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Bloody Queef posted:HSAs are NOT tax evasion. Underreported income is tax evasion. Tax evasion is illegal. Using an HSA is exercising tax avoidance. it's basically a loophole similar to the backdoor roth.
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Dec 30, 2014 02:04
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"Tax evasion" is strictly a term used for illegal avoidance of tax. "Loophole" is a loaded term typically used to denigrate tax rules that allow some people/companies/whatever to pay less tax than others that seem to be in similar circumstances; the implication is that it's either a mistake in the tax code that lawmakers have failed to fix, or a hole that was made deliberately due to undue influence of lobbyists or something. When you believe that a favorable tax treatment is appropriate, you call it a credit, or a deduction, or (typical for this thread) "tax-advantaged" savings options. One of the common impressions given by referring to the roth conversion rule as a "backdoor" roth is that, since it's a "loophole," congress is likely to act to shut it down in the future. By calling HSA savings plans a "loophole" you imply the same thing. I think the former is more likely than the latter, though, since roth conversions allow you to bypass an income limitation for ira contributions that congress obviously intended to matter, while HSA savings plans are pretty clearly intended to be used for health care as you get older but also not just steal your money if you wind up not needing it for health care. tl:dr, when Congress deliberately creates a tax-advantaged incentive for saving money, that is not a loophole and it is not tax evasion.
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Dec 30, 2014 02:38
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I meant evade in the sense of avoid. I don't know trade terms, just that evade and avoid are synonyms.
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Dec 30, 2014 03:22
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Is there any use in including commodity ETFs like COMT in a non-taxable account? Maybe doesn't make sense given the unpredictable volatile nature of commodities, not to mention the old joke about never invest in something you couldn't explain to your grandmother given the complex nature of things like commodity futures.
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Dec 30, 2014 06:41
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What if my grandmother is a financial genius? What then??? 
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Dec 30, 2014 07:35
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GoGoGadgetChris posted:4. At least for me personally, my HSA option is terrible. 1% management fee on top of nothing but American funds with 5% loads and 1.5% expense ratios. And you can't roll an HSA into anything other than a new HSA. You know you can use any HSA provider you like, yes? Even if your employer only sponsors a single custodian, you can transfer/rollover any amount at any time to an HSA of your choosing, unlike a 401k.
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Dec 30, 2014 09:14
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A lot of the time, the company-sponsored HSA will pay the yearly fees related to the actual HSA account, making it more preferable if you don't have a significant balance. If the available investment fund options are loaded with fees, yeah that sucks.
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Dec 30, 2014 14:19
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etalian posted:Is there any use in including commodity ETFs like COMT in a non-taxable account? There are a few things about commodities that make them different from stocks. One is that it's much harder to just invest in an "index" of commodities. You have to use futures or other derivatives, and these will have tracking error. Also the fund has to "roll" futures contracts forward every month (or every few months), and if they're really trying to follow the GSCI closely then they have to do it within a pretty small window of time, which means it should be possible for arbitrageurs to front-run their trades. In addition, we have a clear story for why stocks have a positive expected value: You take on a risk and are rewarded in the long term by growth of the company. Similarly, with bonds you take on credit risk and interest-rate risk, and are rewarded with a risk premium. With commodities it's less clear that they should all go up over long periods. What if we find some better source of energy that allows us to stop using oil? What if people stop drinking orange juice in favor of some other kind of juice? And before anybody starts talking about inflation, yes of course commodity prices will go up with inflation, but there's a decent argument that stocks should too, and furthermore there are much better ways of directly owning inflation (for example TIPS or I-bonds). You need a positive expected return beyond just inflation to justify investing in a commodities index. Overall I wouldn't invest in a commodities ETF unless you understand how a futures contract works, what "rolling" is and why it matters a lot, and how exactly the ETF you are investing in deals with it. In addition, you should have a story in mind as to why commodities as an asset class have a positive expected return in excess of inflation. If you understand all this stuff and still want to invest in commodities, have at it.
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Dec 30, 2014 17:00
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Peanut3141 posted:HSA talk. As usual, I'm going to provide the warning that to have an HSA, you need to have a specific type of medical coverage (deductible greater than X and so on). So before jumping on the HSA bandwagon, you should be sure that the medical coverage is sufficient for your needs.
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Dec 30, 2014 17:59
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Echo 3 posted:In addition, we have a clear story for why stocks have a positive expected value: You take on a risk and are rewarded in the long term by growth of the company. Similarly, with bonds you take on credit risk and interest-rate risk, and are rewarded with a risk premium. With commodities it's less clear that they should all go up over long periods. What if we find some better source of energy that allows us to stop using oil? What if people stop drinking orange juice in favor of some other kind of juice? And before anybody starts talking about inflation, yes of course commodity prices will go up with inflation, but there's a decent argument that stocks should too, and furthermore there are much better ways of directly owning inflation (for example TIPS or I-bonds). You need a positive expected return beyond just inflation to justify investing in a commodities index. Furthermore, even if you expect commodities to keep up with inflation, you do not actually get that return. What you are getting is the return on the collateral (T-bills or other cash like securities) and the roll return, which already had the expected inflation priced in and thus is more akin to what side the "insurance" is paid. This has little to do with the spot return, and more to do with which side of the trade is earning the premium. In a state of normal backwardation, the commodity producers hedge against dropping commodity prices and the futures holder earns a positive roll return (good for the investor). In a state of contango, it goes the opposite direction (bad for the investor). You need to understand that this is the mechanism you are buying, and not the actual exposure to the spot return of commodities. In the past, backwardation may have been more common than today so backtested portfolios with commodity futures may overstate the benefits of them in a portfolio. The more important feature is how it behaves in a portfolio. There is a tendency for them to be negatively correlated with bonds, which means someone with a high bond allocation that is seeking yield through extending duration may want some commodity futures to hedge the risk of bonds.
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Dec 30, 2014 18:33
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I rolled over my 401K into my new employers Vanguard plan on December 15th, with about $13K going into VEXRX. 2 days later the price drops 12%, but I get a dividend back into the account of 14%. Mint is reporting it as a massive loss. Is it just not taking into account the dividends? Same happened to VWNAX. Did I luck out or am I missing something?
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Dec 30, 2014 21:16
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Arzakon posted:I rolled over my 401K into my new employers Vanguard plan on December 15th, with about $13K going into VEXRX. 2 days later the price drops 12%, but I get a dividend back into the account of 14%. Mint is reporting it as a massive loss. Is it just not taking into account the dividends? Same happened to VWNAX. Did I luck out or am I missing something? Mint is terrible with tracking investments. PersonalCapital does it better.
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Dec 30, 2014 21:36
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Finally got into my new account and these expense ratios...
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Dec 30, 2014 22:07
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^^^WOW....ETB posted:Mint is terrible with tracking investments. PersonalCapital does it better.
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Dec 30, 2014 22:21
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Bogleheads used to have a competition to see who could find the highest expense ratio for a S&P500 index. 0.9% is a contender! That looks like the 401k for a company that can't afford a 401k. I'm sure the employer splits some of the expense ratio revenue with the 401k provider.
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Dec 30, 2014 22:31
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I hope your company offers a match, at the very least...
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Dec 30, 2014 22:57
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Inverse Icarus posted:I've sort of been winging my 401k for a while now. I set it up when I first started working, knew nothing about investing, followed whatever JP Morgan's little web advisor told me to do based on a short survey, and maxed it out (15% max with my employer, with a 4% match). My dad smacked it into me that I should forget the 401k money even existed and just let it become a mountain, but now that I know more about investing I know that I should have been rebalancing it this whole time. It's been doing well, but then again everything has, so I'd like an unbiased look at the funds available, and suggested allocations from strangers on the internet. SiGmA_X posted:Please post the associated ER for each fund. Totally forgot I posted this and was reminded by HOGS' post. Here they are.  Edit: Could I just use the self-directed thing and dump everything into Vanguard 2045? Inverse Icarus fucked around with this message at 23:08 on Dec 30, 2014 |
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Dec 30, 2014 23:04
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100 HOGS AGREE posted:Finally got into my new account and these expense ratios... Wow, those are even worse than the options in my company's plan (also through Principal). I'd only contribute up to your company's match, putting it all in the S&P 500/400/600 index funds (in an 82/11/7 split to approximate the total stock market), and balance it with bonds and international equity in an IRA (and HSA if you're eligible).
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Dec 30, 2014 23:14
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While the below is not really a 'Retirement Savings' related question, nor is it really a Personal Finance thread question either. Regardless, it seems to fit better here since it is directly related to retiring..... Background - I am helping my mother prepare to hit 65 in March 2015. Part of that involved getting her enrolled in Medicare Part A, since it is apparently a requirement within the three months prior to her turning 65, (despite the fact that she is going to continue working full time, has full medical at work, and is not requesting early SSN benefits since she's only 65). Anyway, that part was a breeze online, just a couple of questions for her to answer, and now it's in review status. My understanding is that she'll get issued the Part-A hospital policy, but she won't have to apply for Part-B, (the medical 'insurance' part of Medicare that she will pay for), until she actually retires. Her plan is to work at least to her full retirement age of 66 in March 2016, but she is heavily leaning towards continuing to work for an additional year or two to finish up paying some existing debts before she retires, likely at 67 or 68. Digging around the SS website though, I think I see something that should make her quite happy and speed up goals of getting debt free, but I am not sure I am understanding it right - Question - (about drat time) Assuming she decides to continue working after her full retirement age (66), she CAN go ahead and file for SS benefits at age 66, while STILL working full-time. (If she waits to file until she hits that age, she won't have to worry about any weird formulas for subtracting x amount of her SS benefits for every x amount over some arbitrary limit set by the feds). She would actually get her entire salary from her employer like usual, (roughly 40k/year gross), in addition to her full monthly SS benefit (in her case, about 19.5k/year). Am I interpreting that correct? I appreciate input from ancient goons who have done this personally, people who have helped their folks make the transition into retirement, and/or anyone who knows anything about SS benefits. I tried getting info from her HR dept, but they were morons about everything and of no help. I have learned more from google than from them, geez.
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Dec 30, 2014 23:43
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Yes, she can receive her full benefit while still earning money. The only difference is that if you make over like 30k a year, your social security becomes mostly taxable income (I think it's like 85% counts as income) instead of tax-free. Her other option would be to continue delaying social security for as long as possible (up to age 70 max?) to increase her eventual monthly benefit. I know that a lot of the early retirement finance people like this option, and consider it a a relatively "cheap" insurance policy against living far longer than expected. Whether or not that's a good option for her depends entirely on her situation and desires. Another weird option people play with is taking the spousal benefit from social security at their full retirement age while continuing to delay their own personal benefit, and then switching over at age 70. This gives them some money at age 66 (I think it's actually the spouse's age 66 but I'm not really sure how it works), while still allowing them to take their own bigger benefit at age 70. This is an option if she was married for 10 years and did not remarry (or is still married/widowed). You would get some excellent specific advice at the early retirement forums at http://www.early-retirement.org/forums/. It is a much older crowd over there and a lot more people with detailed social security experience.
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Dec 30, 2014 23:55
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Inverse Icarus posted:Edit: Could I just use the self-directed thing and dump everything into Vanguard 2045? You will probably get hit with big commission fee, for Fidelity it's $75 for buying mutual funds from other providers. Vanguard funds are no-load so for most places you would just have to pay the high vs ETFs commission for the trade. Of course if you have a fairly big lump sum to convert the above is not a big problem. etalian fucked around with this message at 00:42 on Dec 31, 2014 |
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Dec 31, 2014 00:03
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I think I've been kind of a massive idiot for the past two years. I got all hot and heavy about saving for retirement at the beginning of my graduate school career and opened a Roth. Somehow I kind of managed to overlook the "can only contribute taxable, earned income", and I've been maxing it out since then using old savings etc. I'm guessing I'm reasonably hosed and have to pay a penalty of about 6% of the total investment and withdraw all of it to stop getting screwed more later. Going to call Vanguard and see if they're any help in the morning, but in the meantime, am I reading this right?
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Dec 31, 2014 06:47
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Deviantfish posted:I think I've been kind of a massive idiot for the past two years. I got all hot and heavy about saving for retirement at the beginning of my graduate school career and opened a Roth. Somehow I kind of managed to overlook the "can only contribute taxable, earned income", and I've been maxing it out since then using old savings etc. I'm guessing I'm reasonably hosed and have to pay a penalty of about 6% of the total investment and withdraw all of it to stop getting screwed more later. Graduate school, are you getting a fellowship or stipend or working at all? If you have a w2 with as little as exactly the dollar amount you put into that roth you're golden. Don't panic.
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Dec 31, 2014 07:26
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The Proc posted:Graduate school, are you getting a fellowship or stipend or working at all? If you have a w2 with as little as exactly the dollar amount you put into that roth you're golden. Don't panic. Well, medical school actually, so that one day I may lend credence to the theory that doctors make horrible investors. So, sadly, no stipends or anything. I suppose technically I'm still claimed as a dependent, though I'm not sure that would have any benefit to my situation.
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Dec 31, 2014 08:07
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Could anyone offer me a suggestion as to which Vanguard mutual fund I should dump my 2015 allotment into? Currently split 50/50 with 10k+ respectively in VFIAX (500 Index Admiral Shares) and VMVAX (Midcap Value Index Fund). Risk tolerance is high, thanks!
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Dec 31, 2014 10:53
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Guinness posted:You know you can use any HSA provider you like, yes? Even if your employer only sponsors a single custodian, you can transfer/rollover any amount at any time to an HSA of your choosing, unlike a 401k. On that note, I'm currently looking into the process right now as my employer just switched who it has handling it's HSA accounts. Is the rollover process pretty much 1.) Deposit money from old HSA into my checking account 2.) Write check for amount and deposit into new HSA? 3.) Report on a tax form somewhere (?) Am I missing anything?
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Dec 31, 2014 15:28
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Droo posted:Yes, she can receive her full benefit while still earning money. The only difference is that if you make over like 30k a year, your social security becomes mostly taxable income (I think it's like 85% counts as income) instead of tax-free. Thanks much, I'll have to look at that website. She already receives a pension from her previous government employer, that in combo with her current government employer sounds like it would put her well over that limit so that her SS benefits would become taxable. I believe her ultimate goal is for her primary pension to be used for living expenses, her current employer's pension (once she retires) will be providing her medical coverage, and her SS benefits simply being 'extra'. That all relies on her being debt-free prior to retiring though. She is divorced and was married for from ~ 69-83, so I know she needs to look into whether she will benefit more from filing under his vs hers, but I figure we won't really know that until she sits down for a one-on-one at the local SS office once she gets closer to 66. Anyway, thanks again for the input. I suppose I just wanted reassurance that I was reading her options right.
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Dec 31, 2014 16:26
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Greatbacon posted:1.) Deposit money from old HSA into my checking account No, you definitely do not want to withdraw from your HSA into your checking account. That would be an unqualified distribution (taxes + penalties) and then you'd only be able to deposit up to the annual max in your new HSA. You need to initiate a transfer through either your old or your new HSA. Call one/both of them up and ask them what their process is.
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Dec 31, 2014 16:31
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It's likely you fill out a form and they will mail you a check that you then re-mail to your new HSA with a form of their own. You may need to get it notarized / medallion sealed (such a loving scam).
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Dec 31, 2014 16:38
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Bhodi posted:It's likely you fill out a form and they will mail you a check that you then re-mail to your new HSA with a form of their own.
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Dec 31, 2014 16:48
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crazyphil posted:Could anyone offer me a suggestion as to which Vanguard mutual fund I should dump my 2015 allotment into? Currently split 50/50 with 10k+ respectively in VFIAX (500 Index Admiral Shares) and VMVAX (Midcap Value Index Fund). Risk tolerance is high, thanks! Not enough information. Your first step is to figure out what portfolio allocation you want. Then your question will pretty much be answered. Start with stock/bond percentage.
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Dec 31, 2014 17:12
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crazyphil posted:Could anyone offer me a suggestion as to which Vanguard mutual fund I should dump my 2015 allotment into? Currently split 50/50 with 10k+ respectively in VFIAX (500 Index Admiral Shares) and VMVAX (Midcap Value Index Fund). Risk tolerance is high, thanks! Any reason you picked those two? Seems like a really odd choice to put half of your money in "midcap value" stocks. Why not just use a Target Retirement fund? Those take plenty of risk (they are 90% stocks if you're younger than 30 or so, as I recall) and are more diversified than your current allocation.
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Dec 31, 2014 17:17
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Vanguard recommends a 40/60 mid/large split iirc, so it's not that weird depending on what he does with his non-IRA allocation/balancing. My IRA is very under weight on large cap domestic stock - because that is all I hold in my 401k. Looking at allocation in Vanguard shows I need to badly rebalance, but that isn't the case at all because it's only part of the story.
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Dec 31, 2014 17:39
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Got some 401k questions. I have a Roth 401k through my employer with around $24k in it. I got a new job and they do not offer a Roth 401k option so I wont be able to rollover the balance into my new 401k. As I understand it, my few options here are start a Roth IRA and throw that money into it and just sit on it or take the lump sum and eat a 10% penalty, right? Can I just leave the money where it is? My previous employer's 401k was miserable, 33% match up to 6% and my new employer's 401k is 100% match up to 5% with a 5% base pay contribution once a year. I was considering just taking the money and paying off some debt. My wife and I do not have a ton of debt, 2 car payments and a mortgage, no credit card debt. Within 2 years I will have surpassed my old 401k savings with the new 401k plan from my new job and my wife has a very good 401k. We have another retirement account that we both put money into every month that has around 26k in it right now. We are both 32 years old with a solid 35 more years of work ahead of us. Together we have around 100k in retirement savings not counting my Roth 401k. I should have never gone with the Roth 401k option but here we are. Do I take the money and run?
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Dec 31, 2014 17:42
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There is nothing wrong going Roth 401k. It gives you more money in retirement with less money in working days. It's a judgement call. Don't cash it out. Simply roll it to a Roth IRA, wherever you hold your other IRA's. You should never leave money in a prior employer 401k if only to consolidate where you have to do your rebalancing, but also because most employer 401k's have poor expensive options.
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Dec 31, 2014 17:44
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SiGmA_X posted:Vanguard recommends a 40/60 mid/large split iirc, The only 60/40 thing related to Vanguard is their 60 stock/40 bond balanced fund. And its stock allocation is about 80% large cap! I don't think midcap funds are terribly popular as they have few of the benefits that small cap and large cap do. Plus, midcap companies tend to become small or large cap, and the turnover can cause implications on some funds.
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Dec 31, 2014 17:58
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SiGmA_X posted:There is nothing wrong going Roth 401k. It gives you more money in retirement with less money in working days. It's a judgement call. I've been looking at Roth IRAs and does the yearly contribution limit count on the initial contribution? Or would it be $5500 over the initial $24000
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Dec 31, 2014 17:59
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SiGmA_X posted:There is nothing wrong going Roth 401k. It gives you more money in retirement with less money in working days. It's a judgement call. "Never" is a little strong. There are lots of terrible retirement plans out there, but there are also good ones - and they can be very good. When a 401(k) or similar plan invests everybody's money, you can think of it as a lump sum. This opens up access to institutional-class funds with minimum balances in the millions of dollars, but exceptionally low expenses. If your old employer offers those options, and you roll into an IRA just because "that's what you're supposed to do," you're paying higher fees for no good reason. Never jump without looking. A lot of the time, it makes sense to bail on a 401(k), but they're not categorically worse than an IRA. Cotato posted:I've been looking at Roth IRAs and does the yearly contribution limit count on the initial contribution? Or would it be $5500 over the initial $24000 If you roll over a balance from another retirement account into an IRA, it doesn't count towards the annual IRA contribution limit.
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Dec 31, 2014 18:11
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Cotato posted:I've been looking at Roth IRAs and does the yearly contribution limit count on the initial contribution?
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Dec 31, 2014 18:11
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slap me silly posted:Not enough information. Your first step is to figure out what portfolio allocation you want. Then your question will pretty much be answered. Start with stock/bond percentage. I'm 28, so I am comfortable with a 100% stock allocation. Echo 3 posted:Any reason you picked those two? Seems like a really odd choice to put half of your money in "midcap value" stocks. Why not just use a Target Retirement fund? Those take plenty of risk (they are 90% stocks if you're younger than 30 or so, as I recall) and are more diversified than your current allocation. http://investorplace.com/2014/03/5-vanguard-funds-warren-buffett/view-all/#.VKQs_Rs5DIU I came across that article and it made sense to me, although I chose the Midcap Value Fund over the Midcap Index Fund. SiGmA_X posted:Vanguard recommends a 40/60 mid/large split iirc, so it's not that weird depending on what he does with his non-IRA allocation/balancing. My IRA is very under weight on large cap domestic stock - because that is all I hold in my 401k. Looking at allocation in Vanguard shows I need to badly rebalance, but that isn't the case at all because it's only part of the story. My 401k (Thrift Savings Plan) is split 60/20/20 between the C/S/I funds (Stocks of large and medium-sized U.S. companies/Stocks of small to medium-sized U.S. companies (not included in the C Fund/International stocks of 21 developed countries). I have more than 2x as much there as my IRA. I was really leaning in a few directions with where to put the $5,500: Option 1: Increase large cap holding Option 2: Increase mid cap holding Option 3: Open up a small cap fund Option 4: Open up an international fund Option 5: Open up a bond fund Thanks for input
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Dec 31, 2014 18:24
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