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Syrinxx posted:I just initiated a rollover of my old employer 401k to a Vanguard IRA. Up until this point I just picked mutual funds from their meager selection that had reasonable ERs and had good history and ratings. https://www.bogleheads.org/wiki/Three-fund_portfolio "VOO lol" isn't even a bad idea, really. Neither is a target retirement fund! But if you've got a big balance you're transferring, you can probably recreate the Target Retirement with admiral shares to shave that extra couple bucks of expenses per year.
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May 23, 2017 23:08
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| # ? May 26, 2024 23:50 |
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I'm switching jobs and will need to rollover my 401k. I have to do the backdoor Roth stuff so have (all in Vanguard) Traditional IRA ($0 balance, just for backdooring), Roth IRA and Brokerage. If I want to continue to backdoor, my only options are leave my 401k where it is or roll it over to my new employer, right? Never thought I'd write backdoor that much before. backdoor
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May 23, 2017 23:17
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dexter6 posted:I'm switching jobs and will need to rollover my 401k. Yes. You could also try to open up an individual 401k, but I'd only resort to that if both 401k plans truly sucked.
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May 23, 2017 23:30
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Been lurking this thread and reading a bunch of the backlog and it's been very enlightening, thank you all! I should probably sit down with a real financial planner for couple hours but I figured I'd ask here too: I'm currently 29 going on 30 and I've been making non-minimum wage for about three years now. I'm currently earning about 130k pre-tax annually (don't know how stable that is, yay tech bubble), and have about 65k in cash assets ($45k in 1.05% APY savings account and $20k in a checking account because I'm a moron). I've also got about $10k in debt (remaining car loan over the next 2 years, 1.5% interest so I figured I might as well keep the money in the bank). My employer doesn't offer any 401(k) matching but I do have access to a few Vanguard Institutional Target Retirement Funds at 0.1% ER (plus some account management fees I'm trying to learn about). My income (to my knowledge) exempts me from any Roth IRA contributions and makes traditional IRA contributions non tax-deductible. My savings (read: money going uselessly into my checking/savings accounts) over the past twelve months has been about $2.4k/mo (not great, I buy stupid poo poo and rent is expensive in San Francisco). Would I be wrong in maxing out my 401(k)? contributions with a 100% allocation to a Vanguard target retirement fund with anything else I can spare going into a traditional IRA with the same allocation? This poo poo hurts my brain and I have no interest in actively managing my funds. I figure if my job disappears I can roll the 401(k) over to a traditional IRA with lower fees anyway.
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May 24, 2017 08:28
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Oneiros posted:Been lurking this thread and reading a bunch of the backlog and it's been very enlightening, thank you all! I should probably sit down with a real financial planner for couple hours but I figured I'd ask here too: Ha, your post reminds me a lot of what brought me to BFC in the first place (i.e. saving a lot each month and didn't know what to do with it, but suspected I could do better than my checking account). First, you do not need to go see a financial planner, at least from what I can glean from your post. I don't see anything overly complicated in your situation that you can't handle yourself. Learning how to pick the right investments is no more difficult than learning how to pick the right financial adviser. In fact, most in here would say it's much easier, since to pick the right financial adviser you have to have an idea of whether they're picking the right investments, and so you may as well do it yourself. Once you start to have a complicated tax situation a financial adviser can add value, but my advice for your particular situation is to avoid them. There are some good resources in the OP to educate yourself. Second, it sounds like you save about $29,000/year with no matching. This is more than the $23,500 that you're eligible to save in tax-advantaged retirement accounts (good problem to have!). Your plan sounds pretty good to me! You are correct that you earn too much money to contribute to a Roth, but you may still contribute to a traditional IRA. It is totally fine to send $18,000 to your 401(k) in the Vanguard target date fund, open an IRA with Vanguard to send another $5,500 to a traditional IRA invested the same way, and invest the remaining several thousand in a Vanguard taxable brokerage account invested the same way. You probably don't need to save any more in checking/savings, and in fact may want to direct some of that in a lump sum to your shiny new brokerage account. Just make sure to leave enough as an emergency fund for 3-6 months expenses. Third, if you want help on the "I buy stupid poo poo" part of your post, feel free to make a thread. But you're doing well so far! 
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May 24, 2017 12:37
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Oneiros posted:I'm currently earning about 130k pre-tax annually... 401k contributions count when calculating MAGI for Roth eligibility. If you maxed your 401k contribution at $18k, it should drop you below the $118k cutoff for when Roth eligibility starts phasing out. Also you can look into doing a backdoor Roth as your income keeps climbing provided you do not have any deductible Traditional IRA assets.
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May 24, 2017 13:58
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Looking for a quick sanity check of my Roth IRA allocation before I add this year's contribution. I'm 29 and am 5% Schwab Emerging Markets, 20% Schwab International, 55% Schwab US Large Cap and 20% Schwab US Small Cap.
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May 24, 2017 16:39
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Hashtag Banterzone posted:Looking for a quick sanity check of my Roth IRA allocation before I add this year's contribution. The problem with the Schwab international funds (I'm assuming SCHF and SCHE or their mutual fund equivalents) is that they don't own small cap international. They have separate funds for that, but one nice thing about something like VXUS is that it has developed/emerging and large/small cap, and you get it with one fund. Why do you have separate allocations for large/small cap instead of just a total market fund like SCHB/VTI? Overall percentages look good though maybe think about bonds at some point.
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May 24, 2017 17:25
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Finally got some details about my non-governmental 457b plan. Same fund choices as my 403b. However, distributions can only be spread out over a maximum of 5 years. I think we're likely to stay with this employer for a while, and if we don't, there's a reasonable chance we'd end up at another place with a non-governmental 457b. If we don't, then the balance in there won't be too high by the time we change jobs I'd suspect. So in theory we have another $36,000 of tax-advantaged space/year which we could fill, but I'm kind of leery about the balance getting taxed more heavily than the savings going on. What do you think?
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May 24, 2017 20:58
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Chu020 posted:Finally got some details about my non-governmental 457b plan. Same fund choices as my 403b. However, distributions can only be spread out over a maximum of 5 years. I think we're likely to stay with this employer for a while, and if we don't, there's a reasonable chance we'd end up at another place with a non-governmental 457b. If we don't, then the balance in there won't be too high by the time we change jobs I'd suspect. So in theory we have another $36,000 of tax-advantaged space/year which we could fill, but I'm kind of leery about the balance getting taxed more heavily than the savings going on. What do you think? Most 457s can, worst case scenario, be rolled into IRAs. This will kill the benefit of no penalty before retirement age, but it's an option if you are worried about tax hit at withdrawal.
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May 24, 2017 23:18
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Nope, only governmental 457s can be rolled into an IRA. Non-governmental 457s can only be rolled into another NG-457 if your next employer happens to have one. They also run the fun risk of being accessible to your employers creditors if the company goes under. Unlikely in my case (large academic hospital), but pertinent to the discussion.
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May 25, 2017 01:06
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Ah, good catch. I had somehow missed the NG part of his post. Perhaps another pertinent question about the plan is how long they would hold the fund after separation of employment.
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May 25, 2017 02:28
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So hypothetically, what happens if you've been contributing to a Roth IRA and your income spikes above the cutoff mid year? My wife has been staying home with our kids so I've been able to file jointly and be well under the Roth limit. But she recently got a job offer she's inclined to take which would boost us over the limit again. Do we just stop new contributions and eat whatever penalty? Or is there a way before the next tax day to say "my bad" and back the money out?
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May 26, 2017 22:15
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Docjowles posted:So hypothetically, what happens if you've been contributing to a Roth IRA and your income spikes above the cutoff mid year? You can recharacterize it to a traditional IRA.
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May 26, 2017 23:07
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Banned King Urgoon posted:You can recharacterize it to a traditional IRA. So in that case, I get no tax advantage in either direction, but at least don't get penalized?
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May 26, 2017 23:27
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You can withdraw it as an excess contribution, then make a non deductible traditional IRA contribution, then rollover the non deductible contribution to a Roth IRA. This is the "backdoor Roth IRA" that you may have heard of that lets anybody make Roth IRA contributions regardless of income. For the sake of keeping a scrupulous paper trail I would probably take the extra step of making an excess contribution withdrawal, then repeating the contribution in order to roll it over. I am not exactly sure what consequences you might theoretically experience if you made some small capital gain in the process.
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May 26, 2017 23:50
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Chu020 posted:Finally got some details about my non-governmental 457b plan. Same fund choices as my 403b. However, distributions can only be spread out over a maximum of 5 years. I think we're likely to stay with this employer for a while, and if we don't, there's a reasonable chance we'd end up at another place with a non-governmental 457b. If we don't, then the balance in there won't be too high by the time we change jobs I'd suspect. So in theory we have another $36,000 of tax-advantaged space/year which we could fill, but I'm kind of leery about the balance getting taxed more heavily than the savings going on. What do you think? I need to find out more about my 457 plan, so thank you for reminding me through this post! I have similar concerns, because I started contributing a few years ago when I learned about the separate contribution limit for a 457 compared to 401k/403b. However, I never paid attention to the "non qualified" part and it never occurred to me to look it up until I saw it mentioned somewhere a few months ago (White Coat Investor? BFC? I honestly don't recall) but since then I've read about it from multiple sources. I'm a bit freaked out about it, but I contribute because it till hasn't hit some insurmountable point that will get destroyed by taxes. The worst case scenario right now (besides one of the largest hospital systems in the country going belly up and I get zero to show for it) would be if it grows to a large sum, I leave/get fired, and the only distribution is immediate lump sum in a high earning year. Anything else (immediate distribution while the account is low, any 5 year spread, any 10 year spread, and delaying distribution until a designated age, say 59.5) is totally doable in the grand scheme of things. Hell, depending on the circumstances it can fund an impromptu sabbatical. No matter what though, I'd earmark using that money first if it's there when I retire because it's at the greatest risk of confiscation.
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May 27, 2017 02:35
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It kind of sounds like non-governmental 457 plans can be quite cumbersome with the number of rules they can have. Do those rules change from agency to agency? What are some examples of rules that a 457 can have that's implemented by the employer? It sounds like they can force you to take the money in a short period of time after separation? If that's the case, is there a benefit of having that as your primary savings vehicle over the 401k? I thought the idea was to have some untold millions in the retirement account and draw off it forever, so having to take it all in 5 years would immediately preclude it from that. Or should a non-governmental 457 just be treated as the stop-gap between an early retirement, of like let's say 52, until you hit that magical age of 59.5 or when Social security kicks in?
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May 27, 2017 13:49
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A good general overview of 457 plans is here, but in short, a governmental 457b plan is essentially another 401k/403b without a penalty if you withdraw prior to age 59.5. However, a non-governmental 457b (offered at a number of non-profits) is subject to your employers creditors if your employer goes under, and the rules surrounding withdrawals vary widely from employer to employer (can it be left with the employer after leaving, does it have to be taken as 1 lump sum or spread out over x number of years, etc) . Also, fees associated with investments don't have to be as transparent as they do with 401k/403b plans. So it's additional tax-deferred space, but depending on the rules of your specific employer, it may actually make more sense to invest in a taxable account instead. In particular, if you have to take it as one lump sum, you may end up paying more in tax on a large portion of the savings than you did going in if the balance is high. You would want to draw down this account first in most circumstances though before tapping other retirement savings due to these issues. Personally, I think we'll probably use ours since we can spread withdrawals over 5 years, though if we did try to get the account balance as high as possible, $36k/yr at 7% would end up around $2.4 mil after 25 years. Assuming the tax brackets increase to some extent with inflation we should come out ahead in the tax arbitrage game, but honestly who knows, and we may end up doing some taxable savings instead of maxing the 457b plan.
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May 27, 2017 19:34
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Having a retirement account exposed to a single employers bankruptcy means it's literally impossible to diversify your risk of it going to zero no matter what you do. I wouldn't touch such a non-gov 457b with a ten foot pole.
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May 28, 2017 02:09
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Are IRA CD's a decent option if I have low risk tolerance? I was thinking of opening a 5-year CD with Ally anyway, and if I open a Traditional IRA CD with them I get the same terms and can also claim the tax deduction
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Jun 1, 2017 14:34
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EugeneJ posted:Are IRA CD's a decent option if I have low risk tolerance? A lot of factors in this (your age, portfolio split, etc), but this might be too risk averse. Factoring in inflation, rates on CDs will make you minimal return. Sure your retirement money won't disappear but it won't really appreciate either.
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Jun 1, 2017 14:55
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What's everyone's thoughts on employee stock purchase plans? I can buy shares at 85% of their full value between 2 and 10 percent. I can't sell the shares until 12 months and I believe at 24 months I get a larger tax break. No fees for selling them either.
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Jun 1, 2017 17:22
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B-Mac posted:What's everyone's thoughts on employee stock purchase plans? I can buy shares at 85% of their full value between 2 and 10 percent. I can't sell the shares until 12 months and I believe at 24 months I get a larger tax break. No fees for selling them either. I love ESPP plans but only when you can sell the stock right away for a guaranteed gain. A one year holding period is a really long time.
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Jun 1, 2017 17:28
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monster on a stick posted:I love ESPP plans but only when you can sell the stock right away for a guaranteed gain. A one year holding period is a really long time. My thoughts too. The stock *has* been doing well but that obviously doesn't mean it will continue to.
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Jun 1, 2017 17:29
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B-Mac posted:What's everyone's thoughts on employee stock purchase plans? I can buy shares at 85% of their full value between 2 and 10 percent. I can't sell the shares until 12 months and I believe at 24 months I get a larger tax break. No fees for selling them either. EESP that have no holding period are amazing. Even with your fairly long holding period, it could still be a pretty good deal if you want to set aside a little as a gamble with only a small amount of risk. Obviously, only do it if you have already maxed your Roth IRA and don't need the money right away. A 15% discount and fee-free is not too bad, even though the holding period sucks.
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Jun 1, 2017 17:54
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Leon Trotsky 2012 posted:EESP that have no holding period are amazing. 
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Jun 1, 2017 18:06
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My wife and I max our Roths ($11000) total and each contribute 10% of out paychecks to our 401K (~ $10000). So I was thinking about either upping my 40k1 contribution or starting up in the ESPP, guess I could do a bit of both. On a more idiotic note my whole life policy I signed up for 4-5 years ago hits the point where I can cash out at a zero loss this year. (Please don't beat me, I was an idiot then)
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Jun 1, 2017 18:27
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B-Mac posted:My wife and I max our Roths ($11000) total and each contribute 10% of out paychecks to our 401K (~ $10000). So I was thinking about either upping my 40k1 contribution or starting up in the ESPP, guess I could do a bit of both. You should fake your death to make sure that you maximize your financial gain from a whole life policy instead of just taking a bath on it.
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Jun 1, 2017 18:28
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Leon Trotsky 2012 posted:You should fake your death to make sure that you maximize your financial gain from a whole life policy instead of just taking a bath on it. You know my wife had the same idea.
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Jun 1, 2017 18:30
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B-Mac posted:You know my wife had the same idea. Well don't go with "went out on a canoe and never returned" because someone already tried that. https://en.m.wikipedia.org/wiki/John_Darwin_disappearance_case
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Jun 1, 2017 19:22
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B-Mac posted:You know my wife had the same idea. Lol don't give her any ideas
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Jun 1, 2017 19:59
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CannonFodder posted:Well don't go with "went out on a canoe and never returned" because someone already tried that. This story is even better: http://truecrimetruant.com/index.php/2016/06/08/molly-and-clay-daniels-some-body-they-didnt-used-to-know/
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Jun 1, 2017 20:06
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I got a notice that my 401k has replaced some funds with new ones with lower expense ratios. But then they raised the contract asset charges. I'm pretty sure I'm in the same place.
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Jun 2, 2017 15:47
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I think listening to the freakonomics back catalog has broken my brain. I saw the headline "Almost half of Americans die nearly broke" and was amazed by the number of people who do a good job of coordinating their draw down rate with their life span.
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Jun 2, 2017 20:56
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CopperHound posted:I think listening to the freakonomics back catalog has broken my brain. I saw the headline "Almost half of Americans die nearly broke" and was amazed by the number of people who do a good job of coordinating their draw down rate with their life span. Yeah that headline sounds like a very good thing?
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Jun 2, 2017 21:13
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Michael Scott posted:Yeah that headline sounds like a very good thing? depends on how broke they are in the time frame leading up to their death
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Jun 2, 2017 21:16
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CopperHound posted:I think listening to the freakonomics back catalog has broken my brain. I saw the headline "Almost half of Americans die nearly broke" and was amazed by the number of people who do a good job of coordinating their draw down rate with their life span. I had the same reaction and mentioned it to my cube mate....
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Jun 2, 2017 23:57
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Michael Scott posted:Yeah that headline sounds like a very good thing? Spoiler: most of those same people are broke going into retirement as well.
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Jun 3, 2017 02:13
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Everybody spends like 90% of their net worth in the last 3 years of their lives. Enjoy!
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Jun 4, 2017 00:10
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