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On 01/01/24 contributed into my Roth IRA (transact, contribute to IRA). The money was taken out of my savings on 01/03/24. The money has been sitting in my Vanguard Federal Money Market Fund for a few days. Any idea when they money is supposed to drop into my target account? I've never had a contribution take so long.
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Jan 8, 2024 22:35
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You have to execute a buy order to move money from your settlement fund into your target date fund.
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Jan 8, 2024 22:53
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I want to contribute the maximum amount for both 2023 and 2024 to my Roth IRA, I have not contributed anything to it for 2023 or 2024 yet. From the Vanguard website it looks like I can still contribute for 2023, is that correct? Can I max out both 23/24 right now without issue? Edit: Also, I was planning to mostly buy VTI but should I be diversifying my ETFs in my Roth more? What are some other funds to look into? Popete fucked around with this message at 01:56 on Jan 9, 2024 |
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Jan 9, 2024 01:51
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Popete posted:I want to contribute the maximum amount for both 2023 and 2024 to my Roth IRA, I have not contributed anything to it for 2023 or 2024 yet. From the Vanguard website it looks like I can still contribute for 2023, is that correct? Can I max out both 23/24 right now without issue? correct.
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Jan 9, 2024 01:55
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spwrozek posted:correct. Thanks!
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Jan 9, 2024 01:56
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Can I roll over a 401k from a previous job into my Vanguard IRA even if I've already contributed the maximum yearly amount?
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Jan 9, 2024 02:04
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Popete posted:Can I roll over a 401k from a previous job into my Vanguard IRA even if I've already contributed the maximum yearly amount? Yes, rollovers are not contributions.
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Jan 9, 2024 02:08
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Popete posted:Can I roll over a 401k from a previous job into my Vanguard IRA even if I've already contributed the maximum yearly amount? Rollovers are separate. If the 401k is a Roth and the IRA is a Roth, this works. If the 401k is Traditional and the IRA is Traditional, this works. (If there's a mismatch it doesn't work). If either one is Traditional, then if you ever think you might be needing to do Backdoor Roth IRA contributions, you might want to NOT do the rollover. It depends on how good/bad your 401k is. (Fund options, expense ratios, fees, hassle).
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Jan 9, 2024 05:35
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Is it possible to rollover a traditional Ira into a solo 401k? I have both at Schwab and would love to get my traditional Ira's flattened for future back doors. I presume I also need to get my wife's traditional taken care of too. She has a 403b with Vanguard. Any idea if those generally can accept a traditional Ira rollover? Thanks!
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Jan 9, 2024 06:28
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Don't know if this counts as long term, but I'm looking at opening a savings account with Discover since they're advertising interest rates in the 4+% range. I've already been pulling money out of Wells Fargo and putting it into a money account with Fidelity, splitting it between SPAXX and SPRXX, but dumping the rest in a place with slightly lower interest but FDIC insurance doesn't seem like a bad deal. Any reason not to and just completely wipe out my savings acct with WF and just keep checking? Also, triple checking my IRA backdoor understanding since I can try it out in April: I've got both a trad and Roth account with Fidelity. Last few years I've been maxing out the contribution to the Roth then just moving 10k or so over from trad to Roth. Let's say this year's max contribution for both is 3k. Instead of just maxing the Roth contribution and transferring from trad (a total of 3k in 'new' contributions) I should instead max out both Roth and trad contributions, then immediately roll over the 3k from trad to Roth for an effective Roth contribution of 6k, right?
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Jan 9, 2024 07:38
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TraderStav posted:Is it possible to rollover a traditional Ira into a solo 401k? I have both at Schwab and would love to get my traditional Ira's flattened for future back doors. Yes to both for IRS rules at least, but the plan administrators for the 403b could have their own rules, so your wife would have to ask if they support it. Takes No Damage posted:Also, triple checking my IRA backdoor understanding since I can try it out in April: I've got both a trad and Roth account with Fidelity. Last few years I've been maxing out the contribution to the Roth then just moving 10k or so over from trad to Roth. Yes, assuming you have the ability and plan to eventually be 100% roth (your phrasing leaves whether you've already achieved that or not ambiguous), you should be maxing out what you can with roth, then the test in traditional, and rolling over as much as you can. But note the "immediately" my be more like 1-6 business days, depending on how long it takes your IRA provider to actually process your contributions.
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Jan 9, 2024 08:31
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Takes No Damage posted:Also, triple checking my IRA backdoor understanding since I can try it out in April: I've got both a trad and Roth account with Fidelity. Last few years I've been maxing out the contribution to the Roth then just moving 10k or so over from trad to Roth. The way you said this is super confusing to me, maybe I'm misunderstanding. There is one combined annual maximum IRA contribution limit. For 2024 it is $7000. You can contribute any combination of traditional and Roth that add up to $7000 (income limits aside). There are not two different contribution limits. If you are planning on doing backdoor Roth conversions you should not be directly contributing to the Roth IRA, you should be making non-deductible post-tax contributions to the traditional IRA and then converting them to Roth. Do you mean that you are trying to zero out a traditional IRA by converting $10k per year and paying taxes on it, thus to make future backdoor Roth IRA conversions avoid the pro rata rule? You can't just "move" money from trad to Roth without tax considerations. Either you're paying taxes on converting pre-tax trad money to post-tax Roth money, or you're converting post-tax trad money to post-tax Roth money which is where the backdoor comes into play. The whole point of doing backdoor Roth conversions is for when you are over the direct Roth contribution income limit (and thus also way over the income limit for deducting traditional IRA contributions). The ideal way of zeroing out a traditional IRA balance to avoid the pro rata rule is rolling it into a non-IRA account with the same pre-tax treatment, like a traditional 401k -- if you have one that allows rolling an IRA into it. If you're high income it is generally recommended to roll your old 401ks into your current 401k instead of into an IRA to avoid the whole mess, because 401k to 401k rollovers are nearly universally supported by all custodians. Guinness fucked around with this message at 08:58 on Jan 9, 2024 |
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Jan 9, 2024 08:43
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Guinness posted:The way you said this is super confusing to me, maybe I'm misunderstanding. There is one combined annual maximum IRA contribution limit. For 2024 it is $7000. You can contribute any combination of traditional and Roth that add up to $7000 (income limits aside). There are not two different contribution limits. If you are planning on doing backdoor Roth conversions you should not be directly contributing to the Roth IRA, you should be making non-deductible post-tax contributions to the traditional IRA and then converting them to Roth. I assumed that they had a mix since they were in the "phase out" income zone (for 2024, MAGI of between 146k and 161k) where they could contribute a few thousand but not the full 7k.
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Jan 9, 2024 09:28
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MegaZeroX posted:Yes, assuming you have the ability and plan to eventually be 100% roth (your phrasing leaves whether you've already achieved that or not ambiguous), you should be maxing out what you can with roth, then the test in traditional, and rolling over as much as you can. But note the "immediately" my be more like 1-6 business days, depending on how long it takes your IRA provider to actually process your contributions. I had a trad IRA for a lot of years, then on further discussions with my parents started a Roth and have been rolling/contributing to that every year instead with the eventual goal being 100% Roth. I know it can be different given various situations, but in their case they calculate they're paying more having their total withdraws taxed vs paying tax up front on the initial contributions. Guinness posted:Do you mean that you are trying to zero out a traditional IRA by converting $10k per year and paying taxes on it, thus to make future backdoor Roth IRA conversions avoid the pro rata rule? You can't just "move" money from trad to Roth without tax considerations. Either you're paying taxes on converting pre-tax trad money to post-tax Roth money, or you're converting post-tax trad money to post-tax Roth money which is where the backdoor comes into play. Right, been moving from trad to Roth and paying the tax each year. So if I only have the 2 IRAs with Fidelity, there's no reason/benefit to mess with the trad account other than dumping cash into Roth? Reading up on backdoor some more and it sounds like it's more for people who are juggling IRAs from multiple sources and trying to get everything consolidated into a single account?
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Jan 9, 2024 09:47
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TraderStav posted:Is it possible to rollover a traditional Ira into a solo 401k? I have both at Schwab and would love to get my traditional Ira's flattened for future back doors. Yes Technically yes, but I would be surprised if the plan will allow it
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Jan 9, 2024 13:25
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Takes No Damage posted:Reading up on backdoor some more and it sounds like it's more for people who are juggling IRAs from multiple sources and trying to get everything consolidated into a single account? No, it’s literally just to avoid the income limits on contributing to a Roth. That’s why the “backdoor” term.
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Jan 9, 2024 13:48
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Takes No Damage posted:I had a trad IRA for a lot of years, then on further discussions with my parents started a Roth and have been rolling/contributing to that every year instead with the eventual goal being 100% Roth. I know it can be different given various situations, but in their case they calculate they're paying more having their total withdraws taxed vs paying tax up front on the initial contributions. Okay, now I'm a little confused. To be clear, Backdoor Roths are specifically for people who are in ineligible to make full Roth contributions due to the limitation requiring you, in 2024 dollars, to have an income below $146,000, as determined by the definition of modified adjusted gross income (MAGI) used for IRAs. Then there is a "phase out" range, decreasing how much you can contribute, where if your MAGI is above $161,000, you can no longer contribute to the Roth account. If you have an income of over $161,000, how the system is supposed to work is that you can't contribute to any IRA beyond post-tax (AKA non-deductible) traditional contributions, where the only tax benefit over a normal taxable account is that you don't have to pay taxes on gains until withdrawal (which only matters for tax-inefficient funds, and is actually worse for things like ETFs). However, since the law governing Roth conversion doesn't make any specification about pre-tax and post-tax money in traditional IRAs, there is a loophole that you can just do a Roth conversion turn all of your post-tax funds into Roth ones, thereby defeating the point of the income restriction. However, the IRS, in order to make the MAGI caps at least somewhat meaningful, requires all IRA Roth conversions to be done with their pro-rata rule, where you must do Roth conversions equally based on the ratio of pre/post tax dollars. eg: if you have $10k in pretax and $10k in post-tax, and you do a Roth conversion of $10k, it has to be $5k from the pre-tax funds and $5k from the post-tax funds. To avoid the pro-rata rule, as discussed elsewhere in this thread, people can try to rollover their pre-tax dollars into a workplace account (including possibly a solo-401k) to make it so the only pre-tax dollars in their IRAs are post-tax so they can convert and avoid the pro-rata rule. As discussed though, this only works for some individuals, since some workplace accounts won't allow this. It is worth noting that this will probably be patched at some point. Dems would have done it when they had the trifecta as part of the Build Back Better legislation, but Manchin through a hissy fit and wouldn't allow it. A future dem trifecta will probably actually do it unless they are reliant on a Manchin-like figure again to pass leglislation. At any rate, what I had assumed was that your income was between $146k and $161k, and were asking if you should be contributing to the post-tax traditional along with normal Roth contributions (as opposed to putting all in post-tax and then converting), to which I answered yes because you will save a very very slight amount on taxes if those dollars are in the money market for the few days the conversion takes to happen. MegaZeroX fucked around with this message at 14:21 on Jan 9, 2024 |
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Jan 9, 2024 14:18
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Takes No Damage posted:Don't know if this counts as long term, but I'm looking at opening a savings account with Discover since they're advertising interest rates in the 4+% range. I've already been pulling money out of Wells Fargo and putting it into a money account with Fidelity, splitting it between SPAXX and SPRXX, but dumping the rest in a place with slightly lower interest but FDIC insurance doesn't seem like a bad deal. The backing of a government money market fund and a FDIC bank account is the same: the federal government. There's no reason to think a FDIC account is safer than a government money market fund, so why take the hit in interest rates? If you feel better with FDIC insurance, go for it. But in a scenario where the government does not pay out its treasury obligations you should assume they will not pay out their FDIC obligations either. edit: I guess I should add that SPAXX is a government money market fund, SPRXX is not. SPRXX holds corporate debt, so it is more risky than SPAXX or a FDIC insured savings account. drk fucked around with this message at 16:49 on Jan 9, 2024 |
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Jan 9, 2024 16:46
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e: nvm
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Jan 9, 2024 17:32
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Popete posted:I want to contribute the maximum amount for both 2023 and 2024 to my Roth IRA, I have not contributed anything to it for 2023 or 2024 yet. From the Vanguard website it looks like I can still contribute for 2023, is that correct? Can I max out both 23/24 right now without issue? I don't think anyone has addressed the portfolio question, but I would suggest you read up on the three-fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio All in on VTI isn't a terrible place to start, but I think having some portion allocated to bonds is a good idea. An alternative to all this would be a target date fund, which are good matches for IRAs. Typically they will have slightly higher fees than an optimal three-fund portfolio, but they handle the fund choice and rebalancing for you.
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Jan 9, 2024 18:54
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Takes No Damage posted:Don't know if this counts as long term, but I'm looking at opening a savings account with Discover since they're advertising interest rates in the 4+% range. I've already been pulling money out of Wells Fargo and putting it into a money account with Fidelity, splitting it between SPAXX and SPRXX, but dumping the rest in a place with slightly lower interest but FDIC insurance doesn't seem like a bad deal. Any reason not to and just completely wipe out my savings acct with WF and just keep checking?
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Jan 9, 2024 19:10
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Seconding that! My Discover savings is fantastic
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Jan 9, 2024 19:23
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Question on I-Bonds on Treasury Direct - does the redemption value shown reflect the loss of final 3 months of interest if redeemed before 5 years?
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Jan 9, 2024 21:30
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MegaZeroX posted:To be clear, Backdoor Roths are specifically for people who are in ineligible to make full Roth contributions due to the limitation requiring you, in 2024 dollars, to have an income below $146,000, as determined by the definition of modified adjusted gross income (MAGI) used for IRAs. Then there is a "phase out" range, decreasing how much you can contribute, where if your MAGI is above $161,000, you can no longer contribute to the Roth account. Thanks for the detailed writeup. I'm nowhere near 160k so making full individual contributions should be fine for the foreseeable future. I was thinking backdooring was to get around that limit, not one that decreased your limit as your income goes up. Also good to hear Discover is a decent banking option. I got the savings account opened this morning but haven't really poked around yet. I may look into adding checking, with bill pay and direct deposit I could get completely away from WF which would be just fine with me.
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Jan 9, 2024 21:34
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Discover is good! i've had my savings there for several years now and even beside the high yield there was one time that they double-executed a transfer by mistake and they proactively reached out, explained what happened, and offered to cover any overdraft fees etc that might have resulted from their mistake (and i *think* they might have kicked me $100 for my trouble? i can't find the email now).
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Jan 9, 2024 22:21
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The Slack Lagoon posted:Question on I-Bonds on Treasury Direct - does the redemption value shown reflect the loss of final 3 months of interest if redeemed before 5 years? Yes, the balance shown is always your available to withdraw balance. I Bonds will not accrue any interest for the first three months, and receive a catch-up payment at 5 years.
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Jan 9, 2024 22:27
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nitsuga posted:I don't think anyone has addressed the portfolio question, but I would suggest you read up on the three-fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio Thanks! Appreciate the link.
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Jan 9, 2024 22:50
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drk posted:Yes, the balance shown is always your available to withdraw balance. I Bonds will not accrue any interest for the first three months, and receive a catch-up payment at 5 years. Prefect, thank you. Time to roll over some 0% fixed rate I-bonds!
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Jan 9, 2024 23:26
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How do ETFs like SGOV work? I just buy say $1000 worth of shares at market price (it’s always about $100?) and just hold onto it for dividends? Does it ever go below $100? Or does it not matter? Someone mentioned this page or last BOXX too and it seems more like a meme? but how am I suppose to earn money with it if it doesn’t pay dividends?
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Jan 9, 2024 23:38
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If you look at a chart of BOXX, seems clear you have to sell to take income.
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Jan 9, 2024 23:50
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Boris Galerkin posted:How do ETFs like SGOV work? I just buy say $1000 worth of shares at market price (it’s always about $100?) and just hold onto it for dividends? Yes. Its mechanically very, very similar to a money market fund. Not all brokerages will allow you to auto re-invest ETF dividends though, so money market funds have an advantage there. (I think XHLF is the better fund because of lower expenses and slightly longer duration, but SGOV is definitely good)
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Jan 10, 2024 00:18
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drk posted:Yes. Its mechanically very, very similar to a money market fund. Not all brokerages will allow you to auto re-invest ETF dividends though, so money market funds have an advantage there. Where can I find a list of, and ideally a page where someone has already done this research, these short term alphabet soup ETFs? I feel like every time people talk about them there’s another one I’ve never heard of and it’s all a bunch of random letters.
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Jan 10, 2024 00:26
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Boris Galerkin posted:Where can I find a list of, and ideally a page where someone has already done this research, these short term alphabet soup ETFs? I feel like every time people talk about them there’s another one I’ve never heard of and it’s all a bunch of random letters. Here's a list of bond ETFs from the Fidelity screener with 1 year or less of duration and 0.10% or less in expenses:  If you ignore the corporate stuff and the 2024 term stuff, you are left with: XHLF XONE SGOV TBLL
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Jan 10, 2024 00:39
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should I buy XONE with a physical disc drive or go digital?
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Jan 10, 2024 01:40
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As long as we're talking about it, anyone have any thoughts on SCHO vs. SGOV? I get the the former is a 1-3 year bond fund, and the latter is a 0-1 year fund, but how much difference does that make in practice?
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Jan 10, 2024 01:43
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Jabarto posted:As long as we're talking about it, anyone have any thoughts on SCHO vs. SGOV? I get the the former is a 1-3 year bond fund, and the latter is a 0-1 year fund, but how much difference does that make in practice? SGOV is short enough in duration that it will (theoretically) always slowly gain value day to day. Thus I find it basically as good as a savings account. When you go for longer fixed income durations like SCHO you become more sensitive to relative changes in interest rates. If you look at their prices over the last year you can see how SGOV keeps pretty consistent share value ("resetting" every month as dividends pay out), while SCHO does have times where the share value has declined in response to rates changing.
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Jan 10, 2024 01:54
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To add to that, the other difference between SCHO and SGOV is that in general, over longer periods of time, longer duration bond funds should return more than shorter term ones (this is called term premium). We are in a slightly unusual period of time in which shorter term funds are yielding more than longer ones, but it shouldn't be expected that that will be the case indefinitely. So for example, while SGOV currently has a SEC yield of 5.45% and SCHO has a SEC yield of 4.59%, I would expect the latter to actually return more over the next 10 years (and very possibly even over the next 2 or 3 years).
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Jan 10, 2024 04:06
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Jabarto posted:As long as we're talking about it, anyone have any thoughts on SCHO vs. SGOV? I get the the former is a 1-3 year bond fund, and the latter is a 0-1 year fund, but how much difference does that make in practice? BIL is very similar to SGOV (think of it like SGOV for the purposes of this post), but an older ETF, so I can make charts like this: https://stockcharts.com/freecharts/perf.php?BIL,SCHO&n=3380&O=011000  it's not just about expected return -- the month-to-month and year-to-year total return of those things will have quite different variance
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Jan 10, 2024 04:32
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MegaZeroX posted:It is worth noting that this will probably be patched at some point. Dems would have done it when they had the trifecta as part of the Build Back Better legislation, but Manchin through a hissy fit and wouldn't allow it. A future dem trifecta will probably actually do it unless they are reliant on a Manchin-like figure again to pass leglislation. I like that this all originated from Peter Thiel's abuse of Roth accounts, and those loopholes they didn't actually close in most versions of the bill.
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Jan 10, 2024 21:10
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For long range planing, what do you all use for real rate of return on your portfolio. I see everything from 2% to 8% real return listed, which makes a huge difference over 30+ years.
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Jan 10, 2024 23:59
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