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If I'm planning to contribute more than $5,500 but less than the $52k/yr limit, does it make a difference if I go for traditional IRA -> backdoor roth + some extra in mega backdoor roth vs entirely mega backdoor roth?
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Mar 28, 2017 05:43
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oliveoil posted:If I'm planning to contribute more than $5,500 but less than the $52k/yr limit, does it make a difference if I go for traditional IRA -> backdoor roth + some extra in mega backdoor roth vs entirely mega backdoor roth? as long as the funds are basically the same I'd prioritize the mega-backdoor first. if you end up with some extra cash before next April you can still regular backdoor it, but you can't retroactively deduct 401k contributions from your paycheck.
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Mar 28, 2017 13:04
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I haven't had a job in 2017 and expect that to remain the case at least through June. Needless to say, my total income for 2017 will be much lower this year than any time in the foreseeable future. Is now a perfect time to convert ~$38k in traditional/rollover IRAs to Roth? Seems like now would be ideal due to lower income tax rates this year, and my understanding is having no traditional IRA makes it easier to do backdoor Roth contributions in the future. Any compelling reasons to not do this?
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Mar 28, 2017 21:41
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Splinter posted:Any compelling reasons to not do this? Nope.
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Mar 28, 2017 21:49
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-Zydeco- posted:Ahh, I misunderstood what the TSP was. I thought it was just a program that contained a traditional and Roth IRA. Yes I am making Roth contributions to my TSP at the moment. The caps on a Roth IRA aren't connected to the Roth cap on a TSP are they? TSP is essentially identical to a combination Traditional 401(k) and Roth 401(k) from your perspective as an employee. As mentioned, standard (i.e., not SIMPLE) IRAs are separate things you can open up and contribute to that are independent from your employment. I think the TSP is a good deal, and it makes sense to max it out before contributing to an IRA.
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Mar 29, 2017 15:48
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Splinter posted:Any compelling reasons to not do this? potatoducks posted:Nope. assuming that you have the funds to cover the taxes on the conversion, of course
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Mar 29, 2017 16:22
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Has anyone had experience with Vanguard's "Personal Advisor Services"? My spouse is trying to figure out what to do with low 6-figures worth of stocks transferred from her former investment manager to Vanguard (they're part of her retirement savings, ~30 years from now). We've realized that we're not interested or able to rebalance the stocks ourselves going forward, and either need an investment manager to do it for us or just sell the stocks and put the money in a Target mutual fund. Is this kind of stock rebalancing something the Vanguard advisor could do? Is it worth paying >$1000 per year for this kind of service (0.3% of her funds), or are their cheaper options? I'm guessing the advisor would also be able to allocate my spouse's investments into the appropriate admiral share funds and minimize taxes? Right now she just has everything is in the age appropriate Target funds (both taxable and non-taxable accounts), which is simple but presumably not optimal.
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Mar 31, 2017 21:45
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Tetraptous posted:TSP is essentially identical to a combination Traditional 401(k) and Roth 401(k) from your perspective as an employee. As mentioned, standard (i.e., not SIMPLE) IRAs are separate things you can open up and contribute to that are independent from your employment. I think the TSP is a good deal, and it makes sense to max it out before contributing to an IRA. Both parts? I was going to max the Roth TSP, then a Roth IRA and then go back and work on maxing the traditional TSP remainder.
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Apr 1, 2017 00:16
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pokeyman posted:As someone who hasn't been investing long enough to experience a big downturn, these stories are very helpful! Keep 'em coming. My conservative Uncle internalizes a lot of Fox News, Rush Limbaugh, Glenn Beck, etc. During the crash, he concluded that Obama and the Democrats' infantile economic sensibilities were to blame. He fully cashed out his accounts near market bottom. As the Democrats and Obama were involving themselves in salvaging the economy, he concluded it would only get worse. He missed almost the entire recovery.
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Apr 1, 2017 00:23
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Nocturtle posted:Has anyone had experience with Vanguard's "Personal Advisor Services"? My spouse is trying to figure out what to do with low 6-figures worth of stocks transferred from her former investment manager to Vanguard (they're part of her retirement savings, ~30 years from now). We've realized that we're not interested or able to rebalance the stocks ourselves going forward, and either need an investment manager to do it for us or just sell the stocks and put the money in a Target mutual fund. Is this kind of stock rebalancing something the Vanguard advisor could do? Is it worth paying >$1000 per year for this kind of service (0.3% of her funds), or are their cheaper options? You could save $1000 a year by simply picking a target retirement fund that is close to your retirement date. Vanguard will rebalance and adjust the risk automatically.. Target retirement 2045 would be about 30 years.
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Apr 1, 2017 00:25
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Nocturtle posted:Has anyone had experience with Vanguard's "Personal Advisor Services"? My spouse is trying to figure out what to do with low 6-figures worth of stocks transferred from her former investment manager to Vanguard (they're part of her retirement savings, ~30 years from now). We've realized that we're not interested or able to rebalance the stocks ourselves going forward, and either need an investment manager to do it for us or just sell the stocks and put the money in a Target mutual fund. Is this kind of stock rebalancing something the Vanguard advisor could do? Is it worth paying >$1000 per year for this kind of service (0.3% of her funds), or are their cheaper options? You are better off just leaving the money in the current target date funds and forgetting about it for 30 years. When you are ready to retire you will be very likely be millionaires. Monte Carlo sims show that 200k with no contributions and a conservative allocation will have median value of 1.4 million after 30 years.
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Apr 1, 2017 01:21
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-Zydeco- posted:Both parts? I was going to max the Roth TSP, then a Roth IRA and then go back and work on maxing the traditional TSP remainder. As with a 401k, there is only on maximum contribution limit for TSP which included both Roth and Traditional contributions; e.g., if you max out Roth you have nothing left to contribute to Traditional and vice versa. For 2017, your personal contribution to both Roth and Traditional (not including the TSP match) is limited to a total of $18k, however you choose to divide that. Also, be aware that the matching contribution (up to a total contribution of 10%) is always contributed to Traditional under TSP, even if you contribute entirely to Roth (up to the $18k limit for 2017). However, the government's contribution to TSP does not count against your personal limit. (There is a higher limit for the sum of personal and employer contributions to a 401(k), but you'll never reach that under TSP). Tetraptous fucked around with this message at 02:01 on Apr 1, 2017 |
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Apr 1, 2017 01:59
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Ropes4u posted:You could save $1000 a year by simply picking a target retirement fund that is close to your retirement date. Vanguard will rebalance and adjust the risk automatically.. Definitely agree, all her other investments are in a TARGET 20XX fund. The problem is that selling her stocks now would involve a significant capital gains tax payment, which is money that won't spend the next ~30 years compounding. We're trying to understand how workable it is to hold on to these stocks, as assuming the selection is well diversified and tracks the broader index it could actually be the cheaper option. This requires someone to actually reallocate the stocks periodically, hence the interest in people's experience with the Vanguard advisor service. Murgos posted:Individual stocks are not optimal. You are taking on massive risk looking for a home run. It's a low probability of success. Paying someone to manage individual stocks for you is even less optimal. You have all the risk and you are paying extra for it. There are numerous studies that show that active stock management does not beat just investing in a low cost S&P 500 fund on average. We're pretty annoyed that we have to deal with these stocks, they were purchased by a former investment manager who was charging ~2% ER (!) before we transferred them to a Vanguard brokerage account. If the capital gain tax were less we'd definitely just sell them and buy index funds for all the reasons you mentioned, but as it stands we need to at least consider the alternative. To restate the question, is there any reason to use the Vanguard personal advisor as opposed to just investing everything in the TARGET 20XX fund for the purpose of retirement savings? Has anyone here used one and had a positive experience? edit: VVVVVV Thanks will look into this. Nocturtle fucked around with this message at 19:30 on Apr 3, 2017 |
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Apr 1, 2017 19:03
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It sounds like what you really need is a good fee-only fiduciary investment advisor to look at your particular situation and concerns, not someone tied to a particular brand.
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Apr 1, 2017 22:02
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Any recommendations for 529 plans? I am maxing my 401k Maxing my Roth IRA (though I think I am going to switch to a traditional. One of my goals is early retirement, then I start moving the Traditional money to my Roth.) Maxing my wife's Traditional IRA (she's no longer working -- transitioned to stay at home mom) Right now I am just socking leftover money into a brokerage account and my savings account. I feel like a 529 would be a better option for some of that money. Initial research shows Vanguard and Utah plans are the best, but I don't really know what to look for with these. I am leaning towards vanguard's since both the IRA's are through them already. Thoughts? Also, generally speaking, anything I am missing? Could I be doing something more efficient / better with the money that I am putting in the brokerage account? Lastly, is there a such thing as too much Vanguard? Literally all of my retirement accounts, plus my brokerage, use Vanguard's funds. Forgot to add - I am in Kansas. Stryguy fucked around with this message at 02:53 on Apr 2, 2017 |
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Apr 2, 2017 02:22
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Stryguy posted:Any recommendations for 529 plans? What state are you in? Some may be better for locals instead of shopping around to Utah or NY or CA or whoever the cheap ones are now.
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Apr 2, 2017 02:45
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Stryguy fucked around with this message at 19:00 on Sep 22, 2019 |
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Apr 2, 2017 02:52
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Stryguy posted:Whoops, forgot to mention that. I am in Kansas. I don't think Kansas has any tax benefits, so you can go with any state you want. Vanguard was my top choice, but they had a large minimum starting balance, whereas California has no minimum to open and is also nice.
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Apr 2, 2017 03:54
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Ah ok yeah I remember comparing a few and deciding for some reason I liked CA's option best. Maybe for some asset allocations it is cheapest? But really just compare the costs for a few and go with it.
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Apr 2, 2017 05:55
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Someone on reddit said that since retirement accounts, like 401ks, can't be touched by creditors during bankruptcy, you can buy a risky fourplex without worrying about being financially ruined if the housing market dips, because you just lose the house and not your 401k. Then they said that since the market dipped, you can immediately try again - this time making a much better investment at the bottom of the market, when prices can only really go up. Is this bullshit? It sounds like a stupid way of looking at things if you're someone who wants to amass a lot of money outside of retirement accounts - you should be worried about a failing investment because it still costs you a lot. Another question: I already filed my 2016 taxes. Is it too late to open an IRA for 2016 and add $5.5k to it? Will I have to do anything extra with my tax form? I made too much to be able to do a Roth IRA and I made too much to deduct a contribution to a tradition IRA, so I would be aiming to do a post-tax contribution and then convert it to Roth immediately. oliveoil fucked around with this message at 15:27 on Apr 3, 2017 |
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Apr 3, 2017 15:22
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Well, bankruptcy is pretty hard to come back from, and I'm not sure where you plan to get money to "try again", but it's true that retirement accounts are exempt from common (all?) bankruptcy proceedings. But of course if you take money out of those accounts, they're no longer exempt.
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Apr 3, 2017 15:30
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Look up non recourse loans. Might even be able to avoid bankruptcy. Good luck getting another good loan immediately though.
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Apr 3, 2017 15:34
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Hi, I'm trying to invest for the first time ever just before tax day and could use some much needed guidance. I'm 27 with a large emergency fund/savings doing nothing at the moment. My company doesn't offer a 401k/retirement stuff so it's all up to me. I been reading on and off for the past couple of months and looks like the traditional IRA from Vanguard is the one for me. Correct me if I'm wrong. I want to max out $5,500 for 2016 and 2017. Is there anything else I should do?
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Apr 4, 2017 01:56
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poe meater posted:Hi, I'm trying to invest for the first time ever just before tax day and could use some much needed guidance. I'm 27 with a large emergency fund/savings doing nothing at the moment. My company doesn't offer a 401k/retirement stuff so it's all up to me. I been reading on and off for the past couple of months and looks like the traditional IRA from Vanguard is the one for me. Correct me if I'm wrong. I want to max out $5,500 for 2016 and 2017. Is there anything else I should do?
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Apr 4, 2017 02:15
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Hoodwinker posted:You will only be able to contribute for last year if you already had your IRA opened as of last calendar year. Somebody correct me if I'm wrong here. You must open the account prior to the filing deadline and can fund it for the previous year.
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Apr 4, 2017 02:25
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zharmad posted:You must open the account prior to the filing deadline and can fund it for the previous year.
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Apr 4, 2017 04:02
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poe meater posted:Hi, I'm trying to invest for the first time ever just before tax day and could use some much needed guidance. I'm 27 with a large emergency fund/savings doing nothing at the moment. My company doesn't offer a 401k/retirement stuff so it's all up to me. I been reading on and off for the past couple of months and looks like the traditional IRA from Vanguard is the one for me. Correct me if I'm wrong. I want to max out $5,500 for 2016 and 2017. Is there anything else I should do? Most studies show Roth is better tan Trad in the long run. How did you come to the Trad conclusion?
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Apr 4, 2017 04:56
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spwrozek posted:Most studies show Roth is better tan Trad in the long run. How did you come to the Trad conclusion? In particular, Roth is usually better if you're young, e.g., 27. Excepting unusual circumstances, like you're quitting your job to become an improvised monk on the next couple years.
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Apr 4, 2017 05:10
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The biggest advantage a Roth IRA has is the higher effective contribution limit. If it's your main retirement account, and you plan on maxing your contributions every year, $5500 of post-tax money is worth quite a bit more than $5500 of pre-tax money.
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Apr 4, 2017 06:19
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oliveoil posted:Another question:
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Apr 4, 2017 15:26
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Hmm, I read a few articles that it was pretty close to a wash. I went through the full motley fool articles and still a bit puzzled. When would someone do traditional then? Is the full tax deduction not worth it? I'm single and I will hit six figures in gross at the end of this year. I don't know anything so I appreciate the help.
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Apr 4, 2017 18:11
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poe meater posted:Hmm, I read a few articles that it was pretty close to a wash. I went through the full motley fool articles and still a bit puzzled. When would someone do traditional then? Since IRA contribution limits are small (5.5k per year), it is almost always better to go Roth if you are maxing your contributions every year. This gives you the most tax-advantaged "space" in your IRA. The situations where it would make more sense to go traditional are: 1) Your income makes you ineligible for a Roth IRA 2) You are reasonably sure that you are going to consistently be in a higher tax bracket now than in retirement. With #2, you can convert it to a Roth over time when your income is very low (assuming you have no other sources of income in retirement). It requires a little bit of planning and in the end the difference isn't huge. That's why it is easier/best to just do Roth for most people who are eligible and planning on maxing. Leon Trotsky 2012 fucked around with this message at 18:52 on Apr 4, 2017 |
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Apr 4, 2017 18:49
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poe meater posted:Hmm, I read a few articles that it was pretty close to a wash. I went through the full motley fool articles and still a bit puzzled. When would someone do traditional then? Once you hit $117,000 in earned income (single), the amount you can contribute to a Roth IRA gradually decreases until you hit $132,000 earned income, at which point you cannot contribute any money to a Roth IRA, unless it's via backdoor. You are eligible for the full deduction but I don't think that it's worth it - you can run the numbers, though. It's basically calculating the rate of return on $5,500 post tax dollars versus $5,500 pre tax dollars, which then lines up against your tax deduction.
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Apr 4, 2017 18:55
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poe meater posted:Hmm, I read a few articles that it was pretty close to a wash. I went through the full motley fool articles and still a bit puzzled. When would someone do traditional then? Basically a dollar in a Roth is more "valuable" than a dollar in Traditional because the taxes have already been paid on the Roth (using a simplified example of 15% taxes, $1 in roth is worth $1.15 in traditional). As long as you're putting the same amount when adjusting for taxes in between a Roth and a Traditional, if your taxes at retirement are the same as now then it does come out to be a wash in the simplistic view of it. It really gets more complicated than that though and there isn't one right answer for what the correct option is. The fact that a dollar in Roth is more valuable means that you get a higher effective limit since the yearly contribution limits don't take this into consideration and have the same limit for Roth and Traditional. To counterbalance that though, with traditional you'll reduce your tax burden at the top end of your current tax bracket but you'll pay taxes on it in retirement at likely a much lower number (possibly 0% if it's within the standard deduction, which would make that traditional dollar more valuable since you got to avoid taxes on it all together). There's also a fair amount of trying to make predictions involved in choosing which option, it's possible that tax rates go up (or down) for the level of income you're at which can make one or the other a better option. Overall my personal opinion is that it makes sense to have a mixture to let you take advantage of the benefits of both types of accounts, for me I have a traditional 401k and a Roth IRA because I phased out of being able to deduct a traditional IRA so if I wanted a traditional account it had to be in my 401k.
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Apr 4, 2017 19:04
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poe meater posted:Hmm, I read a few articles that it was pretty close to a wash. I went through the full motley fool articles and still a bit puzzled. When would someone do traditional then? Whether the traditional or Roth is "better" depends entirely on the tax rate at time of contribution compared to time of withdrawal. If the tax rate is the same it is totally a wash, assuming you contributed the same amount of pre-tax money. The point is that the IRA limit is the same amount on both Roth and traditional, but money that has already had taxes paid on it is worth more than money that hasn't. If your only tax-advantaged space is an IRA, the "extra" 20-25% of money in the Roth will make a much bigger difference at retirement than the maybe 5% difference between Roth and traditional. This only really matters if you plan on maximizing your IRA contribution every year (which it sounds like you will).
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Apr 4, 2017 19:26
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This comes up often, and I think this is what is often forgotten: https://www.irs.gov/retirement-plan...nt-plan-at-work If you are making six figures it is unlikely your AGI will allow you to claim any deduction for traditional IRA contributions.
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Apr 4, 2017 19:30
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sweet_jones posted:This comes up often, and I think this is what is often forgotten: Some people use IRA so everyone understands, but are actually talking about traditional vs roth 401k contributions through their employer.
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Apr 4, 2017 19:38
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sweet_jones posted:This comes up often, and I think this is what is often forgotten: the brother specifically said he's not covered by a retirement plan at work which means he can fully deduct trad IRA contributions
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Apr 4, 2017 19:40
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sweet_jones posted:This comes up often, and I think this is what is often forgotten: If you are making 6 figures, then there is a large chance that you won't be eligible for a Roth IRA anyway and traditional is your only choice.
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Apr 4, 2017 19:42
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Leon Trotsky 2012 posted:If you are making 6 figures, then there is a large chance that you won't be eligible for a Roth IRA anyway and traditional is your only choice. Most people who make six figures don't make nearly as much as you do. I would wager that the majority of people making 6 figures are eligible, especially because 401ks reduce your MAGI. When you take into account other deductions, it's entirely possible an individual making slightly north of 140k can contribute the full amount, if they're maxing their traditional 401k. By comparison, after 105k or so it's kind of hard to have enough deductions for a traditional IRA to be deductible. I think there's a lot more people in the 100-140k range than there are past that. Nail Rat fucked around with this message at 19:51 on Apr 4, 2017 |
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Apr 4, 2017 19:49
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