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Ropes4u posted:People should be forced to save through payroll deductions, how and where is beyond me. Rather than requiring you to opt-in, there's been a push in some areas to have 401(k) deductions by default, unless you opt-out. (Obviously doesn't help anyone who lacks access to a 401k.)
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Sep 2, 2020 23:24
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jjack229 posted:I agree that having phase-out income levels and then a method to bypass all that anyway seems like an odd way to design a system. From some half-assed research, it seems like the change that took effect in 2010 was to remove the income limits from conversions. This was sold as a benefit because an IRA conversion generates short-term tax revenue. Here a 2006 article that doesn’t acknowledge the backdoor Roth: https://www.hklaw.com/en/insights/publications/2006/10/summary-of-the-tax-increase-prevention-and-reconci
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Sep 2, 2020 23:31
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Small White Dragon posted:Rather than requiring you to opt-in, there's been a push in some areas to have 401(k) deductions by default, unless you opt-out. Defined benefit plans would be optimal but there isn't enough of an incentive for businesses to grant them right now, and congress lacks the desire to offer legislative incentives.
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Sep 2, 2020 23:36
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smackfu posted:From some half-assed research, it seems like the change that took effect in 2010 was to remove the income limits from conversions. This was sold as a benefit because an IRA conversion generates short-term tax revenue. Yep. They even cut people a really nice break in 2010 that let them divide the booked income over 2011 and 2012, which both spread out the tax hit and sometimes kept it from getting into higher tax brackets. Here's a Vanguard notice.
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Sep 3, 2020 00:37
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Oscar Wild posted:Defined benefit plans would be optimal but there isn't enough of an incentive for businesses to grant them right now, and congress lacks the desire to offer legislative incentives. Like pension plans? I'm not sure I trust some of these companies to be around that long, and people seem to get screwed when those are handed over to the PGBC.
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Sep 3, 2020 01:25
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jjack229 posted:I agree that having phase-out income levels and then a method to bypass all that anyway seems like an odd way to design a system. theres a quasi disincentive if you have outstanding sep/simple/traditional ira balances and lack access to a 401k to get around it but the entire concept of the backdoor roth sounds completely absurd to everyone for whom it works lol
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Sep 3, 2020 02:29
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tbp posted:theres a quasi disincentive if you have outstanding sep/simple/traditional ira balances and lack access to a 401k to get around it but the entire concept of the backdoor roth sounds completely absurd to everyone for whom it works lol On Friday I will have hit the overall 401k limit.  It's absurd that I'm allowed to do this and I sure hope rates don't tank in the future.
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Sep 3, 2020 02:34
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Ropes4u posted:People should be forced to save through payroll deductions, how and where is beyond me. being in this line of work has pushed me further left than anything else in my life without question because you see, literally mathematically, how impossible it really is. the general way my practice works is on a b2b level where i'm free to access for employees of given businesses or pension systems. so its a neat benefit for someone, imo, making 30, 31k a year (say a public school teacher) to be able to get the full suite of financial planning from start to finish and be able to talk really once every other week if need be. i have regular clients who are kids getting started with debt problems, needing help budgeting, they are wrestling over wether to move out etc. but like, at some juncture, you can't work magic. many of them just don't make enough money. you can repeat mantras to a certain level but after a while you're telling someone "invent more hours in a day" or "don't get sick because your emergency fund can't afford to pay the deductible". there's ways to cheat the system by breaking traditional guidelines to "catch up" and praying nothing happens to you if you have a last gasp option to save yourself in the event it does, but really, the system is so blatantly unfair and the poorer you are the more something innocuous becomes absurdly impossible to come back from. administrative mistakes and misundestandings become brutal, and things people of means can easily bounce back from are like life sentences for the working poor. i don't really see an end in sight in this current system. it feels like being born poor is like being born in a well of gravity, to me. to some extent you can struggle really, really hard and stand up, but it's almost absurd to expect everyone to be able to do so.
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Sep 3, 2020 02:36
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H110Hawk posted:On Friday I will have hit the overall 401k limit. yo congrats. when you're regularly able to do that, i think you should feel some anxiety off your shoulders, its a fair marker that your planning for the future is almost certainly at the point where you want it to be.
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Sep 3, 2020 02:38
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KYOON GRIFFEY JR posted:congrats u have invented social security I meant in something better, like index funds in a system similar to Australia. Ropes4u fucked around with this message at 03:31 on Sep 3, 2020 |
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Sep 3, 2020 03:26
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anyone here use m1 finance
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Sep 3, 2020 09:07
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My company has canceled 401K matching due to pandemic economic impact. I am also currently working to reduce unsecured debt. Would it be advantageous to cancel my 401k contributions and take that money and throw it at my debt?
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Sep 3, 2020 11:03
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If your employer is not matching you are better off investing directly with Vanguard yourself for sure.
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Sep 3, 2020 11:48
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Beach Bum posted:My company has canceled 401K matching due to pandemic economic impact. I am also currently working to reduce unsecured debt. Would it be advantageous to cancel my 401k contributions and take that money and throw it at my debt? The reason to do 401k with matching is it’s a guaranteed 100% return. If they’re not, then the calculation for debt payoff vs investment depends on rates on your debt. If it’s cc debt or something else with high rates I’d pay that before retirement, because tax advantaged investments aren’t going to be comparable I think.
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Sep 3, 2020 12:33
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Beach Bum posted:My company has canceled 401K matching due to pandemic economic impact. I am also currently working to reduce unsecured debt. Would it be advantageous to cancel my 401k contributions and take that money and throw it at my debt? Also take into account that your 401k contributions are reducing your income that's taxed at the top marginal tax rate at this time, reducing tax drag on your investments. Unsecured debt is likely going to be at a relatively high interest rate however, so it's likely better to pay the debt off.
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Sep 3, 2020 12:55
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Yeah it's CC debt at 17.9%, and my top marginal tax rate is 22%. I hadn't thought of that angle, hmmm... Actually, if I understand how this works (and I probably don't because I've already proven myself an idiot by having CC debt...): Standard deduction for 2020 will be $12.4k, so with gross wages of $40.319.24 that takes me out of the 22% range starting at $40,126, making my top marginal tax rate 12%, right? So if I'm correct, it would definitely be advantageous to put the contributions to the CC debt. That and paying off another $190/mo would certainly make me feel better, and there's always room in the cost-benefit for mental well-being. Edit: Was looking at my 401k and noticed this  HAIL SATAN GOD OF INVESTMENTS Beach Bum fucked around with this message at 14:57 on Sep 3, 2020 |
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Sep 3, 2020 14:47
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22% bracket starts at taxable income of 40,126. So with no 401k/IRA contributions, at 52,526 gross.
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Sep 3, 2020 14:53
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WithoutTheFezOn posted:22% bracket starts at taxable income of 40,126. So with no 401k/IRA contributions, at 52,526 gross. Right, but my gross is the 40,319.24 figure, so, while I didn't include this figure in my last post, with SD that's taxable 27,919.24, well within the 12% bracket. (disclaimer: ...right?  )I apologize for any confusion due to a lack of clarity on my part, or for that matter my ignorance. If I'm still wrong you might have to use smaller words 
Beach Bum fucked around with this message at 15:30 on Sep 3, 2020 |
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Sep 3, 2020 15:03
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Beach Bum posted:Yeah it's CC debt at 17.9% I stopped reading there pay that off first. also read this 
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Sep 3, 2020 15:36
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The money you save by not having debt is equivalent to tax free income.
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Sep 3, 2020 15:51
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Beach Bum posted:Right, but my gross is the 40,319.24 figure, so, while I didn't include this figure in my last post, with SD that's taxable 27,919.24, well within the 12% bracket. (disclaimer: ...right?
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Sep 3, 2020 16:05
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Beach Bum posted:Yeah it's CC debt at 17.9%, and my top marginal tax rate is 22%. I hadn't thought of that angle, hmmm... Those numbers aren't comparable at all. You get a one-time boost from the tax savings putting money into a retirement account. The behavior on withdrawal (ordinary income on the full balance instead of capital gains on just the gains) means it's not a straight boost at your marginal tax rate - but even if it were, it's still a one time thing. Credit card debt compounds. The longer you hold it, the worse it gets. If you keep the CC debt for more than a year then it's going to cost you more than 17.9%. Saving for retirement is a good thing, but you need to aggressively pay down your CC debt as soon as possible, and you can't compare a one-time boost to exponential growth.
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Sep 3, 2020 16:11
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Rog to all. Just making sure I wasn't somehow screwing myself by removing the contribution and throwing it at the debt. To stave off any slavering hounds thinking I'm the next zuarg I've paid down $6k since May2019 and am on schedule to have it all gone no later than the next 12 months. pmchem posted:I stopped reading there Ooh I like that one, thanks! Fortunately I've already got everything in order up to the Snowball/Avalanche box and am paying no less than $300/mo into the debt, averaging about $400/mo since May2019. At the moment it seems that the letter notifying us about the discontinuation of the match was merely "We are no longer obligated to provide a match but we might if we feel like it. Talking to the Fidelity rep this morning it seems I still got my match on my last check, but today's contribution hasn't hit Fidelity yet so I can't see if it was still there for this check quite yet. Rep and I agreed that I should check back in on my transactions on Monday to see if the match is still there and act accordingly. Beach Bum fucked around with this message at 16:16 on Sep 3, 2020 |
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Sep 3, 2020 16:13
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Beach Bum posted:My company has canceled 401K matching due to pandemic economic impact. I am also currently working to reduce unsecured debt. Would it be advantageous to cancel my 401k contributions and take that money and throw it at my debt? almost certainly its better paying off that debt esp if its cc debt
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Sep 3, 2020 16:27
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Space Gopher posted:Those numbers aren't comparable at all. Well, the 401k also compounds. If you put money in pretax to a 401k versus a regular post tax brokerage account, you're getting the additional compounded growth on the pre-tax money that's deposited. So if you imagine you have 1k pretax, that turns in to say, 900-630 post tax depending on your tax bracket, so you're theoretically getting an additional $370 compounding for retirement (on which you'll have to pay taxes on when you withdraw it, hopefully at a lower tax rate). But yeah the OP needs to pay the CC off first. Residency Evil fucked around with this message at 16:41 on Sep 3, 2020 |
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Sep 3, 2020 16:38
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its completely fair, imo, to use an assumed ROR in the 401k and the interest rate on the CC as positive and negative interest rates in your assumptions. and in that case, the answer is almost always clear (if you have a match left, do that, if you dont, do the card, etc.)
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Sep 3, 2020 17:28
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My current 30 years fixed mortage rate is 4.75%, and I am not upside-down on the loan balance. I am 9 years in to the note and have been paying on time, but have made no extra payments into the principal. My monthly income stream is very comfortable and if I were to refinance, I don't have an immediate use for the money that would be freed up by the lower payment. Given that mortage rates are historically low I began talking with a family friend who is a loan originator and he's provided me some numbers w.r.t. refinancing at a new rate of 2.875%. If I were to re-fi at this rate, on a new 30 year loan (starting the amoritization schedule over) I save ~$300/month on the P&I payment. If I take those savings and just pump back into the principal, e.g. keep my payment exactly as it is now, I shave off ~5 years off my current loan, going from 21 years to 16 years. This includes the payback time on the closing costs, which he quoted are very modest (about $2,700). However, another option would be to take that $300/month I'd save and invest it (into what? Who knows). Taking into account capital gains taxes, assume a modest return rate, and take into account interest paid on the note, I found that I'd need a ~7% return on this investment over 16 years to "break even" and have enough in the account to either pay the mortgage note off, OR make a life decision and do something else with the money. No matter what, refinancing seems like a no-brainer at this time as I have several reasonable strategies to work off, right?
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Sep 3, 2020 18:46
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Anti-Hero posted:My current 30 years fixed mortage rate is 4.75%, and I am not upside-down on the loan balance. I am 9 years in to the note and have been paying on time, but have made no extra payments into the principal. My monthly income stream is very comfortable and if I were to refinance, I don't have an immediate use for the money that would be freed up by the lower payment. yes. Definitely refinance from a 4.75% 30 year loan to one at 2.875%.
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Sep 3, 2020 19:12
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Anti-Hero posted:My current 30 years fixed mortage rate is 4.75%, and I am not upside-down on the loan balance. I am 9 years in to the note and have been paying on time, but have made no extra payments into the principal. My monthly income stream is very comfortable and if I were to refinance, I don't have an immediate use for the money that would be freed up by the lower payment. What's his rate on a 15 year? If you can keep the payments approximately the same after the interest drop, you'd take 6 years off the mortgage.
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Sep 3, 2020 19:46
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With rates under 3% I personally feel no rush to pay off a mortgage. But yes a refi from 4.75 to 2.875 with low costs makes sense no matter what you do with the monthly savings afterward.
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Sep 3, 2020 20:26
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Anti-Hero posted:My current 30 years fixed mortage rate is 4.75%, and I am not upside-down on the loan balance. I am 9 years in to the note No question. Do a 30 or 20yr refi. Anything else you do is future you thinking. Get that rate now. 
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Sep 3, 2020 20:28
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Anti-Hero posted:My current 30 years fixed mortage rate is 4.75%, and I am not upside-down on the loan balance. I am 9 years in to the note and have been paying on time, but have made no extra payments into the principal. My monthly income stream is very comfortable and if I were to refinance, I don't have an immediate use for the money that would be freed up by the lower payment. yeah i dont see why not
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Sep 3, 2020 23:42
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I liquidated some inherited silver and would like to fund some sort of account for my kits. What's the best option for that? Custodial IRA?
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Sep 4, 2020 03:45
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Rusty Shackelford posted:I liquidated some inherited silver and would like to fund some sort of account for my kits. What's the best option for that? Custodial IRA? If they don't have earned income you can't open a Custodial IRA for them. Look into UTMA/UGMA
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Sep 4, 2020 03:55
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Rusty Shackelford posted:I liquidated some inherited silver Please tell me you poured it into some kind of cool mold at least
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Sep 4, 2020 04:22
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alnilam posted:Please tell me you poured it into some kind of cool mold at least I tried to, but it smelt horribly.
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Sep 4, 2020 05:38
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Rusty Shackelford posted:I liquidated some inherited silver and would like to fund some sort of account for my kits. What's the best option for that? Custodial IRA? Foxes don’t have to pay taxes. Just bury the silver in the back of your den.
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Sep 4, 2020 05:48
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^^^^^^ ughGuinness posted:With rates under 3% I personally feel no rush to pay off a mortgage. I'm in this boat right now. About to close on a 2.5 refi and while I could pay it off faster...I don't think it actually makes any sense to do so.
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Sep 4, 2020 06:05
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Where are y'all getting these incredible rates from? I inquired about a refi a couple months ago at SunTrust, they were only able to offer me like 3.25. 720-750 credit rating.
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Sep 4, 2020 07:31
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Beach Bum posted:Where are y'all getting these incredible rates from? I inquired about a refi a couple months ago at SunTrust, they were only able to offer me like 3.25. 720-750 credit rating. Rates have tanked since then. edit: Thanks all for the advice. I'll proceed on the refi!
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Sep 4, 2020 07:43
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