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Fancy_Lad posted:Personally, I prioritize my HSA maxing between steps 2 and 3. How are you handling your medical expenses? Pay out of the HSA? Or pay out of pocket and retain the receipts for retirement? Just curious which route people are picking.
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Jun 13, 2014 16:17
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.Z. posted:How are you handling your medical expenses? Pay out of the HSA? Or pay out of pocket and retain the receipts for retirement? Just curious which route people are picking. I'm actually debating it right now. I could use the HSA money upfront now to help sustain my recent wedding travel and car loan payoff, but I know the returns on my HSA investments will likely outpace the car loan interest (2.19%).
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Jun 13, 2014 16:23
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Sorry! More questions - there seems to be a cap on what you can withdraw from a SEPP? Mr Money Mustache talks about it being a supplemental way to draw some money, not the main way. It sounds like I'll still need some sort of non tax privileged account? http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/
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Jun 13, 2014 16:27
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xie posted:Sorry! More questions - there seems to be a cap on what you can withdraw from a SEPP? Mr Money Mustache talks about it being a supplemental way to draw some money, not the main way. It sounds like I'll still need some sort of non tax privileged account? Edit: ignore me, I misunderstood early distribution. SiGmA_X fucked around with this message at 03:44 on Jun 14, 2014 |
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Jun 13, 2014 16:35
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xie posted:edit: Unless you're talking about something else that's more long term? I'm not very familiar with HSA stuff. My employer provides lifetime medical if you retire after 55 (you're so limited in the USA if you want to retire early!). I believe the funds in my health FSA must be used that year FSA and HSA aren't the same... Random Google result: http://www.benefitspro.com/2012/05/08/2013-hsa-and-fsa-cheat-sheet xie posted:edit: I do have access to a 457b but make nowhere near $200k. xie posted:edit: Wait a tick - aren't I locking my funds up in a Roth IRA until we're almost 60? Where should I be putting this money so that we can actually stop working in our 40s? I'm not sure where the 200k figure comes from - perhaps this is some sort of limitation your employer imposes? My employer (also a University) has no income restrictions on the 457 account. Basically a 457(b) works very similarly to a 403(b) or a 401(k), except there are no age requirements to take money out without penalty. This is a good tax-advantaged solution for early retirement folks if you have access and the ability to max this out. Also on your Roth IRA, you can withdraw the money you put into it at any point with no taxes and no penalty (at least with today's rules). It is just earnings that you would be penalized taking out before you hit retirement age (ignoring the Substantially Equal Periodic Payments options we have today) ER is something I'm also strongly considering with my plan being to use my 457(b) as the primary passive income and Roth contributions as a "buffer" when needed. I also have a 403(b) that is my "when I'm for for-real old" pot of money since I have no confidence in social security. Assuming you are planning on living past retirement age, you need to have a plan on how you are dealing with that, so some amount of your money "locked away" isn't a bad thing. Of course the problem is that all we can do is make guesses and assumptions on the variables like long term capitol gains tax rates, income tax rates, health insurance, the rules for Roth/Traditional IRAs, 401/403/457 accounts, HSAs, social security, so on and so forth. Just because these things work the way they do today, doesn't mean they will necessarily work the same in 10,20,30 years. Hedge your bets. .Z. posted:How are you handling your medical expenses? Pay out of the HSA? Or pay out of pocket and retain the receipts for retirement? Just curious which route people are picking. Personally, we are paying our medical expenses out of the HSA. I don't think either option is "wrong", but my reasons for this are three-fold: 1) I have this silly hope that at some point socialized medicine will be a reality in America, therefore reducing the need for a massive amount of HSA savings. 2) There is no guarantee that HSA rules won't change. Zero tax now is better than possibly zero or lower tax in the future. 3) I'm not maxing out all tax-advantaged options yet. My wife and I both have 457(b) options ($17.5k/year each), I have a 403(b) ($17.5k/year), she has a pention, the HSA ($6.55k/year total), our Roths ($11k/year total). Over $70k/year is a whole lot more in tax advantaged/retirement options than most couples have 
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Jun 13, 2014 16:37
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xie posted:Sorry! More questions - there seems to be a cap on what you can withdraw from a SEPP? Mr Money Mustache talks about it being a supplemental way to draw some money, not the main way. It sounds like I'll still need some sort of non tax privileged account? It really depends. Keep in mind his goal was to retire at 30, not in his 40s. If you contribute the max to your 401k plan for 20 years and have a modest employer match, you can have 1 million in there. So it you contributed between 25 and 45, and then retired, according to the calculator he linked you'd be able to withdraw 45k per year. If you've managed to pay off your home in those 20 years, you can live off that even after inflation, no problem. Plus you probably have a maxed out Roth at that point you can take another smaller SEPP for. And if inflation gets to be too crushing after ten years or so, limited SS benefits are just around the corner. From his story, he retired at age 30 with well under 200k in his 401k and opted to just let it ride, because obviously if he withdrew enough to live on he'd run out of money and then he'd also get hit with the tax penalty because he went off the SEPP early  He says himself: quote:Overall, any of these strategies will work, but the issue remains the same for early retirees – because of contribution limits, your 401k will probably not be large enough to retire on until you’ve made at least 20 years of maximum contributions and seen some investment gains as well. If you're retiring in your 40s, the bolded should apply for you. Nail Rat fucked around with this message at 16:45 on Jun 13, 2014 |
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Jun 13, 2014 16:38
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I do not have employer match. My employer puts 5% in the 403b until I turn 40, then 10%. No matching ever.Fancy_Lad posted:FSA and HSA aren't the same... Random Google result: Yeah so this is a non-starter for me it seems like. It's not offered to me. I should use a little but in the FSA since in 2014 they now offer the debit card option, but our out of pocket health costs are seriously ~200 a year. quote:I'm not sure where the 200k figure comes from - perhaps this is some sort of limitation your employer imposes? My employer (also a University) has no income restrictions on the 457 account. Basically a 457(b) works very similarly to a 403(b) or a 401(k), except there are no age requirements to take money out without penalty. This is a good tax-advantaged solution for early retirement folks if you have access and the ability to max this out. A 457 is only open to high earners here over $200k.  "The University 457(b) Deferred Compensation Plan allows certain faculty and staff to set aside a tax-deferred portion of their salary, in addition to tax-deferred annuity (TDA) deductions. Complete details about the program are available in the plan highlights. Eligibility Employees whose base salary is at least $200,000 (for 2014) and reside in certain states are eligible to enroll in this plan in 2014."
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Jun 13, 2014 16:44
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xie posted:I do not have employer match. My employer puts 5% in the 403b until I turn 40, then 10%. No matching ever. Well that's functionally the same in the calculations I'm talking about. Without knowing your salary it's hard to run the numbers but if you contribute the max amount for 20 years and get 8% gains with your employer contribution, you'll have somewhere between 900,000 and $1,000,000, enough to start a livable SEPP. If you've maxed Roth as well, figure that will have 300,000. Between the two you should have an income of around 40k in inflation-adjusted dollars from combined SEPP. Nail Rat fucked around with this message at 16:51 on Jun 13, 2014 |
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Jun 13, 2014 16:46
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I'm not in a position to put in 20% of my pre-tax earnings right now unfortunately. I make around 63-65k and live in Boston. I'd be underwater if I maxed out both within 6 months. I'm attempting to move in that direction now, and hoping to take a big bump in salary in the near future. My rent is currently ~28% of my post tax income. edit: I also have ~10k remaining in student loans which are a priority for me. xie fucked around with this message at 16:56 on Jun 13, 2014 |
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Jun 13, 2014 16:53
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xie posted:I'm not in a position to put in 20% of my pre-tax earnings right now unfortunately. I make around 63-65k and live in Boston. I'd be underwater if I maxed out both within 6 months. Then you don't need to worry about whether you should be putting any into taxable investments so you can retire before you have enough in your 403b to start an SEPP, because right now that's not realistic at all. Basically: no in your current situation you shouldn't be considering taxable investments.
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Jun 13, 2014 16:57
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OK, thanks for the help. I am absolutely going to max out a Roth this year and probably put a few extra thousand into my 403b, with more next year, and hopefully maxing both out starting in 2016. In 2016 we plan to move out of the city and drastically decrease our housing, and if I left the University for a private sector job would see an almost immediate 20k+ pay increase.
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Jun 13, 2014 16:59
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xie posted:OK, thanks for the help. I am absolutely going to max out a Roth this year and probably put a few extra thousand into my 403b, with more next year, and hopefully maxing both out starting in 2016. In 2016 we plan to move out of the city and drastically decrease our housing, and if I left the University for a private sector job would see an almost immediate 20k+ pay increase. And in that case you'd be able to use that pay increase to max out a 401k and still have a little left for quality of life improvements 
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Jun 13, 2014 17:04
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Nail Rat posted:And in that case you'd be able to use that pay increase to max out a 401k and still have a little left for quality of life improvements That's the goal. Neither of us have ever been "increased lifestyle" people besides some travel & the occasional eating out. I've been hesitant about private sector because I enjoy not working for a bank or something, but I'd rather make $95k at a bank for 15 years than $65k at a college forever. I'm due a raise any second now (it's past due, HR problems) and get a raise in Oct (mostly COL), and 100% of that is going to Roth/403b. I'm not even adding it as extra income in our monthly budget.
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Jun 13, 2014 17:07
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SiGmA_X posted:Afaik no, you can draw down as much as needed. As long as they're substantially equal.
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Jun 13, 2014 19:44
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My tax advisor had me do something called a "Backdoor Roth IRA Conversion" this year and it was a huge pain. I had to send my broker 2 different paper forms through the mail, wait for those to clear, then send another paper form through they mail. I filled them out with a pen. They wouldn't let me email them a scanned pdf, and they wouldn't even take a fax. The whole thing sucked. Is there a broker where I can just press a button on a website that says "Do Backdoor Roth IRA Conversion" every year instead of having to jump through all these hoops? If so, I'd transfer my Roth IRA over in a heartbeat. Related: How hard is it to transfer your Roth IRA to a different broker?
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Jun 14, 2014 20:07
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To clarify on the 457b comments: If a state or federal govt employee has access to a 457b, it's usually treated as a retirement plan with the same benefits as a 403b or 401k. Woohoo, you have an extra retirement account! HOWEVER, some employees in some companies may also have access to a 457b in addition to one of the other retirement programs to have extra space available as a high income earner. This makes up for the lack of retirement accounts compared to the self employed/independent contractor options. The drawback is that these accounts are often categorized as non-qualified, and therefore are not insured if the company is sued into oblivion or goes bankrupt.
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Jun 14, 2014 20:11
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Marvel posted:My tax advisor had me do something called a "Backdoor Roth IRA Conversion" this year and it was a huge pain. I had to send my broker 2 different paper forms through the mail, wait for those to clear, then send another paper form through they mail. I filled them out with a pen. They wouldn't let me email them a scanned pdf, and they wouldn't even take a fax. The whole thing sucked. Vanguard is great. Not sure how easy it is to transfer your Roth IRA over (haven't done that, started with Vanguard) but doing a backdoor Roth with them was super easy. Bought funds in a traditional IRA. Waited for those to clear (about 3 days). Transferred them over to Roth. Cleared in like, 2 days. No paperwork, no questions. Not quite "press a button" but probably as close as you can get.
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Jun 14, 2014 20:23
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I'm trying to debate where to stash my cash. I have ~$40k saved up for a down payment on a house which will probably be spent in the next 12-24 months, and will add monthly to this until then. A recommendation earlier in the thread was just to keep it in a money market account as something like a bond index fund would be too risky given the time table. I currently have it in a money market account in my credit union. The rate table is here: code:https://personal.vanguard.com/us/funds/snapshot?FundId=0030&FundIntExt=INT The annual performance graph shows 1.72% return on 10 years, but that doesn't really seem right? Basically, I am not sure how to compare the two. Henrik Zetterberg fucked around with this message at 21:11 on Jun 16, 2014 |
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Jun 16, 2014 21:05
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The "safest" investment could turn your $40,000 to $20,000 in the next 12-24 months. Open an online savings account (use bankrate.com to find the best rate - personally I'm using Discover and getting 0.85% with no fees) and stick it all in there. Your timeline is too short to hope for gains or to worry about inflation.
GoGoGadgetChris fucked around with this message at 21:18 on Jun 16, 2014 |
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Jun 16, 2014 21:12
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That 1.72% is a ten-year figure. It's giving 0.01-0.02% ish right now, just like your credit union. It's only a year or two, leave it where it is and forget about it.
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Jun 16, 2014 22:11
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Or move it to an online high interest savings account, FDIC, and forget about it.
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Jun 16, 2014 22:39
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I just checked bankrate and it looks like Ally has a 0.85% MM account or a 0.87% savings account. I will probably just go ahead and chuck it all in there. Thanks for the help!
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Jun 16, 2014 23:47
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Speaking of Ally - what is the easiest way to avoid a wire fee? I'm thinking of transferring my Emergency Fund to Ally savings, but my bank has like a $30 wire fee that I really don't feel like paying for since it will negate whatever interest I plan on accruing for the year. What's the cheapest way to move money between my local bank and Ally? I was thinking of opening an online checking account with Ally along with the Ally savings account, and then I can just write a check from my local bank account to the Ally checking account, and then move the money to the savings account from there.
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Jun 17, 2014 00:02
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You should be able to just EFT the money. If your bank doesn't offer that option, initiate the transfer from Ally. EFT is what your utility uses when you have auto bill pay or whatever. It usually takes a day or two, but doesn't have the wire fee.
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Jun 17, 2014 00:06
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Guy Axlerod posted:You should be able to just EFT the money. If your bank doesn't offer that option, initiate the transfer from Ally. I will try that - thank you!
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Jun 17, 2014 00:30
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EugeneJ posted:Speaking of Ally - what is the easiest way to avoid a wire fee? Personally, I think you might be preemptively optimizing. If your net interest gained for the year is $30, I think your time is better spent on just about anything else than shuffling money around between roughly equivalent online accounts. You're saving the mental hassle of having more accounts, lowering risk of low balance fees by splitting up your accounts, and the net financial benefit sounds pretty small.
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Jun 17, 2014 01:05
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What would you do, goons - My John Hancock 401k plan at work is administered by a relative of mine (he does not work for my company). For years he's been trying to get me to sign up for the plan, but I never had the financial means to do so. Today I called him to ask specifics for the plan since I'm considering signing up for it. He gave me the runaround when I asked about the plan's high expense ratios and how they compounded. I was disappointed that he kept going on in salesman mode instead of talking to me like family. I have a bad, bad feeling that a lot of my co-workers are in the dark about 401k fees, and that we could do better by switching to Vanguard. My relative makes $10,000/year commission on the plan. Do I: A. Persuade my company to go with a new 401k provider, saving us all tens of thousands of dollars, but hurting my relative financially by eliminating his commission B. Stay with the crap 401k plan and keep my relative happy He's rich, so it's not going to break him. But rich people hold grudges over $10, so he'd probably never talk to me again.
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Jun 17, 2014 03:23
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EugeneJ posted:What would you do, goons - Who in your company would you be trying to convince to change plan providers? Would that person spill the beans to your brother in law?
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Jun 17, 2014 03:42
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pig slut lisa posted:Who in your company would you be trying to convince to change plan providers? Would that person spill the beans to your brother in law? Owner - and yeah, probably. I could always call Vanguard and have them send a rep over to talk to the owner. That would probably be easier than me getting involved directly.
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Jun 17, 2014 03:45
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My company 401(k) is with Merrill Lynch. 4% matching Merrill Lynch has a very limited set of funds to invest in, and these generally charge about 1% in fees. Right now I max out my 401(k) contributions ($17500/yr). If I retire in 40 years, and in general get an 8% return on my investment, I will retire with $4.6 million. If the 1% fee were a less fraudulent .2%, then I would retire with $5.7 million. That's 20% of my total return! One of the funds actually charges 1.4%! Should I even have a 401(k) above matching? It's an extremely large company, and I have zero confidence they would change their plan. e: so they have three low cost options that don't show up under the normal list of available funds :-/ BlackRock Equity Index Fund Non-Lending O: .14% expense ratio. But if you look at the description, you'll see that it is not clear whether it is trying to match the S&P 500 or the Russell 1000, which I guess doesn't really matter. Also it says "this is not a mutual fund" in the description, which I also don't get. There's also the Vanguard Mid-Cap index fund, and the Vanguard TIPS fund. So I guess the solution is to put like 80% of my 401k in BlackRock, 20% in Vanguard Mid-Cap, and then put my IRA mostly in bonds. ee: the symbol for the BlackRock fund is BEOOT. This doesn't show up anywhere as actually existing. Wut. Celot fucked around with this message at 05:14 on Jun 17, 2014 |
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Jun 17, 2014 04:27
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Regardless of the low-cost options - which you should probably think about using - the 401k is still better than taxable investments yes. Especially because when you leave the company you can roll it to a traditional IRA. Your plan sounds decent except I might suggest splitting your IRA between international and bonds. Having international somewhere will help...although you won't really be able to rebalance it with US stocks I guess.
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Jun 17, 2014 11:57
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Celot posted:ee: the symbol for the BlackRock fund is BEOOT. This doesn't show up anywhere as actually existing. Wut.
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Jun 17, 2014 12:40
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EugeneJ posted:Owner - and yeah, probably. If you work for a small company, Vanguard may not be willing to handle your 401(k) plan. I used to work for a company with about 35 employees, and we had a Vanguard 401(k) but the COO mentioned that they only dealt with us because one of our execs was on their board of directors; otherwise they wouldn't have been willing to work with such a small company. Your mileage may vary, of course, and this was back in 2010 or so, so things may have changed.
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Jun 17, 2014 14:37
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I've got $100k that I'm looking at putting somewhere. I've got a couple of thousand sitting in a Fidelity Rollover IRA, so I was thinking about just putting it there and setting myself up with a few index funds. Seems that everyone ITT is really hung ho with Vanguard. Is there a material advantage to pulling my IRA out of Fidelity, opening a Vanguard account and putting everything there, or should I just put the $100k into Fidelity?
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Jun 17, 2014 14:40
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Is the 100k currently cash or in a 401k? If it's cash, you can only contribute 5500 a year to an IRA...so you should use that cash as living money for a few years while you max out your IRA and 401k each year. If you're already maxing your 401k and you have a 6 month emergency fund, keep aside enough to max your IRA for the next couple years(you can put 5500 in today and 5500 in on January 1) and start a taxable account.
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Jun 17, 2014 15:00
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Sarcasmatron posted:I've got $100k that I'm looking at putting somewhere. I've got a couple of thousand sitting in a Fidelity Rollover IRA, so I was thinking about just putting it there and setting myself up with a few index funds. Seems that everyone ITT is really hung ho with Vanguard. Is there a material advantage to pulling my IRA out of Fidelity, opening a Vanguard account and putting everything there, or should I just put the $100k into Fidelity? My work SIMPLE IRA is with Fidelity and I have no complaints about the Spartan funds. The Fidelity interfaces are pretty good too. I wouldn't worry about going to Vanguard from Fidelity. My Roth IRA is with Vanguard.
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Jun 17, 2014 15:21
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I use fidelity and am very happy with them. They have comparably low fee index funds (Spartan) and etfs (iShares). Vanguard might be a teensy bit cheaper, but Fidelity has a much better website and generally better customer service. Just consider their revenue model. Vanguard wants to keep costs as low as possible top maximize owner (everyone!) Benefit. Fidelity wants to maximize profits. Fidelity has tons of horrible high expense funds, but they offer solid index funds as well to compete with Vanguard. The terrible expensive funds foot the bill for their nice service that you can use as an index investor.
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Jun 17, 2014 15:21
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Anyone have any preferences between Ally vs GE Capital savings accounts? The APY of their accounts is similar (0.85% vs 0.90%, respectively), so I'm trying to see if one sucks less than the other. If not, I'll probably just go with the higher rate. I'm just dropping a pile of cash in and making a monthly deposit.
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Jun 17, 2014 19:05
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Henrik Zetterberg posted:Anyone have any preferences between Ally vs GE Capital savings accounts? I don't know about GE Capital Bank, but for GE Capital Retail Bank (just renamed to Synchrony Bank this month) I opened an account there for the higher APY (.95 for their savings account) over Ally, and ended up opening an Ally savings account anyways. While I didn't have any actual problems with the GE Capital Retail, it didn't work with Mint, and I don't think GE Capital Bank does either. I will probably just keep the account open and throw money into it when I am underbudget to use on a big frivolous purchase like a car or overly expensive computer.
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Jun 17, 2014 19:56
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THF13 posted:I don't know about GE Capital Bank, but for GE Capital Retail Bank (just renamed to Synchrony Bank this month) I opened an account there for the higher APY (.95 for their savings account) over Ally, and ended up opening an Ally savings account anyways. Huh, I saw Synchrony on bankrate.com, but it listed a monthly fee. Looks like it's waived as long as the account maintains a minimum balance. Currently opening a high-yield savings @ 0.95%. Cheers!
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Jun 17, 2014 20:20
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