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SiGmA_X posted:Why are you asking here, then? I am sure your accountant already gave you the answers. Chill out. I asked a question about my Roth IRA and it was answered. I have no idea why you think I wanted advice about whether or not I should be paying tax on the pension.
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Aug 23, 2014 20:12
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I just read your initial question for the first time, and it appears you don't understand the tax ramifications of inheriting money as it affects your roth IRA contribution this year. I am not sure why you are throwing a temper tantrum and trying to separate out the two issues. Maybe you should call up Robert Boggle and ask him since you apparently don't want anyone's help here.
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Aug 23, 2014 20:15
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SlightlyMadman posted:I asked a question about my Roth IRA and it was answered. I have no idea why you think I wanted advice about whether or not I should be paying tax on the pension. You are entirely right about what you need to do, though.
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Aug 23, 2014 20:15
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SiGmA_X posted:You are entirely right about what you need to do, though. Thank you, and I do apologize for being touchy about it. It's an extremely emotional and sensitive topic for me. edit: and just to be clear, the fault is probably mine for phrasing my question badly. I didn't mean "is this taxable income?" I meant "since this is taxable income, is it counted as part of my AGI for Roth IRA contribution limit purposes?" SlightlyMadman fucked around with this message at 20:20 on Aug 23, 2014 |
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Aug 23, 2014 20:18
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SlightlyMadman posted:Thank you, and I do apologize for being touchy about it. It's an extremely emotional and sensitive topic for me. You're correct. Its considered gross income. There are some various types of rollover methods for a beneficiary to be able to do a trustee to trustee transfer, but that is something I do not have any experience with. You should be able to do this into a Roth, providing you have the cash to pay the income tax due on the monies, too. I am not clear if you could have the pension admin distribute 75% to Vanguard and 25% to yourself for tax payment purposes or not. If so, that would be your best bet - I would shoot your CPA an email, or ask in the tax thread, there are a handful of very qualified CPA's in there!
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Aug 23, 2014 20:34
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SiGmA_X posted:I totally can relate to that, I am not looking forward to the days when my folks pass... We're just trying to help, not pick at your recent loss or anything. Yeah, I debated about the options quite a bit, but I ended up taking the cash to put it in a 529 fund for my neice. I do get a state tax deduction for doing so, but sadly not federal, so it doesn't affect the Roth. I think with my 401k and HSA deductions I'll still come out under the Roth cut-off, but I'll work that out with my accountant in 2015.
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Aug 23, 2014 20:42
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I just put my 401k into a proprietary fund through my company. It is called the "Aggressive Life Strategy Fund" and it has 0.10% expense ratio, 90% stocks and 10% bonds. It is a compilation of several other proprietary funds: quote:8% Total Bond Market Fund, 2% High Yield & Emerging Markets Bond Fund, 7% Real Estate Investment Trust Index Fund, 3% International Real Estate Index Fund, 10% Balanced Exposure Fund, 4% Commodities Fund, 46% Total Stock Market Index Fund and 20% Total International Stock Market Index Fund I am 25 years old, looking at possibly retiring early in 10-15 years. Did I do good or dumb?
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Aug 28, 2014 17:45
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That looks... surprisingly good, even with the expense ratio. You could feasibly reduce your ER by manually assigning the funds, but I would almost argue that you can leave it out of laziness and/or your choice of funds have higher ERs than this specific fund.
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Aug 28, 2014 17:52
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T. J. Eckleburg posted:I just put my 401k into a proprietary fund through my company. It is called the "Aggressive Life Strategy Fund" and it has 0.10% expense ratio, 90% stocks and 10% bonds. It is a compilation of several other proprietary funds: Especially for the rock-bottom expense ratio, that's a pretty awesome fund. What's the ticker on it? That said, if you're looking at retiring that early, you need to be maxing out your 401k and/or saving a lot of after-tax dollars, in which case the foreign stocks don't belong in your 401k (not the international REIT though).
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Aug 28, 2014 18:15
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ETB posted:That looks... surprisingly good, even with the expense ratio. You could feasibly reduce your ER by manually assigning the funds, but I would almost argue that you can leave it out of laziness and/or your choice of funds have higher ERs than this specific fund.
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Aug 28, 2014 20:43
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T. J. Eckleburg posted:I am 25 years old, looking at possibly retiring early in 10-15 years. Did I do good or dumb? isn't 90/10 too aggressive for a 15-year horizon though?
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Aug 28, 2014 20:45
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Hog Obituary posted:isn't 90/10 too aggressive for a 15-year horizon though?
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Aug 28, 2014 21:01
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my guess would be that if one is planning on retiring early, one can afford to work a few more years if the market is taking a dive on your target date. Keep in mind that you'll be paying a 10% penalty if you start taking 401k disbursements at age 40, though.
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Aug 28, 2014 21:07
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Mr. Glass posted:Keep in mind that you'll be paying a 10% penalty if you start taking 401k disbursements at age 40, though. This is not true if you set up a SEPP.
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Aug 28, 2014 21:10
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Presumably anyone planning on retiring at 40 will have significant savings in taxable accounts that they can draw down on before getting to their 401k. 15 years of 401k contributions is only $260k+ appreciation.
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Aug 28, 2014 21:15
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Hog Obituary posted:isn't 90/10 too aggressive for a 15-year horizon though? Early retirees (below 55, but especially below 45) don't play in the same league as normal retirees. They're typically much more savvy with money, they'll be pulling less of their savings per year due to their effectively infinite draw down period, and they're much more likely to find a side gig to make money again if they have any issues in the first decade or two. An early retiree that treats their retirement date at 40 like they are turning 70 (in terms of asset allocation) is most likely leaving a lot of money on the table for the highly questionable benefit of short to mid term stability. Nail Rat posted:This is not true if you set up a SEPP. SEPPs are nice, but particularly at a very young age, your SEPP is basically grocery money, even if you want to draw down more you can't. Early retirees either need to make a Roth rollover ladder, have substantial post-tax savings, or both.
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Aug 28, 2014 22:22
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Does anyone have experience with a NQDC plan they can share? Seems pretty awesome with the obvious downside of life sucking if your company goes bankrupt, but there doesn't seem to be much public discussion of them. Being able to defer an unlimited amount pretax seems really useful, especially for those who want to retire in their 30s or 40s rather than waiting until the mandated official retirement age. My understanding is that you still direct which funds you want the company to invest the money in and reap the gains, but exchanges/rebalancing might be limited in some fashion.
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Aug 28, 2014 22:41
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I recently came into some money I was NOT expecting to come into. Having just recently paid off my student loans and car, this is a huge blessing. I received about 88,000 dollars from a step-relative who I had no idea would will me this money. My question to you guys is how I should proceed. I have a pretty low paying job all things considered, but I want to start putting this money into a retirement account. I guess my basic questions are how I should get started. Should I open up a lazy portfolio and Roth IRA? If so, who is currently the best to go with, Vanguard, Fidelity, Schwab? I think I only have a Schwab in my town out of these options, but these accounts can be opened through the internet, correct? Any advice is appreciated.
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Aug 29, 2014 22:55
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Sorry if this is too Stupid Newbie Finance 101. I try to do research, but I think I need to stop and ask to make sure I'm getting it right. 1) Wikipedia, among other places, says the marginal tax rate for capital gains is 0% for people in my income category (30k/yr). Does that mean I can have money in stocks and not have to pay any taxes on its growth? 2) A lot of sites say that there are good and bad months of the year to invest. Supposedly November's one of the best. Should I wait until November to drop 10k (the buy-in fee) in the Vanguard index fund I've been looking at, or is this total bullshit? 3) I know people say to max out their Roths and IRAs before investing directly, but I'm not sure if that's just because of the taxation or if it is for some reason a really bad idea to dump everything I own in stocks (aside from the obvious risk factor--I'm 23 and employed, I can handle that right now). My rough 5 year plan is to get 60-75k saved and then supplement my income (and/or cut my work hours) with 4% interest/yr, market willing. I've been working for about a year and I've only been reading up on how to manage my finances for a little more than that, so any help is appreciated. This is literally the first I've heard of SEPPs. 
Tjadeth fucked around with this message at 23:05 on Aug 29, 2014 |
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Aug 29, 2014 22:58
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trigonsareNOThomo posted:I recently came into some money I was NOT expecting to come into. Having just recently paid off my student loans and car, this is a huge blessing. Put it all into a safe and stable vehicle like a savings or money market account (A money market account at Vanguard is a solid option, but by no means the only one. It's under the FDIC insurance limit, so a regular ol' bank savings account would work perfectly fine.). Then buy the books in the OP, and start reading. There's no rush, the market will still be there when you're ready to commit to an investment strategy. If you're investing it sooner than 3-6 months from now, you're probably rushing it.
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Aug 29, 2014 23:07
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Kind of surprised the The Bogleheads' Guide to Investing isn't in the OP, given how much we love Vanguard. Seems like a good overview book (I actually just got it as the second edition came out recently).
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Aug 29, 2014 23:12
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Tjadeth posted:Sorry if this is too Stupid Newbie Finance 101. I try to do research, but I think I need to stop and ask to make sure I'm getting it right. 1) Capital gains only apply when you sell the stocks for more than you bought them for. But yeah, if your rate is 0% then you don't pay capital gains taxes. 2) Don't try to time the market. 3) It soudns like you may have confused types of accounts (Retirement vs Non-retirement) with the types of investments that can be held in your accounts (Mutual funds, individual stocks and bonds). You generally (with limitations) can hold any type of investment in any type of account. A 401k account will generally have a list of investments (Usually just mutual funds, sometimes company stock as well) you can select from. An IRA account, or individual non-retirement investment account will let you invest in just about anything. There are some limitations on what you can hold in an IRA. If you wanted to, you could hold individual stocks in your IRA, and mutual funds in your individual investment account. Or mutual funds in both. Even the same mutual fund in both.
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Aug 29, 2014 23:13
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Cicero posted:Kind of surprised the The Bogleheads' Guide to Investing isn't in the OP, given how much we love Vanguard. Seems like a good overview book (I actually just got it as the second edition came out recently). I find Four Pillars to just be sort of a better exposition of the same underlying philosophy.
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Aug 29, 2014 23:15
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trigonsareNOThomo posted:I received about 88,000 dollars from a step-relative who I had no idea would will me this money. My question to you guys is how I should proceed. I have a pretty low paying job all things considered, but I want to start putting this money into a retirement account. I guess my basic questions are how I should get started. Should I open up a lazy portfolio and Roth IRA? If so, who is currently the best to go with, Vanguard, Fidelity, Schwab? I think I only have a Schwab in my town out of these options, but these accounts can be opened through the internet, correct? Any advice is appreciated. You want to maximize a contribution to a roth IRA. You also want to maximize a contribution to a roth 401k if you have that option through your work. If you can do a roth 401k, change your withholding to the highest amount you possibly can and use the 88k to supplement your paycheck. If I were you I would also open a non-retirement brokerage account and a "MySmart Cash Account" (or whatever they call it now) with Fidelity, and get rid of your regular bank entirely. You can direct deposit to the fidelity account, get checks, use any ATM for free (they refund the ATM fee also) and transfer money between the brokerage and the cash account freely. With the brokerage account, you have access to all mutual funds and stocks so that when you are ready to invest it is all set up for you already. If you regularly use a credit card, I would also apply for the Fidelity American Express Investment Rewards 2% cash back card and have the cash back automatically set to go into either your brokerage or cash account, depending on your preference. The only reason to NOT get rid of your current bank account is if you ever need to deposit cash, or if you need to get more than $500 in cash out at one time ever. So to summarize what I would do in your shoes: * Call fidelity, tell them you want 3 accounts opened: RothIRA, Brokerage, and MySmart cash account * Put the annual limit ($5500?) into the Roth IRA (leave it in a money market fund for now) * Put enough money into the MySmart cash account to open it, I forget what the minimum is * Transfer the rest to the brokerage account, leave in money market for now * Once you get checks/debit cards from the MySmart account, change your direct deposit from your job to that account * Close your crappy bank account and never look back * Apply for Fidelity credit card if you want a good rewards card * Read books in the OP and then post your investment plan before you actually do anything
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Aug 29, 2014 23:33
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T. J. Eckleburg posted:I am 25 years old, looking at possibly retiring early in 10-15 years. Did I do good or dumb? If you don't mind me asking, how much do you make, how much have you saved, and how much do you expect to have saved by retirement?
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Aug 29, 2014 23:51
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Cicero posted:Kind of surprised the The Bogleheads' Guide to Investing isn't in the OP, given how much we love Vanguard. Seems like a good overview book (I actually just got it as the second edition came out recently). It is now! Thanks.
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Aug 30, 2014 00:38
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Dumb question here. I mentioned earlier I have 100k in my 401k, but I am now capped at 6% due to being a high income employee. I plan to contribute to a Vanguard 2055 plan for the remainder of what I used to max out my 401k with (so another 8% of my salary). However, am I missing out on compound interest since I am essentially starting from scratch with this new account? Does the value of a long term retirement savings account come from continually putting monthly contributions, or compound interest on top of those contributions? Same question can be boiled down to this: If I had one maxed out 401k for 30 years straight, vs 2 401ks at half the max, would the net income be the same in the end?
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Aug 30, 2014 03:10
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FateFree posted:Dumb question here. I mentioned earlier I have 100k in my 401k, but I am now capped at 6% due to being a high income employee. I plan to contribute to a Vanguard 2055 plan for the remainder of what I used to max out my 401k with (so another 8% of my salary). However, am I missing out on compound interest since I am essentially starting from scratch with this new account? Does the value of a long term retirement savings account come from continually putting monthly contributions, or compound interest on top of those contributions? Yes, it's the same. 100,000 earning 5% earns 5% no matter if it is in one account of $100,000 or 1,000 accounts of $100 each. The only thing different is your fund choice, fees, and if you're investing pre or post tax, but you'll lose nothing in compound interest if you're saving the same dollar amount; and almost all of those things (even compound interest) are dwarfed by your savings rate early on (below 500kish, where earnings start to tilt towards investment returns for a typical saver.)
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Aug 30, 2014 06:19
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Fiancee started a new job recently and has a new 401k through her company. Her previous employer 401k was through Fidelity, and her new employer uses Fidelity too. She has the option to rollover her contributions to a Fidelity IRA. Should we do this?
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Aug 31, 2014 04:13
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Donald Kimball posted:Fiancee started a new job recently and has a new 401k through her company. Her previous employer 401k was through Fidelity, and her new employer uses Fidelity too. She has the option to rollover her contributions to a Fidelity IRA. Should we do this? Yes, it's almost always a good idea to roll it over into a Fidelity or Vanguard (or other low-cost provider) IRA, unless you have some absurdly rare and valuable options in your new 401k (which you almost certainly don't). IRAs have more or less the same upsides and no exposure to withdrawl blackouts or your employer's malfeasance.
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Aug 31, 2014 04:34
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Unormal posted:Yes, it's almost always a good idea to roll it over into a Fidelity or Vanguard (or other low-cost provider) IRA, unless you have some absurdly rare and valuable options in your new 401k (which you almost certainly don't). IRAs have more or less the same upsides and no exposure to withdrawl blackouts or your employer's malfeasance.
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Aug 31, 2014 15:47
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moana posted:I'll likely be doing this for the first time at the end of this year; is there a cap to how much you can rollover into an IRA from a 401k or no? Nope. The only trick is matching up roth/traditional contribution rollovers into the matching form of IRA, but just call the institution. If you're with Vanguard, at least, they'll assign you a person to manage the whole transaction. It's pretty trivial.
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Aug 31, 2014 16:06
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Unormal posted:Nope. The only trick is matching up roth/traditional contribution rollovers into the matching form of IRA, but just call the institution. If you're with Vanguard, at least, they'll assign you a person to manage the whole transaction. It's pretty trivial. Yeah Vanguard basically set everything up for me, whole thing took about a week and a half from when I send them the check from my old 401k until the money was in a new Roth IRA.
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Aug 31, 2014 22:12
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100 HOGS AGREE posted:Yeah Vanguard basically set everything up for me, whole thing took about a week and a half from when I send them the check from my old 401k until the money was in a new Roth IRA. Wow. I transferred mine from a bank to Vanguard and it took like 2 months. Not sure how much of the delay was caused by either party. I missed a dividend payment in the fund I was transferring to.
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Aug 31, 2014 23:09
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100 HOGS AGREE posted:Yeah Vanguard basically set everything up for me, whole thing took about a week and a half from when I send them the check from my old 401k until the money was in a new Roth IRA. I had a similar timeline from when my 401k sent the check to having the funds appear in my IRA. The longest delay came from the HR department at my old job being unable to communicate.
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Aug 31, 2014 23:19
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One thing to note is that having an IRA essentially removes the ability to backdoor contributions into a ROTH IRA.
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Sep 1, 2014 01:45
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asur posted:One thing to note is that having an IRA essentially removes the ability to backdoor contributions into a ROTH IRA. Also depending on the state 401ks gets better bankruptcy and other legal protection. There's also a handy loophole that allows you to resign from a current job at 55 and start doing 401k withdrawals without the extra penalty.
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Sep 1, 2014 08:15
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asur posted:One thing to note is that having an IRA essentially removes the ability to backdoor contributions into a ROTH IRA.
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Sep 1, 2014 08:17
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Cicero posted:Having an IRA at all, or contributing to it that year? Having one at all, due to the way the Roth transfer is allocated across IRA funds. Ideally if you have one and plan to use the back door conversion, you can roll your traditional IRA into a 401k or similar plan first.
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Sep 1, 2014 08:40
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Yeah, how much sense it makes to roll it over depends on a few things but the main thing is how good the options are with your new 401k. You can leave your old 401k where it is, you can roll it over into your new 401k, or you can roll it over into an IRA. If the options at your new company are good, it is probably easier to just roll it into there. Some important things to figure out: 1) What index funds/low ER funds do I have available in my new 401k? Good indicators would be several Vanguard funds (especially total stock market and international). 2) How do they pay for recordkeeping at the old and new 401k? If it is a flat fee or the employer picks it up, rolling it over to the new 401k makes sense. If they do profit sharing, it might make more sense to get it into an IRA. 3) How likely is it that I won't be able to contribute to a Roth IRA due to income restrictions? The more likely, the better it is to keep it in your 401k. Just a few things to think about. I feel like everyone assumes 401k options are awful and you are always better off with an IRA but that is not always the case.
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Sep 1, 2014 19:14
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