|
DJCobol posted:If I were to deposit the max Roth IRA contribution one day into a traditional IRA, leave it in the money market holding until it clears, and immediately roll it to a Roth, in theory I should have zereo to only a few cents worth of interest as my gain to worry about for taxes right? This is the general idea behind the backdoor, yes, but your situation is more complicated because of the rollover ira. The IRS "pro-rata rule" won't let you just convert the after-tax contribution - you have to prorate it across all of your traditional IRA assets. To walk through an example: You have $95K in your rollover - 50% / $47.5k contributions; 50% / $47.5k gains You make a $5K non-deductible contribution. You do a $5K Roth conversion. Under the rule, your traditional assets are $100k (95% / $95k deductible ; 5%/$5k non) Your conversion is therefore comes 95% from the deductible funds ($4750), 5% non deductible ($250) (Brainfart) You'll owe tax on the whole $4750 as ordinary income DJCobol posted:This gets even funkier when I need to start taking RMDs from the inherited IRA next year, and I was going to use the amount I have to take after taxes are accounted for and use that to make my Roth contributions for the year. The good news is that I don't think the inherited IRA comes into play for the pro-rata rule so you continue to treat that as a totally separate bucket of money. SlapActionJackson fucked around with this message at 16:31 on Sep 6, 2019 |
#
?
Sep 6, 2019 16:26
|
|
|
|
| # ? May 14, 2024 00:06 |
|
|
SlapActionJackson posted:If you make more than $137k*, you can't contribute to a Roth IRA directly. Under current tax law, this limit is trivially avoided by contributing to a non-deductible traditional IRA, then immediately converting that to a Roth. The catch is if you have deductible IRA assets, the conversion becomes not so trivial and may trigger some taxes. For other people's reference if they're looking at this, the Roth IRA income limits for 2019 are:
Both have contribution limit phase-outs for roughly the next $10,000 after that, beyond which you can't contribute at all (e.g. the $137,000 mentioned by OP). Amounts are increased slightly for 2020. https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2019
|
|
#
?
Sep 6, 2019 16:54
|
|
|
spwrozek posted:And pay taxes now? Why? you're gonna pay taxes on it sooner or later
|
|
#
?
Sep 6, 2019 17:18
|
|
|
incogneato posted:For other people's reference if they're looking at this, the Roth IRA income limits for 2019 are: Yeah I just looked up married filing separately and saw I'd no longer be eligible. So I guess I've got some big questions about what's going to happen to me tax-wise over the next few years. Fiancée is above all limits but her group manages everything into a backdoor max Roth. She owns a home in VA. I legally still live at my house in GA and travel for work a lot (but spend most of my free time up in VA). Active accounts are Roth Ira (largest since I rolled old 401ks over during grad school to save taxes), vanguard brokerage, HSA (maxing), and current company 401k (maxing). Next year I'll be pushing the single filing MAGI limit. It looks to me like when we get married I'll no longer qualify for Roth Ira contributions however we file, so I'd have to do a backdoor, right? I'm interested in this anyway since I'd rather not be putting money in a brokerage account but don't know what else to do. How do I see if that kind of thing is available with my current company? We have fidelity as our provider. E: also I haven't done any research into what happens when I sell my house. Taxed immediately or not if I move it into a different mortgage (get my name on hers)? The Big Jesus fucked around with this message at 17:47 on Sep 6, 2019 |
|
#
?
Sep 6, 2019 17:44
|
|
|
The Big Jesus posted:It looks to me like when we get married I'll no longer qualify for Roth Ira contributions however we file, so I'd have to do a backdoor, right? I'm interested in this anyway since I'd rather not be putting money in a brokerage account but don't know what else to do. How do I see if that kind of thing is available with my current company? We have fidelity as our provider. We've been discussing the "Backdoor Roth" which requires no cooperation or involvement from your employer or 401k. There's a "Mega Backdoor Roth" that does need your 401k account to have certain features available. It is more complicated and not widely available so do the plain backdoor first. For the Mega backdoor to work your 401k must offer after-tax (not Roth!) contributions AND in-service distributions of those after-tax amounts. You should be able to ask a fidelity CSR or an HR rep if these features are available in your plan. When you sell your house you will likely not owe any taxes on the sale. If it was your primary residence for 2 of the previous 5 years at time of sale, then the first $250k of capital gains ($500k if married at time of sale) are tax exempt.
|
|
#
?
Sep 6, 2019 18:36
|
|
|
KYOON GRIFFEY JR posted:you're gonna pay taxes on it sooner or later It is a fair point. The assumption is if you are in the phase out you hopefully will be in a lower tax pain in the future. He also had to have the cash available to convert it.
|
|
#
?
Sep 6, 2019 21:02
|
|
|
So let's say I have an opportunity to pitch a 401K plan to an employer with roughly 280 employees (of which I am one.) What considerations should I make as far as suggested matching (and their benefit to doing so), 401K providers, etc? Sorry if this is too broad of a question.
|
|
#
?
Sep 6, 2019 21:40
|
|
|
Wickerman posted:So let's say I have an opportunity to pitch a 401K plan to an employer with roughly 280 employees (of which I am one.) What considerations should I make as far as suggested matching (and their benefit to doing so), 401K providers, etc? Sorry if this is too broad of a question. Basically it boils down to, "this improves the compensation package, making this employer more attractive which helps to sign and retain high-quality employees" plus "this is an inexpensive way to do so compared to just paying people more" plus "as my fellow employees, this would directly benefit you." And then you get into the details of the cost/benefit tradeoffs of superior vs. inferior setups: custodians, matching, vesting, investment options, fees, qualification, etc. If you can show that local competitors offer a 401(k), with matching, etc. that is probably ideal.
|
|
#
?
Sep 6, 2019 21:52
|
|
|
Wickerman posted:So let's say I have an opportunity to pitch a 401K plan to an employer with roughly 280 employees (of which I am one.) What considerations should I make as far as suggested matching (and their benefit to doing so), 401K providers, etc? Sorry if this is too broad of a question.
|
|
#
?
Sep 7, 2019 07:59
|
|
|
moana posted:From what I've seen, Gusto is the poo poo when it comes to small business 401ks. If they're not already on your short list of possible providers. This is what my girlfriend uses. They seem more aimed at really small businesses (less that 20 people) though. I believe if you had a larger company the pricing and such had to be obtained by calling. They are very easy to work with though.
|
|
#
?
Sep 7, 2019 12:18
|
|
|
Wickerman posted:So let's say I have an opportunity to pitch a 401K plan to an employer with roughly 280 employees (of which I am one.) What considerations should I make as far as suggested matching (and their benefit to doing so) Look at ERISA and non-discrimination testing. Highly compensated employees ($125k and above) and business owners can't contribute more than 2% above what the rest of the company's employees did during the year. So if you encourage more investing through more matching, the owners/directors/etc can contribute more as well.
|
|
#
?
Sep 7, 2019 16:06
|
|
|
Leperflesh posted:
Agreed - the best argument for introducing something is to point to your direct competitors to show that they do it. glassdoor.com and comparably.com are really helpful for (crowdsourced) specific benchmarking; if you can get a hold of someone's employee handbook/benefits booklet; even better. If you don't know who your peer companies are, ask your recruiting team - they'll definitely know who you compete against for candidates. If your HR/Finance team balks at the cost of offering a 401k, they don't have to roll out a match right away - I think it's more important to have a 401k first & then push for the match in year 2, rather than not have a 401k at all. Gusto can be great, but probably too small for a company with 280 employees. What system do you have for payroll? (Do ADP, Paylocity, or Workday sound familiar at all?) They'll probably have recommendations/partnerships with a 401k record keeper to get the ball rolling. Umister fucked around with this message at 17:20 on Sep 7, 2019 |
|
#
?
Sep 7, 2019 16:24
|
|
|
Stupid question - if I'm happy with my traditional IRA's holdings, and I'm happy with my 401k's holdings... is there any reason to reverse rollover the trad IRA into the 401k? I'm changing jobs, so I'm not sure if the new 401k will accept it, but my current provider will do so without incident. Other than organizing things, is there any real serious benefit? My holdings are all target date funds, if that helps.
|
|
#
?
Sep 9, 2019 17:02
|
|
|
MJP posted:Stupid question - if I'm happy with my traditional IRA's holdings, and I'm happy with my 401k's holdings... is there any reason to reverse rollover the trad IRA into the 401k? If your income is >150k or whatever the roth cutoff is, it would make it possible to do a backdoor roth contribution. No other benefit AFAIK
|
|
#
?
Sep 9, 2019 17:12
|
|
|
Another reason to stay unconsolidated: If you're planning to retire early, having multiple IRAs makes it easier to withdraw the right amount of money early using a SEPP.
|
|
#
?
Sep 9, 2019 17:57
|
|
|
Care to explain how? I don’t see it.
|
|
#
?
Sep 10, 2019 13:01
|
|
|
401(k)s often have more legal protection than IRAs, but that's heavily a state by state thing.
|
|
#
?
Sep 10, 2019 13:41
|
|
|
Anyone use Vanguard Personal Advisor service? Had an initial phone call with them and it all sounds pretty good, from asset balancing, to tax planning on what assets to invest where, and when to withdraw from each. I know that will be a challenge for me going between a workplace 401(k), a Roth IRA, an inherited IRA, an HSA account, a brokerage account, and a rollover IRA. Fees didn't seem too pricey either at .3%.
|
|
#
?
Sep 10, 2019 16:51
|
|
|
DNK posted:Care to explain how? I don’t see it.
|
|
#
?
Sep 10, 2019 16:58
|
|
|
DJCobol posted:Anyone use Vanguard Personal Advisor service? Had an initial phone call with them and it all sounds pretty good, from asset balancing, to tax planning on what assets to invest where, and when to withdraw from each. I know that will be a challenge for me going between a workplace 401(k), a Roth IRA, an inherited IRA, an HSA account, a brokerage account, and a rollover IRA. Fees didn't seem too pricey either at .3%. No, but I'm curious. I think the meetings are "free" above some threshold invested too, right?
|
|
#
?
Sep 10, 2019 17:31
|
|
|
Residency Evil posted:No, but I'm curious. I think the meetings are "free" above some threshold invested too, right?
|
|
#
?
Sep 10, 2019 17:33
|
|
|
I looked in to this a while ago but decided against it because I'm lazy and only use target funds. IIRC, under $500k AUM you can call in and talk to a "call center" advisor any time. Over $500k AUM and you get a dedicated advisor. It looks like they've changed it slightly... I swear it used to be that there were 3 tiers: call center only, fee-only dedicated advisor, and free dedicated advisor. Maybe they've changed it, I dunno. NerdWallet's review implies that advisor access is free, so maybe it's always free and your "level of dedication" changes based on AUM.
|
|
#
?
Sep 10, 2019 18:05
|
|
|
moana posted:You asking me? Setting up a SEPP means distributing all of an IRA over time. If you only have one huge IRA, you have to distribute it all. If you have multiple IRAs, you can pick which ones to SEPP out depending on how much you need pre retirement. I have three IRAs now and was considering consolidating but decided against it in case I wanted to SEPP only part of the money. Oooooooohhhhhh. I wasn’t aware you could SEPP from one while maintaining the others.
|
|
#
?
Sep 12, 2019 01:50
|
|
|
Is there any info out there regarding a multiple investor situation for purchasing property to rent? I was recently speaking to someone who did this a group of 5 of his family, but he had also recently purchased commercial property and bought overseas in his home country. My family is pretty large, and while none of us has tons of money, we’re all fiscally responsible and spend less than we earn. It’s probably a dumb idea, but I’d like to read more about it. I was hoping that we’d have a reference here somewhere, but apparently the landlord thread got gassed.
|
|
#
?
Sep 15, 2019 20:11
|
|
|
Just form an LLC or LLP and use that to buy and manage the property. The hard part is figuring out the rules of the partnership. Who is responsible for what in what amounts and what do you do when someone wants out?
|
|
#
?
Sep 15, 2019 22:30
|
|
|
Cacafuego posted:Is there any info out there regarding a multiple investor situation for purchasing property to rent? I was recently speaking to someone who did this a group of 5 of his family, but he had also recently purchased commercial property and bought overseas in his home country. It starts and ends with an attorney and don't mix money with family. You would form a company, invest in it, and never, under any circumstances, have a even number of votes. Refuse to be a part of it unless your attorney who reviews the partnership agreement shows you how deadlocked votes are handled. Only you know how well your family will work with this when the poo poo hits the fan. If partner 3 loses their job and wants their $25k back what happens? When 75% of them want out? Etc. Are you going to be the heartless no vote who won't spot Timmy the cash? Will you be disowned for it?
|
|
#
?
Sep 15, 2019 22:41
|
|
|
Long time SA lurker and poster with a new account here. Over the course of many years of work I have amassed a pretty sizable pile of monies. I have a 401k, I have a roth IRA. I generally make it a point to maximize what I can each year for these. Is there somewhere else I can put my monies rather than leaving it sitting in the bank? Should I open a normal IRA and buy more mutual funds? Should I buy a house?
|
|
#
?
Sep 15, 2019 23:21
|
|
|
H110Hawk posted:It starts and ends with an attorney and don't mix money with family. You would form a company, invest in it, and never, under any circumstances, have a even number of votes. Refuse to be a part of it unless your attorney who reviews the partnership agreement shows you how deadlocked votes are handled. This sounds like a big ol’ pile of nope. Thanks for pulling my head out of my rear end.
|
|
#
?
Sep 15, 2019 23:26
|
|
|
Cacafuego posted:This sounds like a big ol’ pile of nope. Thanks for pulling my head out of my rear end.  One of the biggest issues with small time partnerships, whatever the business, is "we're in it 50/50!" Enjoy your lawsuit when one of you wants to do something the other doesn't. In any business you must always have the ability for a 51% vote. (And bylaws which allow that % of vote to do anything with the company, including dissolve it.)
|
|
#
?
Sep 15, 2019 23:38
|
|
|
SA-Anon posted:Long time SA lurker and poster with a new account here. If you’re looking for more tax advantaged space, you can use an HSA for that, if you have access to that.
|
|
#
?
Sep 15, 2019 23:39
|
|
|
Your sum of contributed money to a traditional and Roth IRA cannot exceed $6000 per year. If you're maxing your Roth you've used up your traditional space also. If you've maxed your IRA, 401k, and paid down debts, the next step (assuming you have a comfortable emergency fund) is taxable investing. You can invest money in a taxable brokerage such as Vanguard, and will be subject to a bit of tax drag but it's far better longterm than leaving it in a bank.
|
|
#
?
Sep 15, 2019 23:40
|
|
|
Kylaer posted:Your sum of contributed money to a traditional and Roth IRA cannot exceed $6000 per year. If you're maxing your Roth you've used up your traditional space also. If you've maxed your IRA, 401k, and paid down debts, the next step (assuming you have a comfortable emergency fund) is taxable investing. You can invest money in a taxable brokerage such as Vanguard, and will be subject to a bit of tax drag but it's far better longterm than leaving it in a bank. You get an extra $1,000 on your IRA contribution max if you're over 50, and an extra $6,000 on your 401k contribution max at the same age.
|
|
#
?
Sep 15, 2019 23:57
|
|
|
True, thank you for filling in that gap. In terms of brokerages, I think Vanguard is the typically recommended choice unless you have significant money invested. Merrill Edge has some excellent perks if you have >100K in invested assets, and you can still buy and hold Vanguard ETFs there.
|
|
#
?
Sep 16, 2019 00:11
|
|
|
H110Hawk posted:
With real estate, it tends to involve a general partner that has the ability to make decisions, and limited partners that are along for the ride unless the GP breaks laws. This is usually the setup when a real estate guy gets a bunch of doctors and dentists to hand over money to buy something. In that case, it will usually specify what happens if a roof needs replacing and there isn’t enough cash on hand, or when to sell the property.
|
|
#
?
Sep 16, 2019 00:13
|
|
|
crazypeltast52 posted:With real estate, it tends to involve a general partner that has the ability to make decisions, and limited partners that are along for the ride unless the GP breaks laws. Yup, but things get really hairy when it's family. Pressure to invest money you don't have, to setup dumb bylaws, pressure to make emotional decisions, that sort of thing. Most families don't have $high_paid_professional money kicking around.
|
|
#
?
Sep 16, 2019 00:47
|
|
|
Kylaer posted:True, thank you for filling in that gap. Which ones do you consider excellent? I'm looking at them and they seem.. Fine. But not with a 0.15% haircut on 100k+
|
|
#
?
Sep 16, 2019 01:26
|
|
|
You get a pretty big credit card rewards bonus at Bank of America. But I still rather use Vanguard than transfer $100k to Merrill.
|
|
#
?
Sep 16, 2019 01:40
|
|
|
75% increase in your Bank of America credit card cashback, which puts it at 5.25% on your preferred category (which can be internet purchases), 3.5% on groceries and warehouse stores (including my beloved Costco), and 1.75% on everything else. They're also giving me $1500 straight up for transferring my assets there (paid out after I've kept them there for 9 months). And there is no 0.15% haircut for the self directed accounts, that's if you have them manage it. Which I absolutely would not do, nor recommend.
|
|
#
?
Sep 16, 2019 02:09
|
|
|
H110Hawk posted:Yup, but things get really hairy when it's family. Pressure to invest money you don't have, to setup dumb bylaws, pressure to make emotional decisions, that sort of thing. Most families don't have $high_paid_professional money kicking around. Very much so, plus if it’s an apartment and cousin Jim needs a cheap place to stay to get back on his feet, etc.
|
|
#
?
Sep 16, 2019 02:14
|
|
|
|
| # ? May 14, 2024 00:06 |
|
|
Wickerman posted:So let's say I have an opportunity to pitch a 401K plan to an employer with roughly 280 employees (of which I am one.) What considerations should I make as far as suggested matching (and their benefit to doing so), 401K providers, etc? Sorry if this is too broad of a question. Absolutely make sure that the fees being charged for the offerings aren't insane. I still remember my first 401(k) asking over 1% for bullshit funds and no index fund options. It was a complete loving mess.
|
|
#
?
Sep 16, 2019 02:21
|
|
