 5, 2013 16:16
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Kudaros posted:Not sure if this should be in Newbie thread or not. e: misread
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Mar 5, 2013 16:21
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If it won't hurt your father financially, absolutely do it.
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Mar 5, 2013 16:35
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