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Leperflesh posted:Hmm, I think you're right; they're mostly vehicles used for the back-door or mega back-door roth, but if you never actually do the backdoor, then they're just tax deferral on the earnings?
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Apr 17, 2019 20:14
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OK, another revision! I've just removed social security. For most people it's not something they can choose to do or not do, and thinking of it as tax advantaged retirement space is maybe not the right approach anyway. Moved the after-tax/non-deductible 401(k)/IRA to the righthand column 
Leperflesh fucked around with this message at 20:23 on Apr 17, 2019 |
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Apr 17, 2019 20:21
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Hoodwinker posted:Somebody else can correct me if I'm wrong but I believe that's the case. Basically: there should be a 401k and an IRA contribution in each of the 3 columns. For Pre-tax it's Traditional, for Tax-Free Withdrawal it's Roth, and for Tax-Deferred it's After-tax/non-deductible 401k/IRA. After Tax Is Yet Another It Depends thing - I'm using it for Mega Backdoor Roth.
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Apr 17, 2019 20:23
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H110Hawk posted:After Tax Is Yet Another It Depends thing - I'm using it for Mega Backdoor Roth.
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Apr 17, 2019 20:43
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TSP isn't military only, all federal employees get access to it.
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Apr 18, 2019 05:11
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Beer4TheBeerGod posted:TSP isn't military only, all federal employees get access to it. Also Roth TSP exists. I haven't looked into it in detail, but I assume it operates just like a Roth 401(k). https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/TaxTreatment/index.html
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Apr 18, 2019 05:29
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Kylaer posted:If you can afford to fund this, do it. Do tax-deferred traditional contributions until you hit the 19,000bux limit, then aim for the 56,000 mark with after tax You know, I need to give this some thought. Since I don't make enough for the Roth IRA phase out to warrant a backdoor Roth, and don't have in-service rollovers available in my 401k to enable a mega backdoor Roth, I never stopped to consider whether an after-tax 401k could benefit me. I'm able to max my tax advantaged space in my traditional 401 k, Roth IRA, and HSA, and now I have enough socked away in a taxable account for down payments on an eventual next car or next house if need be. The little bit leftover that I put into taxable accounts each year now could indeed go into an after-tax 401k instead and come out advantaged if I leave my job later, roll it over to a Roth IRA, and pay the taxes on interim growth.
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Apr 18, 2019 14:11
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I'm thinking about getting a little riskier with my retirement savings. I'm in my late 30s still so I think I don't need to be as risk averse as I am now. Here is what I have now: Currently maxing out my employer provided 401(k) at $19k annually, plus the employer match. This is in a Vanguard target 2045 mutual fund with Wells Fargo because thats the terrible bank my employer chose. Currently maxing out my Roth IRA at $5.5k annually. This is also in a Vanguard target 2045 mutual fund, invested directly with Vanguard. I also have a rollover IRA from a previous employer currently valued around $10k with Vanguard in a total stock market fund VTSAX. No additional money is being added to this right now. I'm thinking about leaving my 401(k) alone with the target 2045 fund, but changing my Roth IRA over to the same total stock market fund VTSAX that my rollover IRA currently has. Thoughts?
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Apr 18, 2019 15:18
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DJCobol posted:I'm thinking about getting a little riskier with my retirement savings. I'm in my late 30s still so I think I don't need to be as risk averse as I am now. Here is what I have now and what I'm thinking:
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Apr 18, 2019 15:19
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Hoodwinker posted:That's perfectly fine. Additionally, the IRA limit is $6k this year (in addition to the 401k being bumped up to 19k which you knew about). Yup I mistyped that. I had to go back and double check my bi-weekly contribution and I'm on track for $6k this year. Thanks!
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Apr 18, 2019 15:20
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DJCobol posted:I'm thinking about leaving my 401(k) alone with the target 2045 fund, but changing my Roth IRA over to the same total stock market fund VTSAX that my rollover IRA currently has. Thoughts? The 2045 fund is currently 90% total stock (VTSAX + their international one). It's a very small change so don't over think it. If you want more risk runway while maintaining the hands free approach maybe go with 2050? Remember those funds trend towards passive income in retirement because lots of people need that sort of stability, plan accordingly.
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Apr 18, 2019 15:32
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DJCobol posted:Yup I mistyped that. I had to go back and double check my bi-weekly contribution and I'm on track for $6k this year. Thanks! If you can afford it, consider dumping all of your contribution in at the beginning of the year. That's a lot more time for your money to grow.
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Apr 18, 2019 16:00
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What is the thought process on ESPP? Do you sell the stock asap because of the guaranteed returns? Hold all? Hold some? Depends on your situation?
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Apr 18, 2019 16:08
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ChiTownEddie posted:What is the thought process on ESPP? Do you sell the stock asap because of the guaranteed returns? Hold all? Hold some? Depends on your situation? I sell it asap. It's a bet on a 15% tax savings and stocks swing that much in a year as is, up or down.
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Apr 18, 2019 16:20
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Redoing my asset allocation for 90/10 stocks and bonds, would love another set of eyes and feedback to make sure I'm doing this right. Maxing out the Roth, putting money into the 401k, and I rebalance TSP every few months: 
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Apr 18, 2019 16:25
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H110Hawk posted:I sell it asap. It's a bet on a 15% tax savings and stocks swing that much in a year as is, up or down. Isn’t the “guaranteed return” portion (based on your discount) always taxed as regular income anyway? I too participate in my ESPP and sell ASAP.
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Apr 18, 2019 16:42
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Sobriquet posted:Isn’t the “guaranteed return” portion (based on your discount) always taxed as regular income anyway? Your bargain element is taxed as ordinary income. For example if you buy stock for $50 (15% discount on $59, from a look back period) that is worth $100 and sell it for $200 two years later it's $50 ordinary income and $100 cap gains. Your returns aren't guaranteed, but are likely. ESPP is insanely complicated. Edit: Whoops I was wrong: https://blog.wealthfront.com/good-espp-no-brainer/ "For example if you purchase shares at a 15% discount to $10.00 per share ($8.50 per share) and you hold the stock for two years from the beginning of the offering period and sell at $12.00 per share then you would recognize ordinary income at the time of sale of $1.50 per share (the discount) and a long term capital gain of $2.00 per share ($12.00 – $10.00)." H110Hawk fucked around with this message at 16:57 on Apr 18, 2019 |
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Apr 18, 2019 16:53
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Sobriquet posted:Isn’t the “guaranteed return” portion (based on your discount) always taxed as regular income anyway? Yes.
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Apr 18, 2019 16:53
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H110Hawk posted:Your bargain element is taxed as ordinary income. Gains above (Market - Purchase Price) are short or long term capital gains. How do these things look, paperwork-wise? Do you just get a form from whatever broker your company uses laying out X dollars ordinary income and Y dollars capital gains?
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Apr 18, 2019 16:57
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totalnewbie posted:How do these things look, paperwork-wise? Do you just get a form from whatever broker your company uses laying out X dollars ordinary income and Y dollars capital gains? Yes, but it's not for the faint of heart. As I recall it's 2 forms (1099-B and 3922) plus 1 or 2 letter codes on your W-2. If you transfer the shares to a different brokerage it becomes way more complicated as they don't know your basis or how to withhold your taxes. Some companies (where I work for example) handle it all for you and so it flows through to our HRIS/Payroll system and adjusts my withholdings as the year goes on. Other companies it's all 0's and good luck! Hope you are in within the safe harbor if you don't do the math right!
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Apr 18, 2019 17:11
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Ok guys please convince me to do the right thing. I max out the normal retirement stuff, and I contribute the max to my companies espp. Everything I read says to sell right away, but I was viewing this as more of a fun long term gamble and I was planning on holding it for as long as I can because it's a strong young company. But then, why not be happy with a minimum 18% return? What would you do if you didn't need this money?
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Apr 18, 2019 17:18
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My base salary is close to the income limit for Roth IRA eligibility. What happens if I contribute throughout the year but I end up with a bunch of overtime that puts my AGI over the limit?
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Apr 18, 2019 17:21
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FateFree posted:Ok guys please convince me to do the right thing. I max out the normal retirement stuff, and I contribute the max to my companies espp. Everything I read says to sell right away, but I was viewing this as more of a fun long term gamble and I was planning on holding it for as long as I can because it's a strong young company. I don't need the ESPP returns, they just make my life really comfortable what with taking years off my mortgage and renovating the house and hookers and blow, but I still sell it within 24 hours of being able to do so. Same with my options. I get 100% of my livelihood from this stock (Salary, Healthcare, Options, ESPP), which means an extreme concentration of risk. Everyone recommends a diversified portfolio. If you want to let some <=25% amount of it ride so be it - we can't stop you. Some of the people at work are making a absolute fuckton more money doing that, given what our stock has done. It could have been worth nothing more just as well. I look at that and think about all of the money I could have had and have a little regret. Then I remind myself hindsight is 20/20 and move on. If I was truly "I don't need this job, I just work to keep my mind occupied and I want several MORE million dollars" I might be tempted to let it ride, but I don't think I would.
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Apr 18, 2019 17:30
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Maybe this is a better question. Would I have a safer form of this gamble by selling every time and just participating in the next round over and over, rather than holding all of the stock? Assuming I stay employed to participate?
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Apr 18, 2019 17:33
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FateFree posted:Maybe this is a better question. Would I have a safer form of this gamble by selling every time and just participating in the next round over and over, rather than holding all of the stock? Assuming I stay employed to participate? If you assume the stock will go up or stay the same I would go 100% as early as you can as it should have a lower price than future offerings.
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Apr 18, 2019 17:40
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To me it boils down to this: would you be investing your extra money in this company if you didn't work there? If so, buy and hold and enjoy the added benefit of the discount. If not, buy and sell ASAP and enjoy the extra couple $k/year or whatever for minimal effort. The concentration of risk (investing in the company that provides your salary) is interesting, but for me it doesn't change the answer to that fundamental question. I work at a big established company now, though, and the ESPP is not a major component of my total comp. I think the decision is different at a growing company giving you ISOs or RSUs - much higher risk and higher reward and depends on whether you're getting market rate salary, etc.
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Apr 18, 2019 18:00
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H110Hawk posted:I don't need the ESPP returns, they just make my life really comfortable what with taking years off my mortgage and renovating the house and hookers and blow, but I still sell it within 24 hours of being able to do so. Same with my options. I get 100% of my livelihood from this stock (Salary, Healthcare, Options, ESPP), which means an extreme concentration of risk. Everyone recommends a diversified portfolio. If you want to let some <=25% amount of it ride so be it - we can't stop you. This is absolutely, completely my position on this, and what I do. You're even in the same position of having "left money on the table" in order to minimize risk. I have left a LOT of money on the table doing this and I regret nothing. I fully recognize that I do not own a crystal ball, I made my risk tolerance decisions years ago, and I have and continue to follow those decisions through.
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Apr 18, 2019 18:02
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re the above dozen or so posts wow it sure is cool and good that there is so much loving ridiculous complexity to the tax code
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Apr 18, 2019 18:27
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Re: holding stock in your own company; your own employment is already one major personal risk factor, so when you own stock in the same company, that is a form of concentration risk. My view: ESPP represents a small bonus, if it's available and you can spare the money then go for it, sell the instant you can, and seriously reconsider participating if you're not allowed to flip the shares as soon as you get them. If you want to put some of your extra cash into gambling on individual stocks, I'd encourage you to do so with companies that you don't depend on for your livelihood, and maybe even stay away from the entire industry you work for, since a broad industry downturn could also affect your employment. And I'm not only talking about the possibility of being laid off: your ability to earn bonuses, promotions, and raises is also tied to the fortunes of your company and its industry, as well as the overall market. A lot of people have made lots of money anyway by owning lots of their company's stock. Just understand that there is a risk/reward calculus going on and that your personal risk is significantly higher than the risk taken by some other investor owning exactly the same shares at exactly the same cost basis who does not work for your company or in your industry, but you and that guy have identical return possibilities. Are you really so much better at picking stocks than him? "He" represents everyone who is participating in the market, and the degree to which the market is efficient. So you're balancing the "advantage" you may have of what you know about your own company/industry that the market doesn't, against a very real "disadvantage" of being at higher risk due to concentration risk factors. Act accordingly. Updated sheet, with "military" changed to "govt. employee", and Roth TSP added. 
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Apr 18, 2019 18:44
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Leperflesh posted:My view: ESPP represents a small bonus, if it's available and you can spare the money then go for it, sell the instant you can, and seriously reconsider participating if you're not allowed to flip the shares as soon as you get them. This is how I treat it. The 15% discount I get is free money, the risk is that our stock price drops more than 15% (minus taxes) in the short interval before I can unload it each time (hasn't happened yet). withak fucked around with this message at 20:16 on Apr 18, 2019 |
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Apr 18, 2019 18:55
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Most of ESPP are capped. Why sell? I only sell when I change companies or my concentration is too high compared to other individual stocks. I would have missed over 100% returns on my ESPP stock if I was selling on every distribution. It is not a bad idea to sell if you need the money or already have too much concentration. Otherwise, the hassle of taxes on every distribution is not worth it.
Lazy Broker fucked around with this message at 16:17 on Apr 19, 2019 |
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Apr 19, 2019 16:08
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Beer4TheBeerGod posted:If you can afford it, consider dumping all of your contribution in at the beginning of the year. That's a lot more time for your money to grow. I was just going to ask about this; I've been an idiot and normally do my contribution in March or April. If I toss in the full $6K now, and end tax year 2019 being over the contribution limit, what do I do / how is that resolvable? I've seen talk of a 6% excise tax but it's somewhat unclear.
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Apr 19, 2019 17:46
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movax posted:I was just going to ask about this; I've been an idiot and normally do my contribution in March or April.
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Apr 19, 2019 17:57
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Lazy Broker posted:Most of ESPP are capped. Why sell? I only sell when I change companies or my concentration is too high compared to other individual stocks. I would have missed over 100% returns on my ESPP stock if I was selling on every distribution. It is not a bad idea to sell if you need the money or already have too much concentration. Otherwise, the hassle of taxes on every distribution is not worth it. Mine is capped at 10% of my salary so after one quarter it would be my largest single-stock holding, and I don't really anticipate a ton of growth from my company. The taxes are really not a hassle as the discount income goes on my W2 and then I get a 1099 with four transactions (small short-term cap gains or losses). The real bite is the high fees ($30) for selling.
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Apr 19, 2019 20:58
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Hoodwinker posted:If you're that close to the line or you're worried about it, contribute through the backdoor at the start of the year. You can do the backdoor at any income level, it's just that at higher income it's the only way to contribute. Ah, ok. What happens in that case that I end up under the MAGI limit?
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Apr 19, 2019 21:08
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movax posted:Ah, ok. What happens in that case that I end up under the MAGI limit?
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Apr 19, 2019 21:16
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Lazy Broker posted:Most of ESPP are capped. Why sell? I only sell when I change companies or my concentration is too high compared to other individual stocks. I would have missed over 100% returns on my ESPP stock if I was selling on every distribution. It is not a bad idea to sell if you need the money or already have too much concentration. Otherwise, the hassle of taxes on every distribution is not worth it. The biggest reason to sell is to mitigate risk. If your company is doing gangbusters then having your savings there is great. But if you work for Boeing then suddenly poo poo hits the fan, you lose your job, AND your savings are now worth less. Savings that, presumably, you might need now that you don't have a job. That's why people generally recommend against holding stock in the company you work for - you end up doubly-exposed. Unless you've got gently caress-you money in which case, gently caress you.
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Apr 19, 2019 21:38
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If these were the options for your 401k, what would you do?  Girlfriend's work offerings are pretty terrible. Maxing her Roth IRA regardless, company matches half of up to 6%. I'd lean toward contribute to max match in whatever of those funds seems like the least terrible idea, then put the rest in a trad IRA; make sense?
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Apr 19, 2019 21:58
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Nationwide S&P 500 and write an email to her company's fund administrator. The contribution cap is shared between Roth and Trad. IRA so if you're going to max the Roth, you won't be able to have a Trad. IRA
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Apr 19, 2019 22:02
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Nur_Neerg posted:If these were the options for your 401k, what would you do? Definitely still contribute up to the max, and probably continue contributing beyond that as much as she can. The fees are bad but I'm pretty sure it's way better to just eat the fees and move it over once she leaves her job to a better fund than to stick it in a taxable account and eat much higher taxes than the fees.
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Apr 19, 2019 22:03
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