|
Murgos posted:Yes for the tax deduction. Is there a good reason why I would put after tax money in an IRA? It’s just going to confuse things and I have a brokerage account. If you are above both phase outs you should look at backdoor Roth. But if you can do Roth directly then you can never pay taxes on that money again.
|
#
?
Feb 16, 2019 16:18
|
|
|
|
| # ? May 16, 2024 22:34 |
|
|
Zauper posted:Traditional IRA tax deductions phase out....if either you or your spouse is covered by a retirement plan at work. Yup that is what I said. Without all the detail and links. He said you can't contribute which is not correct. Otherwise you could not back door Roth when you go over the phase out for Roth contributions. It is much better to switch to a Roth for sure and unfortunate that he was not aware. Although if he took that 70k and either added it to other retirement accounts or put it in a taxable account it is not the end of the world.
|
|
#
?
Feb 16, 2019 16:23
|
|
|
Zauper posted:Why not just sell some of the stock you bought with the $150k loan and pay them back? aka why didn't you just do a cashless exercise? This too is my question. This sounds like gambling on an individual stock on margin. I mean, I maybe get it if you were trying to exercise to hold for a year + 1 day to get LTCG treatment. Risky, but I get it. But you keep talking about dates in the future that are a lot longer than that.
|
|
#
?
Feb 16, 2019 17:42
|
|
|
Motronic posted:This too is my question. This sounds like gambling on an individual stock on margin. I can explain a bit more for anyone that's curious, though this is a sunk cost at this point. I should also note that this was all done in preparation for leaving the company. It was definitely a gamble. The stock is currently not liquid (private company) but I expect an IPO to be announced sometime within the next 6-18 months. The FMV and the private-market price of the stock were and still are around double my strike price--and given that I was leaving the company, my options would become NSOs 90 days after my departure and thus I'd lose both the ISO favorable tax treatment as well as the possibility for long-term capital gains. Given the positive spread on the options, exercising them once they became NSOs would have a significantly larger tax burden--and if I didn't exercise, they'd expire before liquidity no matter what based on the terms. Obviously when the company does IPO (this is a large private company, not pie-in-the-sky thinking for a tiny startup) I'll sell all of the stock reasonably quickly. Fake numbers that will give a ballpark idea: - 60,000 ISOs at $5 strike price - FMV/private market valuation at $10 - ISOs convert to NSOs 90 days after departure - After departure, all options expire 90 days after IPO - All stock/options are subject to a lockup until 180 days after IPO The extra AMT incurred by exercising was around $70,000--which I'll get back later--whereas if I had waited, the tax would have been around $100,000 or more in standard income tax. Note that the NSOs would expire upon IPO no matter what, meaning that in order to have any upside I would need to exercise the options with cash beforehand. edit: obviously this is a gamble and I'm making debt repayment / retirement plans assuming this all falls through and isn't worth anything. That's why I'm not factoring this in when deciding how best to repay the loan that my parents gave me, and how to prioritize guaranteed 5.5% returns versus a standard Vanguard target date fund investment. opposable thumbs.db fucked around with this message at 19:02 on Feb 16, 2019 |
|
#
?
Feb 16, 2019 18:47
|
|
|
opposable thumbs.db posted:I can explain a bit more for anyone that's curious, though this is a sunk cost at this point. I should also note that this was all done in preparation for leaving the company. Right, so you are betting on a liquidity event. In that case, they really aren't in the money. Anything can happen that would crush the value of the stock. We could enter a recession which causes any liquidity event to be significantly delayed -- my current CEO had this happen to him with the tech crash. He had a company that was due to go public 4 days after microstrategy cratered -- them cratering caused a delay and then the recession came and the value wasn't there. It took them years to get acquired from then and at that point tons of value was lost. That loan as described + 20% cap gains on the stocks will cost you more than the $100k in income tax you had at risk, not factoring for the free loan you're giving the government on recovering money via the AMT credit in future years. In this thread, generally, we don't like gambling on stocks, but sure it's a sunk cost now. At 5.5%, I'd probably aim to pay it off as rapidly as feasible. BTW, when you do pay it off, make sure you are calculating the interest correctly across it (this probably will require some advice from a tax professional) because it may qualify as a gift loan depending on the terms.
|
|
#
?
Feb 16, 2019 19:59
|
|
|
Yep, we did verify that it counts as a standard non-gift loan, because the rate of 5.5% is well above the AFR for this type of loan and interest is compounded from the start of the term. And I definitely acknowledge that it's a gamble and that liquidity is not guaranteed; I deemed it an acceptable gamble at the time based on my insider knowledge of the company. My numbers showed that if I'm able to sell at 1.75x the exercise price, assuming I pay $10,000 interest on the loan, then the difference between LTCG and standard income is about a wash when I factor in missed gains (say, 5% gains) on the extra AMT tax. Regardless, the main purpose of the loan and exercise was so that the options themselves wouldn't vanish or become unexercisable, and because I don't require the liquidity in any sort of time frame then the options' upside is worth dealing with any potential delays. It's a very particular / messy situation that I wouldn't really recommend to anyone at all and I regret getting in to it in the first place. In any case, due to that, I agree that the best thing to do is probably to knock out as much of the loan as reasonably possible. It seems best to get this behind me as much as possible so that it becomes an unexpected bonus at some point down the line.
|
|
#
?
Feb 16, 2019 20:56
|
|
|
opposable thumbs.db posted:I can explain a bit more for anyone that's curious, though this is a sunk cost at this point. I should also note that this was all done in preparation for leaving the company. This is all pie in the sky period until the IPO date. While I wish you luck getting rich this is a super high risk / reward scenario. I could basically copy / paste your post into ad with money thread and it would fit. ISO treatment is hard to give up, and why a lot of people stick it out with companies for longer than they otherwise would and you are in a very unique position to have someone willing to stake your gamble. Want to buy some of my private shares in my last job? They are "in the money" by your definition. They would have expired later this year if I hadn't exercised them years ago. (As in the 10 year grant would have expired.)
|
|
#
?
Feb 16, 2019 21:20
|
|
|
Agreed, and I definitely stuck it out longer than I should have otherwise. At this point, all I can do is wait and deal with the situation. At least I advised others, who were just starting at this company or at similar companies, to get as much cash as possible and to disregard options as much as possible. It's a huge trap. Even RSU compensation at giant companies is a bit scary, since you're tying your compensation in some way to the stock market overall.
|
|
#
?
Feb 16, 2019 21:37
|
|
|
I have a 403(b) left over from an old job, I'd forgotten about it for years so no contributions to it, just interest accruing. My current employer has 401(k) but no match - however, I wouldn't be surprised if a match is added in the next year or two. What should I do with this 403(b)?
|
|
#
?
Feb 16, 2019 21:41
|
|
|
opposable thumbs.db posted:Yep, we did verify that it counts as a standard non-gift loan, because the rate of 5.5% is well above the AFR for this type of loan and interest is compounded from the start of the term. And I definitely acknowledge that it's a gamble and that liquidity is not guaranteed; I deemed it an acceptable gamble at the time based on my insider knowledge of the company. quote:My numbers showed that if I'm able to sell at 1.75x the exercise price, assuming I pay $10,000 interest on the loan, then the difference between LTCG and standard income is about a wash when I factor in missed gains (say, 5% gains) on the extra AMT tax. Regardless, the main purpose of the loan and exercise was so that the options themselves wouldn't vanish or become unexercisable, and because I don't require the liquidity in any sort of time frame then the options' upside is worth dealing with any potential delays. It's a very particular / messy situation that I wouldn't really recommend to anyone at all and I regret getting in to it in the first place. 10k is like 14 months interest on the loan. The only way that makes sense is if you pay it off early! opposable thumbs.db posted:Agreed, and I definitely stuck it out longer than I should have otherwise. At this point, all I can do is wait and deal with the situation. At least I advised others, who were just starting at this company or at similar companies, to get as much cash as possible and to disregard options as much as possible. It's a huge trap. Even RSU compensation at giant companies is a bit scary, since you're tying your compensation in some way to the stock market overall. You should always be paid fairly in cash, and look at RSUs or options as lottery tickets. It's a shot at getting rich, but not part of your main comp.
|
|
#
?
Feb 16, 2019 21:59
|
|
|
I view my RSUs as a nice little quarterly bonus that I occasionally am able to forget about depending on how the stock price is doing, but more importantly as an amount of money that any future employer would need to make me whole on if I changed jobs and gave up unvested stock. I can’t imagine what it’s like banking on RSUs as part of salary for budgeting purposes given how drat volatile the market is and has been.
|
|
#
?
Feb 16, 2019 22:03
|
|
|
TITTIEKISSER69 posted:I have a 403(b) left over from an old job, I'd forgotten about it for years so no contributions to it, just interest accruing. My current employer has 401(k) but no match - however, I wouldn't be surprised if a match is added in the next year or two. If the options available within that fund are decent, you can just leave the money where it is. If your new 401k has better selections (lower expense ratios, etc), you can probably roll the 403b into it.
|
|
#
?
Feb 16, 2019 22:09
|
|
|
Zauper posted:10k is like 14 months interest on the loan. The only way that makes sense is if you pay it off early! quote:You should always be paid fairly in cash, and look at RSUs or options as lottery tickets. It's a shot at getting rich, but not part of your main comp.
|
|
#
?
Feb 16, 2019 22:37
|
|
|
Due to making an adjustment last year to how we are allocating things in our HSA I got to spend all morning figuring out cost basis for things. I know it's my own dumb fault for not realizing this going in but ugh. Thanks California (and apparently still NJ too?) for a good reason to turn off dividend reinvestment in there. And generally be more careful about how we use that account i guess.
|
|
#
?
Feb 17, 2019 00:24
|
|
|
Animal posted:Don't know if its the right thread, but what are the best alternatives to Mint? I use it to keep track of my spending budget and investments. But recently they started only updating your accounts maybe once a day, yet deceitfully tell you that the accounts have been refreshed when you manually updating them. Presumably to save on bandwidth. Might not fit your needs but I like Quicken. Mint is better for budgeting, but complete garbage for investments IMO
|
|
#
?
Feb 19, 2019 01:27
|
|
|
This is my first year maxing my 401k and that feels good. What also feels good is that I have enough money sitting around to open and max a Roth IRA for 2018 (so, $5500, I can still contribute to 2018FY right?) but I'm not sure where to invest it as part of my overall strategy. I'm 36 and don't plan on realistically retiring until 67, so I've got a good 30 years to go. That means my 401k is 100% equities right now. If I open a Roth and put it all into a bond fund, that would come out to just less than 5% of my total retirement assets in bonds. So is it worth it to start funding my Roth with bonds, or throw it into VTSAX and keep at 100% equities for a while longer since my time horizon is still pretty long?
|
|
#
?
Feb 19, 2019 14:35
|
|
|
I put my Roth and TSP in 2050 Lifecycle funds. I'm 36 so my horizon is pretty close to yours.
|
|
#
?
Feb 19, 2019 15:04
|
|
|
Fhqwhgads posted:This is my first year maxing my 401k and that feels good. What also feels good is that I have enough money sitting around to open and max a Roth IRA for 2018 (so, $5500, I can still contribute to 2018FY right?) but I'm not sure where to invest it as part of my overall strategy. Sounds fine to go all in on equities. Also keep international exposure in mind too, where are you at now?
|
|
#
?
Feb 19, 2019 15:17
|
|
|
air- posted:Sounds fine to go all in on equities. Also keep international exposure in mind too, where are you at now? 401k is at 80/20 US/Intl
|
|
#
?
Feb 19, 2019 15:41
|
|
|
Here's a dumb question. How do ESPP's work as far as making up the spread between my locked in purchase price and the market price of the security? Is this stock set aside by the company in a pool that they allocate and collect my purchase price back when the plan purchases shares? Does the company buy it in the open market with their own cash? (Market orders, long term options, that sort of thing.) For example, my faux-ESPP purchase price is $85, which is a 15% discount on a $100 share price in the open market. 6 months later I purchase another tranche of stock, still at $85 but now the stock is $115. In both cases there is a spread of $15 and $30 that comes from somewhere. If 500 employees do an even investment in the ESPP of $21,500 that's ~$2.8MM in value out of thin air. (~126 shares twice a year at a $15 and $30 spread, times 500.)
|
|
#
?
Feb 19, 2019 17:49
|
|
|
ESPP shares typically comes out of the employee incentive pool of stock. i.e., the company already owns those shares, same as any RSUs or stock options you may get in some places.
|
|
#
?
Feb 19, 2019 18:04
|
|
|
Motronic posted:ESPP shares typically comes out of the employee incentive pool of stock. i.e., the company already owns those shares, same as any RSUs or stock options you may get in some places. Thanks, that was my guess.
|
|
#
?
Feb 19, 2019 18:12
|
|
|
paternity suitor posted:Might not fit your needs but I like Quicken. Mint is better for budgeting, but complete garbage for investments IMO Do they sell Quicken desktop as a subscription yet? Not that I like paying for subscriptions but their old model where they wanted you to buy a new copy every year was a pain especially since they broke the online updates for each version after a few years.
|
|
#
?
Feb 20, 2019 12:31
|
|
|
Just so I'm clear, sorry I'm going through this like a 5th grader. I want the option in the future to be able to backdoor Roth without any tax implications like it seems everyone else does. I have no IRAs at all (Trad or Roth). I have $5500 burning a hole in my pocket and want to open a Vanguard Roth IRA for 2018 since it's not April yet. If I do this, I'll have an existing Roth IRA going forward. In the future, I can still create a Trad IRA, fund it with after-tax money, and convert it to my existing Roth with no major issues, right? That's how it works?
|
|
#
?
Feb 22, 2019 01:46
|
|
|
Fhqwhgads posted:Just so I'm clear, sorry I'm going through this like a 5th grader. I want the option in the future to be able to backdoor Roth without any tax implications like it seems everyone else does. I have no IRAs at all (Trad or Roth). I have $5500 burning a hole in my pocket and want to open a Vanguard Roth IRA for 2018 since it's not April yet. If I do this, I'll have an existing Roth IRA going forward. In the future, I can still create a Trad IRA, fund it with after-tax money, and convert it to my existing Roth with no major issues, right? That's how it works? This is how it works, no caveats or addendums.
|
|
#
?
Feb 22, 2019 01:48
|
|
|
Hoodwinker posted:This is how it works, no caveats or addendums. Thank you. Might have some wrinkles to setting it up like I set up my mutual fund account, since I work for a bank and had to go through some extra approval steps, but I'm glad to know I had the basic part right. Edit: Two major "adult" milestones for me this year. Maxing out my 401k and opening a Roth IRA. Only about 10 years behind schedule by my own weird measure of adulthood. Fhqwhgads fucked around with this message at 01:56 on Feb 22, 2019 |
|
#
?
Feb 22, 2019 01:51
|
|
|
smackfu posted:Do they sell Quicken desktop as a subscription yet? Not that I like paying for subscriptions but their old model where they wanted you to buy a new copy every year was a pain especially since they broke the online updates for each version after a few years. I have the Mac version and it's a subscription
|
|
#
?
Feb 22, 2019 01:51
|
|
|
smackfu posted:Do they sell Quicken desktop as a subscription yet? Not that I like paying for subscriptions but their old model where they wanted you to buy a new copy every year was a pain especially since they broke the online updates for each version after a few years. Intuit sold off the Quicken line to a private equity firm which subsequently turned it into a subscription service. The pricing solidified the once a year idea since they are exactly the same except per year now. The older model did have a sunset period but it was usually 4 to 6 years before you were basically forced to upgrade to use any online features. If you're offline only you eventually stop getting updates but it will otherwise work. The mobile app is decent tho it is pretty limited but it syncs seamlessly with the desktop app which is nice. Not really $40/year or more nice, but nice. Personally I plan to just ditch the mobile app when support ends (which kills mobile sync since it uses the cloud) and use the andromoney app on my phone and export the data which Quicken can import rather seamlessly. Tho I would love a recommendation for a good mobile app and desktop app pairing if anyone has one.
|
|
#
?
Feb 22, 2019 07:09
|
|
|
Has anyone got any advice for UK retirement savings? I'm 30, and have only really been in stable employment for the last two years. I'm making about £16,500 a year, and my employer has a pension scheme I'm paying into, which I have just over £700 in at the moment. Looking at my pension scheme I can switch from their standard pension to either a high or low risk one. I have very little debt, just my student debt from university and a £2000 debt from years ago when a bank removed my overdraft, which is not building any interest. Is it worth changing my pension type? Should I be investing elsewhere as well? Where?
|
|
#
?
Feb 23, 2019 13:35
|
|
|
Question on 529 investment options. We just opened one up with Vanguard, and there are 3 "age based" options:  We opened it with the "moderate" option, but we can change twice a year if we want. Our daughter is 1.5 years old right now, and she was born just before the age cut-off for school enrollment around here, which means she'll start college just shy of 19. Does this look like our best bet? Our monthly contribution is based on 7% yearly return (compounded monthly). Not sure if that's overly hopeful, but I know it's not conservative...
|
|
#
?
Feb 23, 2019 19:52
|
|
|
I tend to think taking a bit more risk with funds you're saving for college is worth it, since there are backup plans in case things don't go well (paying from cash flow, student loans, scholarships, etc), and potential drawbacks from saving too much (penalty on withdrawals not for qualified educational expenses, though rules around transfer are pretty lax). So I do an aggressive allocation that's more aggressive than the default 'aggressive' option that has it set to 100% stock through age 9 or so, and adds not as much bonds later on, but it depends on your risk tolerance. Always have the option of shifting more to bonds/cash later if I hit goals earlier than expected or college plans change.
|
|
#
?
Feb 23, 2019 20:49
|
|
|
DaveSauce posted:Question on 529 investment options. We just opened one up with Vanguard, and there are 3 "age based" options: 7% return is the expectation from 100% stock, on average. That allocation is much more conservative so I would not expect that kind of return. That said, given you have a specific date in which you need the money, I'd generally be more conservative with the allocation.
|
|
#
?
Feb 23, 2019 21:23
|
|
|
A while back, I posted about my mom having a few annuities and my stepdad who passed away having a few annuities. At the time I was pretty clueless on what they consisted of, but we got the CFA involved and here is what the CFA responded with so far:quote:- Two Brighthouse Annuities I still don't understand the first thing about annuities. I do know that my mom has SS and a pension, and when you run those numbers against her expenses, as the CFA said she makes more than enough in those two items to cover all her expenses, so I don't see any need to start drawing on those annuities. One thing I am concerned with-if she passes away, what happens to those annuities? Do they just go poof or would they go to the estate and A) get divided up amongst beneficiaries as it's discussed in her will or B) would the beneficiaries have the option of those annuities continuing to grow? I'm just not sure how that part works-if the beneficiaries would have to take a cash option/something equivalent. Also, if she were to take the cash value like the CFA suggests, what would that cash value be? Would it be the the values quoted ($151k,32k, and 235k)? I would figure it would have to be taxed at the least, because I just don't see getting paid a lump sum like those amounts indicate. nwin fucked around with this message at 22:02 on Feb 23, 2019 |
|
#
?
Feb 23, 2019 22:00
|
|
|
nwin posted:A while back, I posted about my mom having a few annuities and my stepdad who passed away having a few annuities. At the time I was pretty clueless on what they consisted of, but we got the CFA involved and here is what the CFA responded with so far: The death benefit part means you will be paid out if she dies, that is part of what she's paying for in the annuity, unless she starts taking the payouts, then it's possible you get nothing if she dies. Annuities suck. Ask how much the death benefit is. Get all of the paperwork for yourself, post it up here if you want. https://www.investopedia.com/ask/answers/122214/what-happens-my-annuity-after-i-die.asp So she's paying 1.6% for the rider charges - is she paying any other fees? She'll still have to pay those fees if she takes the payout, and she doesn't even need the payout as guaranteed income. Gah, annuities suck. Get your CFA to tell you exactly how much it would cost to get her out of the annuities, including any surrender charges or taxes. You can also contact Vanguard and ask their annuity department to do an annuity review with all of her current paperwork - they will tell her exactly how much she's paying now and if she doesn't want to sell, she might be able to switch to a Vanguard annuity that is cheaper. Annuities loving suck.
|
|
#
?
Feb 23, 2019 22:46
|
|
|
moana posted:You need to ask the CFA what the surrender charges are, because that's what it's going to cost to get out of the annuities. If she's had them for over 5-7 years, it shouldn't be too expensive to get you. Why is the CFA not telling you this? It's not like it's hard to find out. You're right, unless the annuity is held inside of a tax-advantaged spot like an IRA, you'll be paying taxes on getting the money out, plus extra if she's under 59 1/2. Usually you can take out part of the annuity (like 10%/year) as a free withdrawal (still taxable) even if you are in the surrender charge period, ask about that. What I quoted was just a summary email of a phone conversation, though surrender charges weren’t mentioned. She’s over 70, so we’re good there, and I think one of them she’s had over 5 years but I need to check. Thanks for all the info. I need to ask some more questions to the CFA. I will say though that this is a new CFA-she wasn’t responsible for any of these investments and doesn’t have a stake in any of them. My stepdad handled all financials through a different CFA and my mom just went along with whatever.
|
|
#
?
Feb 23, 2019 22:58
|
|
|
nwin posted:Thanks for all the info. I need to ask some more questions to the CFA. I will say though that this is a new CFA-she wasn’t responsible for any of these investments and doesn’t have a stake in any of them.
|
|
#
?
Feb 24, 2019 00:16
|
|
|
Question regarding long / short term capital gains tax. I have a relatively small taxable account which I deposit a little money to each week with M1. This is really just "fun" money which I wouldn't miss if it went to $0. However, I am lame/smart(?) with my fun money and I invest it 100% into VOO (ETF version of VFINX). I figure in a few years this might grow to enough to take my wife and kids on a nice vacation or something. Now since I am consistently investing in the same ETF each week will any withdrawal always be subject to short term capital gains? I've had the account for just over a year and never taken a withdrawal.
|
|
#
?
Feb 25, 2019 21:38
|
|
|
Sock The Great posted:Question regarding long / short term capital gains tax. I have a relatively small taxable account which I deposit a little money to each week with M1. This is really just "fun" money which I wouldn't miss if it went to $0. However, I am lame/smart(?) with my fun money and I invest it 100% into VOO (ETF version of VFINX). I figure in a few years this might grow to enough to take my wife and kids on a nice vacation or something.
|
|
#
?
Feb 25, 2019 21:45
|
|
|
You should be able to choose FIFO (first in first out) or Spec ID (choose specific shares) and either should be fine
|
|
#
?
Feb 25, 2019 21:49
|
|
|
|
| # ? May 16, 2024 22:34 |
|
|
I should have just searched M1's website. It's right there. All securities sales are prioritized as follows: We then sell securities, prioritizing them in this order: Losses that offset future gains Lots that result in long-term gains Lots that result in short-term gains
|
|
#
?
Feb 25, 2019 21:56
|
|