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KillHour posted:Pack it up VTSAX, there's a new game in town and it's called FISH everyone always talks about how a monkey throwing darts at a board will beat most active traders, but no one was doing anything about it!
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Apr 1, 2022 05:30
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nelson posted:The main thing that complicates it is taxable investment income. I usually have no idea what that will end up being at the start of the year. 2022 tax year will be especially rough because I sold my 1 bitcoin (that I acquired several years ago) after getting spooked from someone stealing my identity (phone # and primary email) to try and steal it. Thankfully I had 2FA set up, but it was still too close for comfort. Good news is the ~$40k payed off the auto-loan, funded the Roth accounts early and made it easy to put some money away for kids (UTMA) as well. Bad news is, it will be more taxes when I file in 2023. I probably need to up my withholding to compensate. The better way to do this is just save a portion of the proceeds that covers LTCG rather than screwing around with your w-2 with holdings.
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Apr 1, 2022 12:09
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nelson posted:Bad news is, it will be more taxes when I file in 2023. I probably need to up my withholding to compensate. I don't really understand this. The only time I would touch my withholding is if there is a permanent change to my financial status (new job, new kid, etc). You aren't planning on selling more magic libertarian internet money next year right? Just calculate what you'll owe and keep it an online high yield savings account. When tax time comes, take it out and write the check. EDIT: Someone smarter than me just said the same thing.
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Apr 1, 2022 14:22
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So my husband and I make more than the contribution limits allowable for a Roth IRA. We can contribute a maximum of $0 based on the tax tables I'm seeing. We are already saving almost 4K a month in just a regular savings account, we are pretty dang close to maxing out our 401ks every year, And now we have to find a place to put another $12,000 a year that we used to put in Roth. We just opened a vanguard Roth account many years ago that we've been contributing the full amount to every year. What are our options for where to go with the money we have?
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Apr 1, 2022 15:36
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Yours was probably better explained. The only reason to adjust is if you will owe any kind of tax penalties. You don't have to pay penalties if: 1) You owe less than $1000 net after accounting for your withholdings OR 2) You withheld equal or greater this year than 50% of the amount you owe in this tax year OR 3) you withheld equal or greater this year to 100% of the amount you owed in last tax year Your tax burden on a profit of 40K, assuming heart of the LTCG bracket, is $6K. It's very unlikely you would pay a penalty under these rules unless you deliberately underwithhold or you have very, very little income. And in general, if you got a refund last year, and you haven't changed your withholdings, you'll be fine under 3 for sure
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Apr 1, 2022 15:46
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sheri posted:So my husband and I make more than the contribution limits allowable for a Roth IRA. We can contribute a maximum of $0 based on the tax tables I'm seeing. Traditional IRA and convert to Roth. google "Backdoor Roth IRA contribution" do this first before anything else.
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Apr 1, 2022 15:46
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sheri posted:So my husband and I make more than the contribution limits allowable for a Roth IRA. We can contribute a maximum of $0 based on the tax tables I'm seeing. You'll want to check into a Backdoor Roth. Then after maxing that out every year, you should look into investing in an HSA (if you have a high deductible health plan) according to the almighty
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Apr 1, 2022 15:48
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KYOON GRIFFEY JR posted:Traditional IRA and convert to Roth. google "Backdoor Roth IRA contribution" Follow the instructions carefully though. I somehow hosed it up and owe something like $2000 in taxes for trad ira deposit -> roth ira conversion. Hopefully our accountant can unfuck it up.
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Apr 1, 2022 16:08
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I keep telling myself I'll backdoor my traditional IRA but I read about the pro rata rule and my eyes glaze over and I think "well, maybe next month".
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Apr 1, 2022 16:10
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defmacro posted:I keep telling myself I'll backdoor my traditional IRA but I read about the pro rata rule and my eyes glaze over and I think "well, maybe next month". That's where I am at right now 😬😬
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Apr 1, 2022 16:15
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sheri posted:That's where I am at right now 😬😬 From what I understand, if you have $0 in traditional IRAs now, it's very easy. Once I passed the limit I just switched to doing a trad IRA instead and have enough (???) money in there now that I'm afraid of the taxes I'd incur. I've heard that some 401ks let you rollover a trad IRA -> 401k, although they aren't common. Hoping I can do that since past/current employer have changed providers but I'm not too optimistic. I might just give up with the knowledge that this is a Good Problem™ to have.
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Apr 1, 2022 16:27
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Chiasmus posted:You'll want to check into a Backdoor Roth. Then after maxing that out every year, you should look into investing in an HSA (if you have a high deductible health plan) according to the almighty This, plus I Bonds: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm
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Apr 1, 2022 17:31
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I sort of am not sure what to do, if I have extra income if I should pay down student loans or put it into Roth then Trad. I work at a nonprofit and I'm on PSLF plan but that's like 8 more years. Also, I have some non-federal debt. Also, I could leave nonprofits and double my salary. Oh I make enough that I can't deduct student loan interest. That sort of means I should try to get the debt converted to something where it can be deducted [(like a mortgage) obviously not the federal part]. Also, I actually know how to build lattice models so I think I could treat this as a real option but jesus christ that's a lot of work.
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Apr 1, 2022 17:34
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defmacro posted:From what I understand, if you have $0 in traditional IRAs now, it's very easy. Once I passed the limit I just switched to doing a trad IRA instead and have enough (???) money in there now that I'm afraid of the taxes I'd incur. I've heard that some 401ks let you rollover a trad IRA -> 401k, although they aren't common. Hoping I can do that since past/current employer have changed providers but I'm not too optimistic. I might just give up with the knowledge that this is a Good Problem™ to have. You're probably better off not contributing to an IRA at all if you're over the Roth limit and not backdooring. Just use a regular taxable account instead. But rolling an IRA into a 401k is not that uncommon and definitely worth it if you can, to re-enable the backdoor option (edit: assuming your 401k investment options are decent). runawayturtles fucked around with this message at 18:01 on Apr 1, 2022 |
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Apr 1, 2022 17:45
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pseudanonymous posted:I sort of am not sure what to do, if I have extra income if I should pay down student loans or put it into Roth then Trad. There are a lot of big questions here... You could leave your job to earn more income and pay off your student loans instead of having them forgiven. Whether that makes financial sense is just a bunch of math based on your salary, principal, interest rates, etc. But do you actually want to change jobs? If you're staying, it probably doesn't make much sense to pay down a loan that's going to be forgiven. Especially not before contributing to a Roth.
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Apr 1, 2022 18:00
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Space Fish posted:This, plus I Bonds: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm this is if you want to preserve principal, which is a specific choice to make. you can also put money in a non-tax-advantage brokerage account and invest in whatever you want, that's an option too.
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Apr 1, 2022 18:39
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defmacro posted:From what I understand, if you have $0 in traditional IRAs now, it's very easy. Once I passed the limit I just switched to doing a trad IRA instead and have enough (???) money in there now that I'm afraid of the taxes I'd incur. I've heard that some 401ks let you rollover a trad IRA -> 401k, although they aren't common. Hoping I can do that since past/current employer have changed providers but I'm not too optimistic. I might just give up with the knowledge that this is a Good Problem™ to have. Fun fact about this: I did this this year as part of an old 401k rollover. It had both trad and Roth components, so I rolled them into IRAs, and then the trad IRA directly into my current 401k. I also this year did a normal backdoor Roth, but made sure to do it at a different time during the year, so that the tIRA never had commingled funds in it, thinking that I wouldn't trip over the pro rata rule. According to my tax preparer, I unfortunately did trip over it...sort of. I ended up paying literally five dollars in taxes. I don't know whether she did some wizardry to minimize the burden and dodge a bullet for me or it's like that for everybody, but the roll-in isn't necessarily a magic bullet.
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Apr 1, 2022 19:44
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runawayturtles posted:You're probably better off not contributing to an IRA at all if you're over the Roth limit and not backdooring. Just use a regular taxable account instead. But rolling an IRA into a 401k is not that uncommon and definitely worth it if you can, to re-enable the backdoor option (edit: assuming your 401k investment options are decent). I guess just because I'm not getting any tax benefit so it's better to have something I can sell whenever I'd like? And more flexible investment options? raminasi posted:Fun fact about this: I did this this year as part of an old 401k rollover. It had both trad and Roth components, so I rolled them into IRAs, and then the trad IRA directly into my current 401k. I also this year did a normal backdoor Roth, but made sure to do it at a different time during the year, so that the tIRA never had commingled funds in it, thinking that I wouldn't trip over the pro rata rule. $5 sounds like a magic bullet to me! On that note, just got HR confirmation that I can do the rollover with the new plan  .
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Apr 1, 2022 22:36
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A taxable account can be great if you pick tax efficient investments like VTI or other index funds. The benefit is that you can use it at any time like if you plan to buy a car or a house or big vacation in 10 years.
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Apr 1, 2022 22:51
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Sorry if this is a common question: I got a new job a few months ago, it's a lot more money than my old job. But, it doesn't have a 401(k) system. I have an IRA, but I max it out super easy. I would put another ~2x than that into the 401(k) in my old jobs. So, I have a lot more money, but I don't know of any other retirement system that I can contribute to. I do have a savings account, but it's like 0.10% interest at this point. I think. I haven't looked in a while.
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Apr 3, 2022 20:47
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If you're on a High Deductible Health Plan (HDHP) you can contribute to an HSA. Otherwise you're "stuck" with a non-tax advantaged brokerage account. If you want something safer than stocks/bonds but want better return than a high yield savings account, open an account with Treasury Direct and buy up to $10k/yr is Series I bonds. Currently yielding 7%.
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Apr 3, 2022 21:02
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spf3million posted:If you want something safer than stocks/bonds but want better return than a high yield savings account, open an account with Treasury Direct and buy up to $10k/yr is Series I bonds. Currently yielding 7%. This sounds interesting to me. I'll give the system a good look and throw some money at it. Oh, I forgot, I do also have some CDs. They're not a lot of interest, but more than a savings account and a good place to put stuff I won't need right away. Basically have four of them auto renewing yearly in offset periods, giving me at most three months until I can withdraw at least some of the cash in case I need it. That's mostly just to do something with my savings in a short time, used some to buy a car, I'm thinking about eventually using them to put a down payment on a house. Interest rate isn't nearly as high as in retirement accounts.
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Apr 3, 2022 21:20
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What have you invested in within your 401(k) and IRA? I ask because I think you're conflating interest rates and rates of return but I want to be sure. I think you are getting some things a little bit confused here. Anything you invest in with your retirement accounts you can also invest in separately, on your own, in a brokerage account. The only difference is the government's tax treatment of your gains and losses changes based on the type of account. Generally speaking, retirement accounts have substantial tax advantages in return for some limitations on when you can withdraw money and what you can do with it.
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Apr 4, 2022 10:34
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IMO a Roth IRA conversion + traditional IRA rollover should preferably start with the conversion, because the dollar amount eligible for conversion is a known quantity (this year's contribution + any prior non-exempt contributions), while the amount eligible for rollover (the remainder) fluctuates with the investments.
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Apr 4, 2022 19:29
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KYOON GRIFFEY JR posted:What have you invested in within your 401(k) and IRA? I ask because I think you're conflating interest rates and rates of return but I want to be sure. gently caress it, let's get more detailed! So, my IRA was transferred from my first job's 401(k). Earliest job, longest job, largest sum. Been additionally adding the annual limit to it. All of it is put into various index funds with the lowest payments to the IRA, about half to the S&P 500, the rest split up among some of the other international index funds they had available (though I'm having a hard time to find/check the payment rates on their site right now). My 401 (k) was basically the same thing. Mostly in index funds, split between two types. I was putting in about 2x what I was doing in the IRA annually. I worked there about 3 years before covid caused them to cut almost their entire staff, so the balance is about 10% of my entire retirement savings. I was going to transfer this to the IRA account just to keep it all in one place, but they required me to physically mail something, so I put it off out of laziness. New job, no retirements. It's also quite a bit more money (though in a slightly more expensive city), so my savings are going to be higher than before. IRA will be maxed out super quick in this situation. Otherwise, my money is split between checking, savings, online savings, and CDs, kinda complicated when I write it out, but I added each part over a long time and I like to keep it a little more accessible (used it to replace a car a couple years ago, might wanna buy a house, soon). I was thinking about that treasury direct, kinda silly to put money into it for decades when interest rates are kinda low. Mildly thinking about doing a brokerage account as you said. I will also read into those some more. Is there one suggested? Can those investments get pulled out whenever or are they locked until you retire? I dunno, I rambled a bit. Anything missing or more specific you wanna know? Uthor fucked around with this message at 00:06 on Apr 5, 2022 |
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Apr 5, 2022 00:02
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Nah, that was very detailed, thank you! You're doing the right things with retirement money. I assume since you had a 401(k) that the IRA is a Traditional IRA and not a Roth IRA, is that so? One thing I want to note is the difference between interest and returns. Bonds, savings accounts etc, have interest (which is technically also what they return). It's a guaranteed payment to you, the loaner of the money. Equity returns are based on changes in price of equities and dividends - they are riskier in that you can have no returns, or negative returns, but in exchange for risk, potential returns are higher. It's not accurate to say that your retirement funds have a higher interest rate; they have thus far had higher returns than your other low-risk investments. Anyway - a brokerage account is easy to open, you can invest in whatever you want, and you can sell your investments and withdraw money whenever you want, too! You can buy similar S&P500 trackers and all kinds of things there that match up to whatever risk profile you desire. The only issues: 1) If you invest in equities, there is risk that you don't get much in the way of returns. So for instance, it's probably not a good idea to put in the "buy a new car money" in there because who knows what the market will specifically be doing when you need to buy a new car? 1b) If you are ever dependent on this money to live, it's possible that you are forced to sell some of your equities at low prices. This is because your risk of job loss is probably quite inversely correlated to overall economic performance, and therefore the value of your equities. 2) Your sell transactions are taxed. If you've held for more than a year, your profits are taxed as Long Term Capital Gains (probably 15%, since it's 15% for vast majority of taxpayers). If you've held for less than a year, your profits are taxed as income. 3) You also pay taxes on dividends from anything you hold, unlike in your retirement accounts, where these are untaxed at time of distribution. Taxes are not particularly difficult to manage (you get a 1099-B for sell transactions and a 1099-DIV for dividends), but you should be aware of them, unlike the crypto bros. edit: i would advise against putting the house money in equities for reason 1 above if you plan to buy any time in a short horizon (3 years or less, probably?)
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Apr 5, 2022 01:31
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Thanks, super informative! Makes me lean that way. No, my savings are staying as savings. Though they may be a bit higher than the recommended percentage compared to my income (dealt with unemployment, I like to have savings). I am looking to where to put a percentage of my income like I have been doing since my first job in my profession. I will continue to add to my savings at the same time, partially as financial safety, partial as investment in a down payment for a purchase 2-3 years from now. I should also add that I'm single with no kids and pretty cheap hobbies, so extra cash isn't really an issue for me, just thinking about what to do with it for retirement and for safety in case of job loss. Uthor fucked around with this message at 02:07 on Apr 5, 2022 |
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Apr 5, 2022 01:47
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It might not make a huge difference, but 0.10% for savings is a terrible rate. 0.50% is easily doable in savings, and treasuries are paying way more right now. I just bought a 6 month T-bill @ a little above 1.1%. edit: yes, buy I-bonds first if you can hold for 1 year.
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Apr 5, 2022 02:11
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Uthor posted:Thanks, super informative! Makes me lean that way. I hear ya, I overweight cash on hand too. But you should definitely put it in a HYSA as drk suggested. I-Bonds are also useful to protect your principal - they are inflation indexed. The only disadvantage is one year lockup and a limit of $10K/15K a year. You'll do just fine if you take whatever you used to put in your 401(k) and put it in a taxable brokerage account instead in similar funds. Only downside is tax disadvantages. If you want to get fancy at some point you can look at tax-efficient placement but the high level tl;dr on that is "generally less good to hold bond funds and corporate bonds in a taxable account" note the difference between bonds and bond funds - if I go buy a specific bond directly on the secondary market (a T-bill, a California State bond, a specific corporate bond etc), that's different from buying a bond fund like VCIT, which buys and sells a bunch of different bonds in alignment with its objectives.
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Apr 5, 2022 12:45
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KYOON GRIFFEY JR posted:I hear ya, I overweight cash on hand too. But you should definitely put it in a HYSA as drk suggested. I-Bonds are also useful to protect your principal - they are inflation indexed. The only disadvantage is one year lockup and a limit of $10K/15K a year. Yeah, I have an HYSA (didn't know the abbreviation!), most of the savings is in there and in four CDs. I don't know what I-Bonds are, so add that to my research list. The regular savings is just a mid-point that I like cause I can get to it ASAP by walking to the bank (like the time I went to buy a car and they wanted a bigger down payment than I expected and needed to withdraw some extra cash) and it takes the money out of my checking, so I don't see it and get tricked into spending. I don't see the trouble of keeping it around as it's just a tab on my bank's website, doesn't actually cost me anything*. *Edit: it actually paid me about $1.50 last year! 
Uthor fucked around with this message at 14:19 on Apr 5, 2022 |
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Apr 5, 2022 14:06
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If you put that in a better online savings account it would have returned you $7.50 at least!
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Apr 5, 2022 14:26
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Buddy wants to take out a loan against his 401k. Anyone wanna give me a very concise way to tell him not to be dumb
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Apr 6, 2022 01:33
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Gaius Marius posted:Buddy wants to take out a loan against his 401k. Anyone wanna give me a very concise way to tell him not to be dumb What's it for?
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Apr 6, 2022 03:01
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Gonna go out on a limb and say crypto, nfts, or some other grift. Dude gets taken super easy by that poo poo
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Apr 6, 2022 03:14
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He sounds like a lost cause. 
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Apr 6, 2022 03:16
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Gaius Marius posted:Buddy wants to take out a loan against his 401k. Anyone wanna give me a very concise way to tell him not to be dumb My sister has done this, to buy a condo. And she has paid herself back in full, so at least that part of it worked out.
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Apr 6, 2022 03:20
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Gaius Marius posted:Buddy wants to take out a loan against his 401k. Anyone wanna give me a very concise way to tell him not to be dumb There are a lot of reasons this is dumb. One that might land is, if this person leaves their job (voluntarily or not) the loan is due back in full within some really short time window. Getting fired or laid off and then owing a large sum on top of it is a pretty bad situation to find yourself in.
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Apr 6, 2022 04:24
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It used to be that it was due within 60 days, but I believe recent legislation changed that. Not sure on the details.
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Apr 6, 2022 05:04
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acidx posted:It used to be that it was due within 60 days, but I believe recent legislation changed that. Not sure on the details. You now have "until tax day of the following year", and can get a little extra grace by filing for an extension, if it comes to that.
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Apr 6, 2022 05:10
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CubicalSucrose posted:There are a lot of reasons this is dumb. One that might land is, if this person leaves their job (voluntarily or not) the loan is due back in full within some really short time window. Getting fired or laid off and then owing a large sum on top of it is a pretty bad situation to find yourself in. So he's in the military now but he wants to take his retirement when he gets out, transfer it to 401k, then use that as collateral to "jump start his economic engine"
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Apr 6, 2022 05:18
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