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Double-post, understanding no one on this thread is a certified financial advisor (or if you are, don't use this thread to provide it). I want to confirm my understanding / math of: 2023 IRS Limit for a single person, 401(k) contributions is $66,000 from all sources, $22,500 from my contributions. So, if I want to get a backdoor going, I should do: $66,000 - $22,500 - employer contribution (3% of salary atm) = maximum total (e: MEGA, not the $6500 IRA backdoor) backdoor amount -- is that right? source: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits movax fucked around with this message at 21:59 on Jan 3, 2023 |
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Jan 3, 2023 21:39
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To be clear on terminology, what you are describing (exceeding the 22.5k personal contribution limit by putting after-tax contributions into your 401k and converting to roth immediately) is a Mega Backdoor, not a 'normal' Backdoor, which happens solely in IRA space and is limited to $6,500 for 2023. But yes, your math is basically what it works out to for the Mega Backdoor.
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Jan 3, 2023 21:45
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ROJO posted:To be clear on terminology, what you are describing (exceeding the 22.5k personal contribution limit by putting after-tax contributions into your 401k and converting to roth immediately) is a Mega Backdoor, not a 'normal' Backdoor, which happens solely in IRA space and is limited to $6,500 for 2023. Can someone explain to me when the best times to rollover are? Is it better to do it once, or constantly, and why?
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Jan 3, 2023 21:54
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drk posted:2023 I Bond buying guide is up @ TIPS watch: https://tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/ Good stuff, thanks for the link. It convinced me to wait.
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Jan 3, 2023 22:16
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Is there a good website that lists/ranks fee-only financial advisors?
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Jan 3, 2023 22:33
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https://www.napfa.org/
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Jan 3, 2023 22:38
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Excellent. We need some serious financial planning and I'm trying to push the conversation towards fee-only.
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Jan 3, 2023 22:40
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Ubiquitus posted:Can someone explain to me when the best times to rollover are? Is it better to do it once, or constantly, and why? For mega backdoor you want to convert/rollover ASAP. Between contribution and when it get converted, that money is "After tax" money. Meaning that any gain it makes is a capital gain you will owe taxes on. After it is converted it is now "Roth" and no more taxes. Some plans have limits on how often they will do conversions. If you only get X conversions a year, its probably best to space them equally to minimize any given dollars time as Aftertax. Time of the year doesn't matter much other than the one you do in Jan you wont pay for until 15 months later. Timing just after a big contribution like a yearly bonus might also be good. If your plan has unlimited and/or automatic (thanks Fidelity), its best to do them every paycheck. Why this is legal and how it makes some plans just magically have 3x the Roth space is left as an exercise to the reader. The IRS is fine with it through and congress doesn't love it, but can't get around to changing it.
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Jan 3, 2023 23:19
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movax posted:Looking on Fidelity at their CD options for 3 month, lets take the WF 3 mo one as an example -- the maturity date of 4/13 means that end-of-business 4/13 is the fastest I could liquify it, and then would likely have to give an additional few business days for Fidelity to clear it + do an EFT back to my checking to cut a check for property tax, correct? Same with I-Bonds, regardless of the decision on 4/12, I have until 4/30 to make the purchase (if I want the existing rate) or wait until May to go for it. Just buy a T-bill, there are maturities every week. I just bought this week's new 13 week issue (maturity April 6), the yield was 4.522%
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Jan 4, 2023 02:04
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drk posted:Just buy a T-bill, there are maturities every week. I just bought this week's new 13 week issue (maturity April 6), the yield was 4.522% As a new issue, today? I only see 2/7, 3/7 and 5/9 on Fidelity at the moment. Next 13 week looks like it opens up Thursday.
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Jan 4, 2023 02:12
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this link is very useful for tracking Treasury auctions https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf
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Jan 4, 2023 02:18
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pmchem posted:this link is very useful for tracking Treasury auctions That's what I'm looking at -- I feel like I want the one that announces this Thursday, auctions Monday and settles Tuesday? Just doesn't seem to appear on Fidelity's site yet, following this page: https://thefinancebuff.com/treasury-bills-cd-money-market.html
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Jan 4, 2023 02:23
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movax posted:As a new issue, today? I only see 2/7, 3/7 and 5/9 on Fidelity at the moment. Next 13 week looks like it opens up Thursday. The auction closed today, CUSIP 912796YN3. If that date appeals to you, you should be able to buy it on the secondary market sometime after the issue date of Jan 5th. edit: reference https://treasurydirect.gov/instit/annceresult/press/preanre/2023/R_20230103_2.pdf double edit: yes, you wont see this Thursdays auction until Thursday, but there should be availablity of every week under 4 months on the secondary market during market hours drk fucked around with this message at 02:31 on Jan 4, 2023 |
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Jan 4, 2023 02:24
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PNC is offering 4% on their HYSA (min $1) as long as they don't have a physical location in your state (list here: https://apyguy.com/pnc-bank-high-yield-savings-account-review/) Might finally get off my butt to do this.. just wanted to make sure there's nothing that someone has heard about that makes this bad
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Jan 4, 2023 18:35
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Strong Sauce posted:PNC is offering 4% on their HYSA (min $1) as long as they don't have a physical location in your state (list here: https://apyguy.com/pnc-bank-high-yield-savings-account-review/) I asked about this earlier in thread, I think you need to setup some recurring deposits / meet minimum requirements otherwise you don't get the best rate: movax posted:Any thread favorites on ETFs / market exposure to these vs. direct through TreasuryDirect?
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Jan 4, 2023 21:18
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movax posted:I asked about this earlier in thread, I think you need to setup some recurring deposits / meet minimum requirements otherwise you don't get the best rate: If you look, that is "Point 2". That relates to Standard Savings, not the HYSA.
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Jan 4, 2023 21:28
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Is there a backdoor way to get the Vanguard Cash Plus account or whatever they call it?
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Jan 4, 2023 21:33
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Related there is a 4.35% account https://www.mysavingsdirect.com/securebanking/faq.do
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Jan 4, 2023 21:41
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Residency Evil posted:Is there a backdoor way to get the Vanguard Cash Plus account or whatever they call it? The landing page says the rate is still 3.9% which is less than a Vanguard Money Market. So, just buy money market for now? The program is still invite only anyways.
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Jan 5, 2023 02:09
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Out of curiosity I got curious about FSKAX / VTSAX holdings and it is infuriating to me to see loving Tesla up there in the Top 10 of each. I know they have to track the index they follow but still...
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Jan 5, 2023 02:49
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Was talking about 401ks at work today and found out of my workers has been putting 100% of his 401k contribution in as aftertax for the last few years. Thankfully we have in service aftertax to roth conversion, so its mostly salvagable, but common read your docs people.
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Jan 5, 2023 03:28
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movax posted:Out of curiosity I got curious about FSKAX / VTSAX holdings and it is infuriating to me to see loving Tesla up there in the Top 10 of each. I know they have to track the index they follow but still... I haven't done the math on it, but there have been days recently when the S&P 500 is down like 0.3%, TSLA is down like 7%, and it feels like the latter accounts almost entirely for the former.
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Jan 5, 2023 04:27
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drk posted:The landing page says the rate is still 3.9% which is less than a Vanguard Money Market. So, just buy money market for now? I can't recall: is there any reason not to just shift my money over to Vanguard's money market account? Cash in a money market account is also covered by the FDIC, correct?
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Jan 5, 2023 04:37
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Residency Evil posted:I can't recall: is there any reason not to just shift my money over to Vanguard's money market account? Cash in a money market account is also covered by the FDIC, correct? It just feels like a big hassle for what is what, at most 0.5% ? Other than a one time I bonds purchase, I’ve been leaving my e fund in one account in Ally.
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Jan 5, 2023 04:44
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e: wrong thread
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Jan 5, 2023 04:46
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Duckman2008 posted:It just feels like a big hassle for what is what, at most 0.5% ? Other than a one time I bonds purchase, I’ve been leaving my e fund in one account in Ally. VMFXX is at 4.21%, so almost a full percent over Ally at this point, or $1k/year for the 5 seconds it'll take to hit the button on my Ally account. At this point if feels like a 1% ER.
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Jan 5, 2023 04:48
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movax posted:Out of curiosity I got curious about FSKAX / VTSAX holdings and it is infuriating to me to see loving Tesla up there in the Top 10 of each. I know they have to track the index they follow but still... "VT and chill" diversification wins again, see also new BABA runup.
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Jan 5, 2023 04:59
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movax posted:Out of curiosity I got curious about FSKAX / VTSAX holdings and it is infuriating to me to see loving Tesla up there in the Top 10 of each. I know they have to track the index they follow but still... Probably not in the Top 10 anymore. Those Top 10 holdings were based on TSLA at 11/30/2022, with a share price of $195, and it's now $113-ish. Not that it's much consolation since presumably we were all holding it back then as well.
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Jan 5, 2023 05:38
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Residency Evil posted:I can't recall: is there any reason not to just shift my money over to Vanguard's money market account? Cash in a money market account is also covered by the FDIC, correct? https://www.consumerfinance.gov/ask-cfpb/is-a-money-market-account-insured-en-1007/ quote:Money market mutual funds, however, are not federally insured. These are offered by brokers and other entities that are not banks or credit unions. my understanding is that banks and credit unions are fdic insured, brokerages are not. they would be spic insured, so you would be made whole if the brokerage collapsed through fraud, but might face losses if there are problems with the underlying assets, say the money market broke the buck due to a collapse in the commercial paper/short term treasuries market. this happened briefly in 2008, but the fed quickly stepped in to provide liquidity and my understanding is that reforms have made a repeat much less likely. i personally wouldn't think twice about the safety of a mainstream money market account
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Jan 5, 2023 05:52
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GhostofJohnMuir posted:https://www.consumerfinance.gov/ask-cfpb/is-a-money-market-account-insured-en-1007/ One of those reforms is that some types of money market funds can penalize or limit redemptions when their liquidity is stressed, which is potentially a time you'll need your emergency fund. Definitely read the fine print! raminasi fucked around with this message at 06:13 on Jan 5, 2023 |
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Jan 5, 2023 06:08
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Anybody with a fidelity-run mega-backdoor-eligible 401k know how they handle automatic cutoff of after-tax contributions? Are they smart enough to preserve space for the full employer match, or is this something I'll need to manage myself manually?
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Jan 5, 2023 16:26
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SlapActionJackson posted:Anybody with a fidelity-run mega-backdoor-eligible 401k know how they handle automatic cutoff of after-tax contributions? Are they smart enough to preserve space for the full employer match, or is this something I'll need to manage myself manually? Based on my last company, I think you'll need to manage manually. Note that there isn't "mega-backdoor-specific" space, it's an aggregate limit. A few folks found this out the hard way and lost out on some trad 401k space.
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Jan 5, 2023 16:34
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SlapActionJackson posted:Anybody with a fidelity-run mega-backdoor-eligible 401k know how they handle automatic cutoff of after-tax contributions? Are they smart enough to preserve space for the full employer match, or is this something I'll need to manage myself manually? I have a friend with a Fidelity run 401k that allows the mega-backdoor, and he overcontributed. It's honestly not possible for custodian to be smart enough, since they have no idea what might be coming later in the year. For all they know, you wanted to hit the max $61k before the end of the year. My company solves this by having a limit occur in payroll for the after-tax contribution such that there is still plenty of space left. Basically, they stop us at $22,250 every year. That + employee deferrals (another $20.5k for 2022) + match (no one in our company will get more than $15k in matching and most people are much less) means everyone is well under the limit. Honestly I like it this way even if I give up some mega backdoor space.
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Jan 5, 2023 16:44
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SlapActionJackson posted:Anybody with a fidelity-run mega-backdoor-eligible 401k know how they handle automatic cutoff of after-tax contributions? Are they smart enough to preserve space for the full employer match, or is this something I'll need to manage myself manually? You're in luck - I miscalculated something that caused me to run into this problem, and the answer is no, they do not preserve that space. But when I called them a couple years ago to figure this stuff out they were very helpful on the phone. (The mistake I made wasn't due to their phone help; it was caused by a raise I got later.)
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Jan 5, 2023 16:45
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My company payroll stops mbdr contributions to Fidelity when I hit the limit. It sounds like maybe Fidelity doesn't do it without payroll doing it?
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Jan 5, 2023 16:46
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My company has a supplemental savings plan made for over-limit contributions. It has to be set up before the beginning of the year and there are other specific rules for it like no contribution changes allowed to the 401k. Anyway, I’m a bit jealous that people even have the problem of running out of combined tax advantaged space and hope to be one of those people someday.
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Jan 5, 2023 17:24
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Happiness Commando posted:My company payroll stops mbdr contributions to Fidelity when I hit the limit. It sounds like maybe Fidelity doesn't do it without payroll doing it? The question wasn't about the limit itself (which Fidelity does automatically manage, like most 401k providers), but whether Fidelity automatically protects enough combined limit to permit the full employer match.
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Jan 5, 2023 17:29
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Figures. It's a little annoying since I can't set contributions by dollar amount and have to calculate it in percent-of-paycheck quanta.
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Jan 5, 2023 18:04
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SlapActionJackson posted:Anybody with a fidelity-run mega-backdoor-eligible 401k know how they handle automatic cutoff of after-tax contributions? Are they smart enough to preserve space for the full employer match, or is this something I'll need to manage myself manually? My company is ADP payroll, Vanguard 401(k). I was just looking into this and after chatting with our payroll people, I'm just going to leave some buffer and plan a backdoor amount at beginning of year and then fill whatever is left in the last paycheck of the year. We don't "match" but rather contribute 3% of base salary... but that amount varies as bonuses don't count, but 'hazard' pay / other misc. comp varies over the year so I can't quite pin down the exact amount I'll get from them.
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Jan 5, 2023 20:26
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Yeah, Fidelity will cut you off at the $61k cap, but you have to micromanage your contributions as you get close to end of year. I cut down to the minimum to get my full company match in October and it looks like I wound up missing maybe $100 of company match or so because I hit the aggregate limit on the last paycheck. Annoying, but I don't really know how it could be done otherwise, especially if you get bonuses, etc.
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Jan 6, 2023 00:46
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