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CubicalSucrose posted:Do NOT assume you're good. Sell to cover could be as little as 22% federal, which could easily be lower than your marginal tax bracket. This this this. My RSUs sell to cover at only 22% regardless of my (higher) marginal rate or withholding elections. With a lot of RSUs you could be very short on taxes due, plus penalties. I got hit with this last tax year. I withhold extra from my regular paycheck now to close the gap some.
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Jan 5, 2022 03:37
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I just opened a traditional IRA with Vanguard so I could do a backdoor conversion on it rather than contribute directly to my Roth IRA, as it's possible I'll exceed the income limit this year. But now that it's open I can't seem to contribute to it. If I select it under Accounts>Holdings and choose "Contribute to IRA" or "Buy or Sell funds", my only options are my taxable brokerage account and my existing Roth IRA. Do I need to wait a day to be able to transact on it or something?
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Jan 5, 2022 03:40
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Thanks for the clarification. I'm pretty happy with my Roth IRA in a TDF and my roll-over is basically all in a TDF as well. If this does trigger a tax event because of the previous page of conversation, I will probably re-visit it (honestly, a lot of the stuff is over my head). But it doesn't seem like I have enough to warrant looking into it any deeper. The brokerage account is small, and is a 3-fund Boglehead at 85/15 (total stock, total international and total US bond).
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Jan 5, 2022 05:43
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I opened a Vanguard brokerage fund last year after maxing out my Roth IRA. After reading the last couple of pages I checked on my brokerage fund, in which I initially bought some TDF but have since put nearly everything into VTSAX, and yep, I've got some capital gains listed in recent transactions. I figure the damage is done for 2021, but is it worth selling the ~3k I have in TDF in my brokerage and buying a matching amount of other funds to avoid this mix-up in the future, or am I likely to generate more taxes in doing so than if I just leave the TDF amount alone?
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Jan 5, 2022 11:10
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obi_ant posted:Thanks for the clarification. it won't trigger a tax event because both your Roth IRA and 401(k) are tax advantaged. You don't pay taxes on capital gains in those accounts.
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Jan 5, 2022 14:33
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runawayturtles posted:As you're seeing now, holding the target date fund in a taxable account introduces significant tax drag, although it's not usually anywhere near as much as this particular instance. But having to pay taxes on $25k in gains to get out of it is not great either, and I'm not sure we can tell you whether it makes sense to sell. I certainly wouldn't invest any more into it. Yeah, I stopped putting money into VFORX a long time ago in favor of putting more into my 401k. These days I'm fortunate enough to get to the 401k max for me and my wife, and I'm putting more into an HSA. Leperflesh posted:As far as MJP's question: you can decide when to sell VFORX (and pay taxes on your gains) whenever it makes sense, perhaps in consultation with your tax preparer; but in the long term, yes, you should consider shifting to tax-efficient investments in your taxable account, and shift investments within your tax-advantaged accounts to restore the overall portfolio asset balance that you want to have, year by year. I do not think target retirement funds are generally appropriate for people to hold in taxable accounts. So should I be talking first to my accountant about whether it's a good idea to move to tax-efficient investments? Or should I just go straight to a fee-based fiduciary with that question? Edit: should I maybe talk with them about backdooring the VFORX? I've got a Roth that I haven't contributed to thanks to being income restricted. Unrelated q: I think I'm carrying way too much cash in my HMB savings account, which will soon really suck compared to inflation. It's way more than enough to exist for six months of $0 income. Is there a bond ETF or some other secure vehicle to hold this stuff until it's not losing money in a savings account? CDs suck, of course. I figure I'll revisit the situation in six months or so but still, it's starting to seem like a long term issue if I don't do something with the savings. MJP fucked around with this message at 15:37 on Jan 5, 2022 |
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Jan 5, 2022 14:47
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MJP posted:Unrelated q: I think I'm carrying way too much cash in my HMB savings account, which will soon really suck compared to inflation. It's way more than enough to exist for six months of $0 income. Is there a bond ETF or some other secure vehicle to hold this stuff until it's not losing money in a savings account? CDs suck, of course. I figure I'll revisit the situation in six months or so but still, it's starting to seem like a long term issue if I don't do something with the savings. You could hop on the ibond train like many of us are doing.
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Jan 5, 2022 15:27
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Jows posted:You could hop on the ibond train like many of us are doing. Yes I decided my emergency savings was about 2-3x what it should be so went the Ibond route (2021, 2022) plus a chunk into VDADX, which is my pet brokerage fund. Remainder will be split between HMB (did sign up for their credit card and I am just using it for a single recurring expense) and my local bank.
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Jan 5, 2022 16:32
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I think I'm gonna convert my e-fund to 50-75% ibonds and the rest in my capital one account over the next few years. Can't think of any reason I'd need the slightly extra liquidity of keeping it all in cap1.
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Jan 5, 2022 16:45
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I want to park some money for emergencies . I’ve maxed out my ibond. Where should I put the rest ~60k?
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Jan 5, 2022 17:00
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Milosh posted:I want to park some money for emergencies . I’ve maxed out my ibond. Where should I put the rest ~60k? A HYSA. Also bought our ibonds today. Gonna be funny when everyone rushes out of i-bonds some day.
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Jan 5, 2022 17:22
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Smashing Link posted:HMB (did sign up for their credit card and I am just using it for a single recurring expense) I ended up doing this too, and will put all my utilities payments on it to get the 3% back for that category. I have a 2.5% card with no categories so it doesn't make sense for me to use the HMB card for more than one category.
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Jan 5, 2022 17:52
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Wouldn’t you need a crazy amount of utilities for that to cover the annual fee? Or are you you doing all the hoops for getting the full savings interest rate? The new 2.5k direct deposit requirement was too much for me.
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Jan 5, 2022 17:59
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MJP posted:Edit: should I maybe talk with them about backdooring the VFORX? I've got a Roth that I haven't contributed to thanks to being income restricted. You said the VFORX is in your taxable account, right? So are you asking about selling it first (realizing capital gains in the process), then transferring the cash to an IRA and backdooring that? Generally it's a great idea to maximize your use of tax-advantaged accounts before dealing with taxable. If you need to sell some of the target date fund in order to do so, that sounds like a pretty decent plan. If you don't, then the question of whether to sell is not really related to backdooring at all.
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Jan 5, 2022 18:17
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529 plan chat incoming. We don't have a kid yet but are planning to have one or two at some point and inevitably they are going to cost a lot of money to educate. I know I can open a 529 plan pretty much everywhere, and that most of the drivers of decision are expense ratios of available funds and any sort of state level tax incentives. I'm in the Commonwealth of Massachusetts and the 529 plan looks pretty good. Run by Fidelity, target date funds at 15bps, and we can deduct up to $2,000 on our state income taxes (which is substantially less than we owe). Is there any reason to shop further? I might be able to get better ERs somewhere but I lose the tax breaks, and we're likely to remain in Massachusetts for the foreseeable future.
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Jan 5, 2022 19:26
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runawayturtles posted:You said the VFORX is in your taxable account, right? So are you asking about selling it first (realizing capital gains in the process), then transferring the cash to an IRA and backdooring that? Yeah, that's exactly what I'm asking. I've already maxed my wife and my 401k contributions for last year and will do again this year, we're maxing HSAs, and we're giving a bunch to charity enough to help make a dent (and also because it's the right thing to do). I've also made some after-tax contribs to the 401k, which I'm OK with halting. No kids so no 529. If there's other tax-advantaged stuff I can do, I'm all ears. Is there some way to backdoor without selling? I wasn't aware that I could just backdoor the stocks themselves. many goons posted:ibonds Dumb q: is an ibond just an iShares ibond ETF? Also someone mentioned they can be maxed out, is there a limit to how much one human can own of an ibond ETF? MJP fucked around with this message at 19:48 on Jan 5, 2022 |
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Jan 5, 2022 19:35
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Xenoborg posted:Wouldn’t you need a crazy amount of utilities for that to cover the annual fee? I am shooting for the 3% rate. My job lets me split my direct deposit so I only have to put in the $2500/month.
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Jan 5, 2022 19:36
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MJP posted:Yeah, that's exactly what I'm asking. I've already maxed my wife and my 401k contributions for last year and will do again this year, we're maxing HSAs, and we're giving a bunch to charity enough to help make a dent (and also because it's the right thing to do). I've also made some after-tax contribs to the 401k, which I'm OK with halting. No kids so no 529. If there's other tax-advantaged stuff I can do, I'm all ears. Series I Savings bonds https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm You can only buy from the gov. They're not tradable. They adjust to inflation. You can buy $10k per year electronically and you can buy another $5k in paper bonds with your tax return.
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Jan 5, 2022 19:52
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KYOON GRIFFEY JR posted:529 plan chat incoming. We don't have a kid yet but are planning to have one or two at some point and inevitably they are going to cost a lot of money to educate. I know I can open a 529 plan pretty much everywhere, and that most of the drivers of decision are expense ratios of available funds and any sort of state level tax incentives. Assuming this is the next best place to put your money (which seems pretty safe as you're a thread regular), this seems like a great option to me. Consider instead (or possibly in addition to) something like an UTMA
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Jan 5, 2022 19:52
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MJP posted:Yeah, that's exactly what I'm asking. I've already maxed my wife and my 401k contributions for last year and will do again this year, we're maxing HSAs, and we're giving a bunch to charity enough to help make a dent (and also because it's the right thing to do). I've also made some after-tax contribs to the 401k, which I'm OK with halting. No kids so no 529. If there's other tax-advantaged stuff I can do, I'm all ears. No. I'm just saying, if you can afford to max your IRAs and backdoor them without selling your target date shares, then the question of if or when to sell them is entirely unrelated and is still just a matter of when you want to pay the taxes. If, on the other hand, you need to sell some of the target date shares to afford the IRA contributions, it would seem to me a pretty clearly good option.
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Jan 5, 2022 20:07
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KYOON GRIFFEY JR posted:...we can deduct up to $2,000 on our state income taxes (which is substantially less than we owe). Is there any reason to shop further? That $2000 is a deduction, not a credit. It won't reduce your taxes by $2000; it will reduce them by $2000 × <state tax rate> (which is 5% in MA). Fidelity is already pretty good. You're not going to find a better deal to offset potentially losing the state tax deduction.
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Jan 5, 2022 20:24
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FINE thread I bought some ibonds today. (Well, initiated yesterday.) No Medallion needed. YOU WIN. Fun fact, if you edit the html on the page by inspecting the password field deleting `readonly="readonly"` then you can mash capslock and type your password in. Don't hit shift, they uppercase it in their systems to make them non-case sensitive. No need to use their dumb keyboard, they aren't doing any tricks behind the scenes with a hidden variable or transform. (Lookin at you, citibank.) I'm sure some enterprising goon could make a tampermonkey script or whatever the kids are doing these days to make this work naturally, making password manager style passwords easy to use. 
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Jan 5, 2022 20:33
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SpelledBackwards posted:I just opened a traditional IRA with Vanguard so I could do a backdoor conversion on it rather than contribute directly to my Roth IRA, as it's possible I'll exceed the income limit this year. But now that it's open I can't seem to contribute to it. If I select it under Accounts>Holdings and choose "Contribute to IRA" or "Buy or Sell funds", my only options are my taxable brokerage account and my existing Roth IRA. Do I need to wait a day to be able to transact on it or something? It's quirky as hell to get to it with their new interface since it's still a mix of new/old  1. go to MyAccounts/Account overview/Holdings Summary and scroll down to the SOURCE IRA 2. then click on "Account balance detail" 3. then look up at the section in brown "My accountsBalances & holdingsGOON—Traditional IRA Brokerage Account—42069" and CLICK there! 4. then you see "ConvertToRoth" in the header
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Jan 5, 2022 20:37
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CubicalSucrose posted:Assuming this is the next best place to put your money (which seems pretty safe as you're a thread regular), this seems like a great option to me. Consider instead (or possibly in addition to) something like an UTMA Thanks. Yeah, it is. We max 401(k) and IRAs, zero debt, big ole e-fund, pile of money saved for a house down payment, and we're pushing a bunch of money in to taxable brokerage accounts because we don't really know what else to do with it. Good problem to have, for sure. The UTMA gives me a bit of concern because all control over the money goes to the child at age 21. It might be drawn down a bit by that point, but I was not equipped to properly handle a 5 figure transfer of money at age 21. You raise a good point and it might be good as a supplemental vehicle, though. And if kyoon griffey iii doesn't go to college, we can still get the money out of the 529 without too much penalty - contributions are returned untaxed and you pay (income) taxes on any capital gains. One question I have is around contributions - I doubt we contribute more than $15K a year total across grandparents etc but is the $15K limit per individual contributing (eg I can contribute $15K and my parents can also separately contribute $15K) or what? I suspect it's in total but I can't quite figure it out.
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Jan 5, 2022 20:38
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Smashing Link posted:I am shooting for the 3% rate. My job lets me split my direct deposit so I only have to put in the $2500/month. Now that Ive fully thought it through, I guess I'll try this too. 2500 - Direct Deposit 2000 - Transferred to other banks for normal use 500 - Saved I'm assuming I'll have to withdraw 1 quarter a year (this savings is mostly for home improvement/maintenance) making its interest 0. 15000 - In HM 450 - 3% return, 3 of 4 quarters 188 - only 3 of 4 quarters minus 1% interest otherwise 200 - minus 60 annual fee plus 1% more cashback on $600/m utilities (maybe half as much depending on how things code) The hassle is only just barely worth it for $200/y.
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Jan 5, 2022 20:38
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Harveygod posted:That $2000 is a deduction, not a credit. It won't reduce your taxes by $2000; it will reduce them by $2000 × <state tax rate> (which is 5% in MA). ah drat, well, still uhh a hundred bucks is a hundred bucks
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Jan 5, 2022 20:39
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MJP posted:Yeah, that's exactly what I'm asking. I've already maxed my wife and my 401k contributions for last year and will do again this year, we're maxing HSAs, and we're giving a bunch to charity enough to help make a dent (and also because it's the right thing to do).
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Jan 5, 2022 21:16
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I don't think you can do it before you die, but you can earmark traditional 401k/IRA money for charity and you're functionally giving them pre-tax money that grew tax free.
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Jan 5, 2022 21:20
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acidx posted:I don't think you can do it before you die, but you can earmark traditional 401k/IRA money for charity and you're functionally giving them pre-tax money that grew tax free. You can. It doesn't give you a deduction at tax time (because you were never taxed on it to begin with), but it does count towards your RMDs.
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Jan 5, 2022 21:28
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KYOON GRIFFEY JR posted:ah drat, well, still uhh a hundred bucks is a hundred bucks It’s still a guaranteed return of 5% realized each year in addition to saving for college
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Jan 6, 2022 00:46
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Ungratek posted:It’s still a guaranteed return of 5% realized each year in addition to saving for college it's a guaranteed return on $2K and kyoon griffey III's effete private NESCAC undergrad institution is gonna be like $90K/year at this rate
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Jan 6, 2022 01:27
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moana posted:You are donating shares directly from your taxable account, yeah? The charities don't have to pay taxes on your gains, so kill two birds with one stone there. Actually no, I'm just donating via Charity Navigator. Regular ol' donations, cash. Mostly it's helped churn credit cards. I didn't even think about gifting stock instead - I might give that some thought. Jows posted:Series I Savings bonds https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm Oh yikes, 7% until April '22? That's not a bad "what do I do with this for a year" idea.
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Jan 6, 2022 01:30
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MJP posted:Actually no, I'm just donating via Charity Navigator. Regular ol' donations, cash. Mostly it's helped churn credit cards. I didn't even think about gifting stock instead - I might give that some thought.
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Jan 6, 2022 01:47
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I'm in Colorado, which has a 4.55% state income tax rate and currently no limit on 529 contribution deductions, although they're introducing a 30k/year limit this year. If I want to save the cost of attendance to a four-year private college in 18 years, what's the best way to think about saving? Would it make more sense to front load that money now? Does it make more sense to save money slowly over the years, to hedge against college costs changing? KYOON GRIFFEY JR posted:it's a guaranteed return on $2K and kyoon griffey III's effete private NESCAC undergrad institution is gonna be like $90K/year at this rate Can't wait to support my kid until he's 30/trying to find himself. 
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Jan 6, 2022 01:48
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moana posted:Well, if you're trying to get rid of those target date fund shares, much better to donate them than cash out, pay the tax, and donate the smaller amount of cash. Most charities have an option to donate stock nowadays. Good discussion about this in thread; I need to get my wife to donate shares instead of cash. We donate many thousands each year and should be donating shares and then just replacing them at a higher cost basis with the cash we would've donated. I never even really thought about it since she does all the charity picking. We get the same tax write-off either way, right?
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Jan 6, 2022 01:51
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Yep, same write off. Only small hassle is some charities will just send you a letter saying you donated 9 shares of whatever, and you have to go back and find the fmv yourself on the date of the letter.
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Jan 6, 2022 01:59
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Xenoborg posted:Now that Ive fully thought it through, I guess I'll try this too. May or may not be worth it but I'm willing to give it a year and decide later, assuming they don't change their rates/rules again. AMEX Bank raised their rate to 0.5% recently so that's another option.
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Jan 6, 2022 02:13
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moana posted:Well, if you're trying to get rid of those target date fund shares, much better to donate them than cash out, pay the tax, and donate the smaller amount of cash. Most charities have an option to donate stock nowadays. Would this be simplified by using say Fidelity's charitable account at a small premium? You can dump money into it for the immediate deduction then it's just check writing at your leisure. This all assumes you're above the standard deduction federally.
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Jan 6, 2022 02:23
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Residency Evil posted:Can't wait to support my kid until he's 30/trying to find himself. go jumbos baby
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Jan 6, 2022 02:32
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Keyser_Soze posted:It's quirky as hell to get to it with their new interface since it's still a mix of new/old Turns out I needed to wait a day. I'm not at the conversion step yet. That account didn't even show up in at least one view, and the Contribute to IRA button misdirected to my Roth when I clicked it. This morning the Contribute link worked ok sand I was able to tell it to put 6k into the plain accumulation account (whatever that's called). Once that's in, then I'll do the conversion into my existing Roth.
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Jan 6, 2022 02:36
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