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TooMuchAbstraction posted:I hadn't realized that the cap on 401(k) contributions was per-job. Seems kind of ridiculous because I can't help but feel like the only people that can realistically make use of that capability are people who don't need it. It's not. You're beholden to $19k on elective contributions, $56k total regardless of how many plans you have. The loophole here is that your self employment sets up a rule for its employee that the 401(k) isn't optional, and that X% (100?) of your earnings are deposited into it. Now you are contributing against the space between $19k and $56k as it's "non-elective." So you could do, for example, $19k at your current employer, they match in $2k, and this leaves you with available space for your self employement of up to $35k. If it sounds dumb, that's because it is.
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Jun 5, 2019 17:54
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TooMuchAbstraction posted:I hadn't realized that the cap on 401(k) contributions was per-job. Seems kind of ridiculous because I can't help but feel like the only people that can realistically make use of that capability are people who don't need it. Welcome to the vast majority of tax laws in America.
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Jun 5, 2019 17:54
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TooMuchAbstraction posted:I hadn't realized that the cap on 401(k) contributions was per-job. Seems kind of ridiculous because I can't help but feel like the only people that can realistically make use of that capability are people who don't need it. As H110 said, it isn't. The cap is still 56K, but a solo 401k may allow you to fill more of that 56K than you otherwise might be able to.
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Jun 5, 2019 17:58
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Actuarial Fables posted:I would recommend going for the Roth IRA. Because you have a 401k, depending on your income you may or may not be able to deduct Trad IRA contributions, which is kind of the big draw to Trad IRA. Additionally, since the Trad IRA will be taxed once you start withdrawing from it at retirement, and you're limited to contributing $6,000/year for either plan, the Trad will be worth less than the Roth. I checked the deductions for IRA contribution and I am well within the income bracket for the full deduction if that changes anything. The funds I can choose through my 401k are: BlackRock Advantage International A/ International Stock (BROIX) BlackRock Advantage Large Cap Core A/ Large Cap U.S. Stock (MALRX) BlackRock Advantage Small Cap Core A/ Small Cap U.S. Stock (BDSIX) iShares MSCI EAFE International Index Fund/International Stock (MASKX) iShares Russell 2000 Small Cap Index Fund/ Small Cap U.S. Stock (BSPIX) iShares S&P 500 Index Fund/Large Cap U.S. Stock (BSPIX) Bond Funds BlackRock CoreAlpha Bond Investor A/ Diversified Bond (BCRAX) Other BlackRock 60/40 Target Alloc Inv (BIGPX) BlackRock Finl Cash Reserves Inv A/ Capital Preservation (MSAXX) BlackRock LifePath Index 2020 Fund P/ Target Date (LIMKX) Morningstar Lifetime Mod 2020 TR USD (MFLAX) BlackRock LifePath Index 2030 Fund P/ Target Date (LINIX) Morningstar Lifetime Mod 2030 TR USD (MLTHX) BlackRock LifePath Index 2040 Fund P/ Target Date (LIKIX) Morningstar Lifetime Mod 2040 TR USD (MLFAX) BlackRock LifePath Index 2050 Fund P/ Target Date (LIPIX) Morningstar Lifetime Mod 2050 TR USD (MFFOX) BlackRock LifePath Index Retirement Fund/ Target Date (LIRAX) If there's any other info I can give you please let me know.
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Jun 5, 2019 18:31
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mmj posted:I checked the deductions for IRA contribution and I am well within the income bracket for the full deduction if that changes anything. The funds I can choose through my 401k are: Need expense ratios (ER's). However, you will almost certainly be going with one of the target date funds or some kind of three fund portfolio (BSPIX + MASKX and BCRAX).
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Jun 5, 2019 18:43
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mmj posted:I checked the deductions for IRA contribution and I am well within the income bracket for the full deduction if that changes anything. The funds I can choose through my 401k are: Is this one 0.11% fee? Use that.
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Jun 5, 2019 18:44
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Motronic posted:Please enumerate "many". Because it seems like you might have the one trick I don't know about. Well, I work in silicon valley, so maybe my perspective is skewed, but for example I know a software engineer who works contracts, I know some technical writers do too. My wife is a ceramic artist, for a while she was taking 1099 teaching jobs. Our friend up in Portland is a hydro engineer, she works contracts for various state governments and power companies. This article: https://www.npr.org/2018/01/22/578825135/rise-of-the-contract-workers-work-is-different-now says 20% of the US workforce are contractors Now I grant you, Uber drivers are not shoving $50k into self-directed 401(k)s. Neither are a lot of the other contractors mentioned in that article. But I think it's fair to say that there are "many". GoGoGadgetChris posted:Note that you can't get a Side Job paying 10k a year and stuff 51k in a solo 401k. You'll be limited by how much you actually made in the side job That's true, of course. We are discussing high earners aiming for early retirement. You set up a company, for which you are the sole employee. As an employee, your contributions have the same cap as usual ($19k). But as an employer, you can also contribute to your employee's retirement accounts, up to a separate $37k cap (really it's a combined cap of $56, so if the employee contributes less, the employer can contribute more). The employer cannot contribute more than 100% of the employee's salary, so your company will have to be making enough profit to cover a large salary for you, plus the additional employer contribution amount. There are also some additional limits. You are probably going to need this company and your work for it to be your main job. https://www.investopedia.com/retirement/401k-contribution-limits/ If you are a dentist, an architect, an engineer, a lawyer, a consultant, or a professional stock gambler, etc. this may be a good option to consider. You can potentially shove a million bucks into tax-advantaged space in a short 20 year career, just in contributions. Leperflesh fucked around with this message at 18:50 on Jun 5, 2019 |
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Jun 5, 2019 18:47
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Sock The Great posted:Need expense ratios (ER's). However, you will almost certainly be going with one of the target date funds or some kind of three fund portfolio (BSPIX + MASKX and BCRAX). reposting with their annual operating expenses: BlackRock Advantage International A/ International Stock (BROIX) - 1.19% BlackRock Advantage Large Cap Core A/ Large Cap U.S. Stock (MALRX) - 1.18% BlackRock Advantage Small Cap Core A/ Small Cap U.S. Stock (BDSIX) - 1.08% iShares MSCI EAFE International Index Fund/International Stock (MASKX) - 0.36% iShares Russell 2000 Small Cap Index Fund/ Small Cap U.S. Stock (BSPIX) - 0.45% iShares S&P 500 Index Fund/Large Cap U.S. Stock (BSPIX) - 0.36% Bond Funds BlackRock CoreAlpha Bond Investor A/ Diversified Bond (BCRAX) - 0.73% Other BlackRock 60/40 Target Alloc Inv (BIGPX) - 0.81% BlackRock Finl Cash Reserves Inv A/ Capital Preservation (MSAXX) - 0.93% BlackRock LifePath Index 2020 Fund P/ Target Date (LIMKX) - 0.46% BlackRock LifePath Index 2030 Fund P/ Target Date (LINIX) - 0.48% BlackRock LifePath Index 2040 Fund P/ Target Date (LIKIX) - 0.49% BlackRock LifePath Index 2050 Fund P/ Target Date (LIPIX) - 0.49% BlackRock LifePath Index Retirement Fund/ Target Date (LIRAX) - 0.47% please ignore the Morningstar options from the last post, they were the benchmark they were comparing the blackrock lifepath options against as a similar option on the market, I can't actually choose them. H110Hawk posted:Is this one 0.11% fee? Use that. None of them are that low unfortunately, but the BSPIX is one of the lowest.
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Jun 5, 2019 19:02
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mmj posted:reposting with their annual operating expenses: Those are pretty bad, sorry that you're stuck with them. Not godawful but they're not good by any means. I'd probably go 100% BSPIX or 75% BSPIX / 25% MASKX if you want the international exposure. Pick up bonds and small-cap in an IRA if you want those, the bond fund fee there is miserable.
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Jun 5, 2019 19:20
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mmj posted:None of them are that low unfortunately, but the BSPIX is one of the lowest. Do that 100%, and balance in your IRA space to whatever allocation you want. The fees are pretty good compared to what fees used to be on this sort of thing, but not the race to the bottom that Fidelity has started against always low Vanguard.
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Jun 5, 2019 19:42
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BSPIX should be 0.11% . You might be looking at gross instead of net expense ratio.
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Jun 5, 2019 19:47
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Anarkii posted:BSPIX should be 0.11% . You might be looking at gross instead of net expense ratio. The number they gave was their "annual operating expenses" which was the closest thing to an expense ratio my company had in the paperwork they sent me about the 401k options, so you're probably right. Kylaer posted:Those are pretty bad, sorry that you're stuck with them. Not godawful but they're not good by any means. I'd probably go 100% BSPIX or 75% BSPIX / 25% MASKX if you want the international exposure. Pick up bonds and small-cap in an IRA if you want those, the bond fund fee there is miserable. H110Hawk posted:Do that 100%, and balance in your IRA space to whatever allocation you want. The fees are pretty good compared to what fees used to be on this sort of thing, but not the race to the bottom that Fidelity has started against always low Vanguard. Great, I'll set the 401k up today while I'm at work then. For the IRA part, with me definitely getting to take a full tax deduction each year from a trad IRA (my income is nowhere near the cutoff for deducting the whole 6k) is it still better to go with the suggested Roth or should I use the traditional option?
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Jun 5, 2019 19:51
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Leperflesh posted:56k limit stuff Outside of the listed contractor-y professions, the easiest way to do this is probably just get a job at a company where the 401k plan has after-tax contributions and rollovers implemented. As time goes on these are becoming way more common/standardized.
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Jun 5, 2019 19:59
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So, similar question to a few pages ago, but at a different frequency and these are RSUs. I am starting a new job and receive equity that vests monthly but over a total span of 4 years. I think I would like to cash it out every month and then invest elsewhere to diversify. Is there a reason not to do this as often as it vests? Is there a penalty if I keep a small chunk and invest majority back into an IRA or elsewhere? three fucked around with this message at 21:33 on Jun 6, 2019 |
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Jun 6, 2019 21:14
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three posted:So, similar question to a few pages ago, but at a different frequency and these are RSUs. Several things: 1. You might be beholden to insider trading rules which mean you are restricted to quarterly-ish transactions, consult your documents. 2. Some people at larger companies hold RSUs for long term capital gains. This can be done one of two ways: sell to cover (All numbers placeholders for easy math: 100 RSUs @ $100 vest, you now owe 25% taxes on $10,000 in income so you sell $2,500 worth of RSUs (25) to pay those taxes and hold the remaining 75 for a year. The second way is to pay the taxes out of pocket with "cash to cover." I would recommend the first way as it doesn't put "your" money into the pot. Remember that even large companies have 15% swings in stock price. I know this isn't as cut and dry as the  sell for options and ESPP, but you also aren't spending a lot of your own money to take on that risk depending on how your compensation is structured. (I realize options often have cashless hold options as well, but in RSUs your hand is forced.) If it's a super large company, you're already probably pretty exposed to it in your portfolio (Do you work for the first page of companies here? https://investor.vanguard.com/mutual-funds/profile/overview/VTSAX/portfolio-holdings ) and in my mind that makes the marginal increase in risk lower as you're either completely hosed or completely fine. 
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Jun 6, 2019 21:35
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H110Hawk posted:Several things: Yes, but often because they don't understand how RSUs work. If you sell your RSUs upon vest, you owe no capital gains tax of any kind (since there are no capital gains yet). Just wanted to clarify that because there's a lot of confusion on this. If you do want to hold them after vest, then yes, you probably want to hold for at least a year, but since three mentioned wanting to sell and diversify (IMHO, the right decision), sell away.
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Jun 6, 2019 21:59
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I'm just going to echo what everyone else is saying. Sell RSUs as soon as they vest and diversify. You are already over invested with you company by working there. It's best to treat them as a steady stream of income than as a get rich quick scheme if the price increases.
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Jun 6, 2019 22:08
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We’re planning to move to Europe (Netherlands) for 2-3 years. Does anyone have experience with saving for retirement in the US while living and working abroad? I’m current unsure if I’ll be able to participate in or benefit from any employer-provided retirement plan while I’m working there (something I plan to discuss with my potential new employer during salary negotiations planned for next week). Do I just continue contributing to a Roth and put the rest in non-tax advantaged investments?
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Jun 6, 2019 22:22
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H110Hawk posted:Several things: Yes, I will work for one of the top 10 companies there. Based on that, should I just hold the stock? Will I pay less the longer I hold it, or does the length not really matter? I’ve never had equity before.
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Jun 6, 2019 22:25
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Adhemar posted:Yes, but often because they don't understand how RSUs work. If you sell your RSUs upon vest, you owe no capital gains tax of any kind (since there are no capital gains yet). Just wanted to clarify that because there's a lot of confusion on this. three posted:Yes, I will work for one of the top 10 companies there. Based on that, should I just hold the stock? Will I pay less the longer I hold it, or does the length not really matter? I’ve never had equity before. I forgot that the income on the RSU is ordinary not cap gains. Yeah I'm back to sell. You're looking at a 15% savings on the gains/losses it makes in a year, not the whole amount.
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Jun 6, 2019 22:30
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H110Hawk posted:I forgot that the income on the RSU is ordinary not cap gains. Yeah I'm back to Thanks H110Hawk & Adhemar! I'll do some more research as well to educate myself on all of this, but this is very helpful and I appreciate the advice.
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Jun 6, 2019 23:02
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mmj posted:I checked the deductions for IRA contribution and I am well within the income bracket for the full deduction if that changes anything. I'd still recommend going for the Roth, but you can't go wrong either way.
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Jun 6, 2019 23:05
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“Always sell RSUs” is very safe advice, but not that sophisticated. I think “sell it you wouldn’t have bought” is a good principle to consider. More specifically: - Were you planning to invest at least that much into taxable equity that year? - Can you hold the stock without being excessively concentrated in your current employer? (10-15% of all your equity holdings is often said to be excessive.) - Is the company reporting steady annual profits and not in a high-risk/highly competitive business? - Can you separate the company’s value from any subjective feelings of pride in your work there? If the answer to any of these is no, you probably should sell.
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Jun 7, 2019 20:29
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Some companies have a program you can enroll in that will automatically sell RSUs immediately after they vest, which removes any concerns about trading windows and can reduce your cap gains taxes would you get from holding the stock. (Because there isn't enough time for gains between the vest date and the sell date.) It's worth looking into.
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Jun 7, 2019 20:33
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Gazpacho posted:“Always sell RSUs” is very safe advice, but not that sophisticated. I think “sell if you wouldn’t have bought” is a good principle to consider. More specifically: The general assumption is that you wouldn't buy stock in the company you work for, or indeed in any other company in the same industry, because your livelihood already depends on them. If they do badly, you want at maximum to be out of a job, not both out of a job and down on your savings.
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Jun 7, 2019 20:53
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That will depend on whether you have enough other savings to wait for the stock to (maybe) recover. In other words, were you in a position to buy taxable stock?
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Jun 7, 2019 21:32
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TooMuchAbstraction posted:The general assumption is that you wouldn't buy stock in the company you work for, or indeed in any other company in the same industry, because your livelihood already depends on them. If they do badly, you want at maximum to be out of a job, not both out of a job and down on your savings. Yeah but its not so cut and dry when its offered at a 15% discount, it may feel like a perk. (Sorry im talking about ESPPs, not RSUs)
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Jun 8, 2019 00:44
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Yeah ESPP with a discount is free money. Sell it for 18% more than you paid the moment you can and pocket the additional income.
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Jun 8, 2019 02:46
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A few months back I exchanged my Vanguard Roth IRA account from a target date fund into a combo of VBTLX, VTSAX, and VTIAX. All is going well except at the end of each month the money earned from dividends in VBTLX is going into my money market fund. I double checked and have all three funds set to reinvest, is there something else I am missing? Quite stumped as my wife also has a Vanguard Roth IRA account with the same funds and options as mine; her's seems to reinvest with no problem as soon as the dividend is given. Anyone run into this issue before?
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Jun 9, 2019 00:40
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I'm trying to wrap my head around options available to my partner now that solo 401k has been mentioned. Right now they have one job as an employee where they are maxing out their 401k contribution, but there is no match. They also doing some work in another hospital where they are not being paid as a 1099 contractor. Can they use up to 25% of all that 1099 income to get them closer to the 401k limits for the year.
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Jun 9, 2019 17:17
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The Rev posted:A few months back I exchanged my Vanguard Roth IRA account from a target date fund into a combo of VBTLX, VTSAX, and VTIAX. All is going well except at the end of each month the money earned from dividends in VBTLX is going into my money market fund. Have you reached your yearly Roth limit by any chance?
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Jun 9, 2019 19:16
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qsvui posted:Have you reached your yearly Roth limit by any chance? Yes, both my account and my wife's account get funded to the cap each Jan 1st. But her's reinvests with no issues whereas mine just puts in into the money market.
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Jun 9, 2019 19:43
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qsvui posted:Have you reached your yearly Roth limit by any chance? Hitting cap should have no bearing on reinvestment.
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Jun 9, 2019 20:14
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Let me interrupt the regularly scheduled programming to say that you absolutely should review the statements you receive from your IRA custodian to make sure that they applied your contributions to the intended year because any screwup that you don't correct in a timely fashion is your problem and not the custodian's. Excess contributions are subject to a punitive tax not just once, but year after year, until they are either withdrawn or "carried forward" into a later year.
Gazpacho fucked around with this message at 23:12 on Jun 9, 2019 |
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Jun 9, 2019 20:54
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So.... besides the following: -Emergency Fund -Money into 401k -Money into Roth IRA -House downpayment What should I do with my monies? I worked a lot of overtime the last couple of years and have saved a bunch. (Unfortunately I did not open up a Roth IRA until recently.) Should I open a [b]traditional[b] IRA and park it in a money market fund? Worried about inflation and cost of living increases.
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Jun 13, 2019 06:10
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The traditional ira and roth ira share the same $6,000 limit so you won't be able to add more money to that this year. I would just open a taxable brokerage account and dump it all into VTSAX or whatever equivalent available.
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Jun 13, 2019 06:37
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Senor P. posted:So.... besides the following: 529 plan for kids' education if you have any, or possibly your own. Reserve funds for necessary purchases expected within the next 5 years, e.g. a car or computer if needed in that time frame, held in inflation-beating savings account or CDs Reserve fund for any specific discretionary purchase in the next 5 years Then, finally, taxable index fund investments (stocks or tax-advantaged bonds according to your risk preference)
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Jun 13, 2019 08:39
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Mu Zeta posted:The traditional ira and roth ira share the same $6,000 limit so you won't be able to add more money to that this year. I would just open a taxable brokerage account and dump it all into VTSAX or whatever equivalent available. This assuming you are maxing out your 401k and not just contributing up to the match. It's a $19,000 limit on top of the $6,000 limit for your IRA. Beyond that, it's worth looking into finding a way to get an HSA in your life. Then you may want to look into 529 plans and custodial IRA's if you have children, and ABLE accounts if you have disabled children. After all that is exhausted, then look at taxable accounts. Edit: Did I list all tax-advantaged savings vehicles here or are there some other ones I'm not aware of? Volkerball fucked around with this message at 08:46 on Jun 13, 2019 |
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Jun 13, 2019 08:40
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Volkerball posted:
Tax evasion
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Jun 13, 2019 12:35
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Simpsons Reference posted:Tax evasion In keeping with your name, you should've said tax avoision.
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