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Omne posted:If I don't accept the lump sum, nothing happens. The money would stay in the pension fund and continue to accumulate a small amount of interest. I'm not guaranteed a fixed amount at retirement at all. I feel that taking it out, putting it into a Roth IRA would allow me to do more with it, as opposed to earn like 1% a year. Well, you are guaranteed to earn whatever the interest rate is on the account (I'm assuming it's some kind of cash balance plan where the interest is tied to T-bill rates or the like), so in that way you are guaranteed to not lose money on it even if the company loses money on investing the trust backing it. If the stock market tanks you're still getting some kind of positive return. Though as you say, obviously you cannot invest it to try an earn a higher rate like you would with an IRA (you can't roll it over to a Roth without being taxed on the income, I believe). I am in the situation where I have a CB account with an old employer that I left in there for that reason, to sort of balance out the high-risk investments of my 401k and Roth IRA investments. Though this is probably not optimal strategy for someone as young as I am, it's not an overwhelming chunk of my investments and gives me a guaranteed return as well as a broader range of distribution options in case I would ever want them in the future without having to go out and buy an annuity. It also diversifies me a little since I'm invested highly in Vanguard. If you want to roll it over I wouldn't say that's a bad plan by any means, but there are risks involved. Definitely don't just take it out and pay penalties though.
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Oct 17, 2013 00:13
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Sophia posted:Well, you are guaranteed to earn whatever the interest rate is on the account (I'm assuming it's some kind of cash balance plan where the interest is tied to T-bill rates or the like), so in that way you are guaranteed to not lose money on it even if the company loses money on investing the trust backing it. If the stock market tanks you're still getting some kind of positive return. Though as you say, obviously you cannot invest it to try an earn a higher rate like you would with an IRA (you can't roll it over to a Roth without being taxed on the income, I believe). I am in the situation where I have a CB account with an old employer that I left in there for that reason, to sort of balance out the high-risk investments of my 401k and Roth IRA investments. Though this is probably not optimal strategy for someone as young as I am, it's not an overwhelming chunk of my investments and gives me a guaranteed return as well as a broader range of distribution options in case I would ever want them in the future without having to go out and buy an annuity. It also diversifies me a little since I'm invested highly in Vanguard. If it was a lot more money than I would agree; but it's only $6k, so it's not like it would provide much of an offset
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Oct 17, 2013 01:02
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Omne posted:If it was a lot more money than I would agree; but it's only $6k, so it's not like it would provide much of an offset Isn't it common in these sorts of situations for the company to make multiple offers? As in: Offer $6k, see who bites. Then offer $8k and see if you get any more takers, etc. What's the company's expected liability in today's dollars?
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Oct 17, 2013 01:13
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Dik Hz posted:Isn't it common in these sorts of situations for the company to make multiple offers? As in: Offer $6k, see who bites. Then offer $8k and see if you get any more takers, etc. What's the company's expected liability in today's dollars? This is if they were trying to buyout like, promised medical benefits or something which are not guaranteed under the law. Pension plans have a lot of rules around what you can and cannot offer participants and the actuarial equivalencies of the benefits. Each plan has very specific parameters for how you have to calculate a lump sum benefit if one is available, and the law restricts your options for that too. In this case of a cash balance account, which is basically a savings account the company puts money in for you and you don't contribute to, the lump sum benefit is simply equal to the balance in the account. It would not be legal for them to offer a different benefit to cash you out. They can sometimes offer early retirement windows or non-pension benefits to get people to retire early, but that's a different situation. Edit: And Omne for $6K I would agree, just roll it into another retirement account. It will be easier for both you and the company.
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Oct 17, 2013 01:41
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Just signed up to ING to take advantage of the $100 if you do a payroll deposit with them (in Canada not sure if the promo is good in the US), and they are asking me for a cheque payable to myself from my current bank. I'm not entirely sure why they need this and what's its for. Edit: looks like it might be an initial deposit into the account? Demon_Corsair fucked around with this message at 17:21 on Oct 18, 2013 |
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Oct 18, 2013 17:02
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Demon_Corsair posted:Just signed up to ING to take advantage of the $100 if you do a payroll deposit with them (in Canada not sure if the promo is good in the US), and they are asking me for a cheque payable to myself from my current bank. Could be they need to see the routing number/account number, or any other Canadian banking details on the check. Or to verify the account.
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Oct 18, 2013 18:05
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So for the longest time at work, I would take 1 allowance instead of 2 (even though I'm supposed to take 2) because I don't need the extra money on each cheque and hell, then I'd get a nice windfall in form of a tax return the next year. Well I finally did the math and realised why that's loving dumb so I upped my allowances to 2. Thing is, I did this for a few months, then did my usual estimation of my taxes and realised that with the taxes I'm getting taken out of each cheque, I'm still going to end up with a big refund next April. So, I figure I should up my allowances to 3, maybe 4. My question is - is that legal? I've heard tell that some people take 9 allowances and don't get in any trouble (other than the fact that they then owe the IRS about 10,000$ the next year of course), but I thought to take 3 or 4 you would also have to have some dependents you can declare or something. Anybody with experience on this?
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Oct 18, 2013 20:59
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pathetic little tramp posted:So for the longest time at work, I would take 1 allowance instead of 2 (even though I'm supposed to take 2) because I don't need the extra money on each cheque and hell, then I'd get a nice windfall in form of a tax return the next year. I took 1 allowance at my previous job despite having zero dependents, and still got a decent multi-hundred dollar refund every year. Never heard a peep from the IRS. I don't think they care as long as you're not significantly underwithholding. There is such a thing as an underwithholding penalty, though. I don't know if it applies to regular W4 wages or just to contractors or self-employed folks who have to do quarterly estimated tax payments. I found this ehow (shady, I know) that seems to have some good information: http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html
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Oct 18, 2013 21:17
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You can claim less allowances (it says so right on the W-4). Claiming more can be penalized, but I think that is rarer. Keep in mind, on the deductions and adjustments worksheet, you can claim extra allowances if you have a lot of deductions. Some people will be claiming large mortgage interest, donation, or other deductions and perfectly legally claim tons of allowances as a result.
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Oct 18, 2013 21:18
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It's perfectly fine to claim as many allowances as you want. If, however, you end up owing the IRS a lot (more than $1k if I recall correctly) at year-end, you will pay them an additional penalty.
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Oct 18, 2013 21:24
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I don't think it's technically legal to claim more allowances than you "should" but they won't care unless you end up owing a lot. If you do end up owing a lot at the end of the year, you'll be charged a tax underpayment penalty. I got hit with this once when my employer screwed up payroll, and it seriously sucks. Why do you think your allowances should be that high though? It's certainly possible if you have a house and a lot of deductions, but it might be best off just to take the number you "should" at least for one year to see how it turns out. One thing to really watch out for is that state taxes can be very different, and even if you end up not owing federally, you could end up owing your state a large amount if they don't recognize the same deductions. And really, there's nothing wrong with overpaying taxes and getting a refund, especially with interest rates the way they are, unless it's preventing you from maxing out a roth or 401k match or something. The amount of money you're missing out on getting a 1,000 return at the end of the year, versus having it sit in a savings account, is really just a few bucks. I personally find it helpful to get a small-to-moderate return, because it gives me a reason to hold off on buying new toys or whatever except once a year, and having the smaller paycheck helps me adjust to a cheaper standard of living. When we get back into the age of 5% interest savings accounts, things might change though.
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Oct 18, 2013 21:29
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SlightlyMadman posted:And really, there's nothing wrong with overpaying taxes and getting a refund, especially with interest rates the way they are, unless it's preventing you from maxing out a roth or 401k match or something. The amount of money you're missing out on getting a 1,000 return at the end of the year, versus having it sit in a savings account, is really just a few bucks. It's still money you don't have for no real benefit whatsoever. Unless you're having to take into consideration a bunch of different tax credits/deductions, you shouldn't be having a $1000 return. This is assuming you're not doing it on purpose to get additional TIPS bonds or whatever.
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Oct 19, 2013 01:41
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Is it possible to roll over an HSA like a 401k? I just checked my HSA from an employer I left 6 months ago, and the statement reads like so:code:
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Oct 19, 2013 14:14
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Yes. Hsa can roll over. That's one of the neat draws specific to hsas over hrps etc. Call the provider or search in the web portal for a rollover sheet. Fill out the info just like a 401k and submit. Easy peasy.
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Oct 19, 2013 15:09
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Holy cow, easy-peasy was right. I filled out more forms to adopt my cat.
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Oct 19, 2013 19:19
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Thanks for the advice in this thread. I'm going to be looking into upping my allowances - probably just to 3 at least to catch me up to the half a year of having only 1 allowance, but with the math I put together on this front, I'll get a better idea of where I actually lie on the scale.
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Oct 21, 2013 15:25
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One of my goon friends swears by the advice here, so I thought I'd give it a try. Good news, I finally finished many years of college and grad-school in a difficult field and landed a high paying (>100K) gig. Bad news, at this job, the hours are hideously insane, the benefits are barebones, and I work in an area with really high state/local tax rates and where I either live close to work and pay ridiculous rent or spend a couple hours a day commuting to/from work, which blows. Unlike a lot of my collagues, I went slower and worked part-time/full-time through school and thus only have about $40k in student loans and about $10k stashed away in CDs. Although I'm a few years older than my peers, too. My goals in life are: short term to occasionally travel, medium term to buy a house, have a kid, and long term to eventually retire reasonably comfortably If I buy a house, I will probably take a lower paying/better hours job in a city where land is cheaper. For the kid, I'm single, which if I don't meet someone, could mean adoption or surrogate or something plus all the child care expenses that go along, which can get expensive. (I've had several girlfriends over the last few years, but none of them turned out to be anyone I'd want to spend the rest of my life with. Maybe I will find someone someday. Or maybe the problem is me. Who knows.) Anyway, I decided to figure out where my money goes and where I want it to go, but I have no experience with a budget and I don't want to be one of those people who comes into some money and blows it all. On the other hand, after all these years, what the hell is the point if I can't enjoy at least some of it? This is what I setup currently: Pre-Tax Expenses Job Expenses: $10,000 (Not reimbursed) Retirement: $10,000 (No matching) Charity $3,000 After Tax Income: $70,000 Normal Expenses Rent & Utilities: $20,000 (...and this is NOT a large place!) Car Insurance: $800 Gas: $1,000 Car Maintainence: $500 Car Taxes: $200 Groceries: $1,000 Prepared Food/Coffee/.etc: $3,500 (this seems high to me, but many days I feel like I have neither the time nor energy to cook) TOTAL $27,000 Savings IRA: $5,000 House Fund: $7,500 Child Fund: $7,500 Emergency Fund: $2,500 Total Savings: $22,500 Other Travel/Hobby/etc: $10,000 Remaining: $10,000 (approx) I haven't yet budgeted for any of the minor or unpredictable things, like Christmas gifts to family, medical bills (my insurance will cover catastrophes but co-pays for normal stuff is hideous). Anyway, I would appreciate some feedback.
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Oct 22, 2013 03:50
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I just finished grad school this spring (I'm 27 if that matters), and I have $25k worth of student loans to pay off. They start accruing 6.8% interest on Nov. 6, by which point I should have about $10-11k in the bank. Currently I make about $3k a month and have $1k in expenses. In January I will be moving for a new job which at which I will earn about $5k a month (take-home), and I literally cannot imagine how my expenses could exceed $2k/month (I travel a lot for my job, but I'm compensated for all food/lodging/travel expenses when I'm on the road; I actually make money when I travel because I have a fuel-efficient car that retains value). I expect to move again to a more permanent location a couple of years later (around summer-fall of 2016). So here's my idea: instead of paying off the student loans as fast as possible, take what I'm saving now and put a nice down payment on a small, inexpensive house ($60-70k, college town, convenient to campus), with the goal of paying it off completely during the 2.5 years before I move again and then just renting it out (area I'm looking seems to rent similar houses for $600-700) to students or whatever through a local company from then on. I'd use the income to help pay a mortgage on a big kid house and/or fun money. mortgagecalculator.org tells me I can knock out a $45,000 loan (including taxes and interest) in 30 months with biweekly payments of about $730, which would be just under 1/3 of my take-home pay during this period. My job has an excellent (and well-funded) defined benefit pension plan and health insurance, so I don't think I really need to save money for retirement/medical expenses. My car has lots of life left, so no worries about auto payments anytime soon. Unless I start drinking whole bottles of Patron every night, I foresee no problem paying off the student loans as well during this 2.5 year period. So is my cunning plan completely stupid? Should I turn this $10k I have sitting around into an emergency fund, or just go ahead kill half of the student loans immediately? Or something else entirely?
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Oct 22, 2013 05:08
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Ronald McReagan posted:I just finished grad school this spring (I'm 27 if that matters), and I have $25k worth of student loans to pay off. They start accruing 6.8% interest on Nov. 6, by which point I should have about $10-11k in the bank. Currently I make about $3k a month and have $1k in expenses. In January I will be moving for a new job which at which I will earn about $5k a month (take-home), and I literally cannot imagine how my expenses could exceed $2k/month (I travel a lot for my job, but I'm compensated for all food/lodging/travel expenses when I'm on the road; I actually make money when I travel because I have a fuel-efficient car that retains value). I expect to move again to a more permanent location a couple of years later (around summer-fall of 2016). The recurring slogan of the house-buying thread is "Do never buy", that should tell you a lot right there. Read the entire OP there and then ask yourself if you really need a house. Even if you don't change your mind, it would make sense to pay off your student loans first. You have less rights regarding student debt than you do for any other kind of debt, and should poo poo hit the fan, you're completely unable to discharge it through bankruptcy. 6.8% is also a considerable interest rate. I wouldn't throw the whole $10k at it, but consider making springy debt a part of your six-month cushion. Edit: Somehow in skimming I missed the part where you planned on renting out the property eventually. This is a BAD IDEA, don't even think about it. Kilty Monroe fucked around with this message at 12:58 on Oct 22, 2013 |
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Oct 22, 2013 07:44
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Three years ago I unintentionally let a credit card of mine go 30 days overdue and that transgression was added to my credit report. I'm currently debt free and have long since paid off that card (though it's still active), I'm looking to get a mortgage soon and I'm worried about that record, cause I have little history and I've only had maybe four different loans/credit cards in my life. The internet says the only legitimate way to maybe get it removed is to write a 'goodwill letter' and beg the creditor for forgiveness. Is that bullshit or something I should actually be doing?
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Oct 22, 2013 08:56
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Ronald McReagan posted:So here's my idea: instead of paying off the student loans as fast as possible, take what I'm saving now and put a nice down payment on a small, inexpensive house ($60-70k, college town, convenient to campus), with the goal of paying it off completely during the 2.5 years before I move again and then just renting it out (area I'm looking seems to rent similar houses for $600-700) to students or whatever through a local company from then on. I'd use the income to help pay a mortgage on a big kid house and/or fun money. Do not be a landlord for a house in a city you don't live in. Do not be a landlord without extremely deep pockets or a lot of experience / diversity in the business (i.e. more than one property). Never rent houses to college students EVER. This goes double for if you have no experience screening and judging applicants. The maintenance expenses on the house are much more likely to be a huge chunk of (if not well over) what you charge for rent, particularly if you are not there to perform the repairs yourself and have to hire out to get it done. Most renters are not particularly respectful of their properties, college students are worse than the average, and houses will likely get even more damage from college students even than apartments when the landlord is far away. Buying a house in your situation would be a bad decision. Buying a house, moving away and then renting it would be a catastrophic one. Houses are freaking expensive and stuff breaks a lot even when it's being properly maintained. The potential losses you will see far outweigh any income you might get from the process. You should pay off your loans rather than speculate in real estate while you're still in debt.
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Oct 22, 2013 12:21
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Sweet Tsunami posted:One of my goon friends swears by the advice here, so I thought I'd give it a try. I would break your numbers into monthly amounts - annual amounts often seem too abstract when youre spending on a daily basis. I think your grocery estimate of $83/month seems absurdly low, especially if you're in a high cost of living city. I would also say if you like to eat out or that number includes alcohol, that even $300/month might be low, especially if the people you hang out with have a similar income. I don't know how much you drive, but that's another number that looks a little below average. Obviously you've given yourself a large buffer for hobby/travel etc so it could balance out.
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Oct 22, 2013 15:31
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NOTinuyasha posted:Three years ago I unintentionally let a credit card of mine go 30 days overdue and that transgression was added to my credit report. I'm currently debt free and have long since paid off that card (though it's still active), I'm looking to get a mortgage soon and I'm worried about that record, cause I have little history and I've only had maybe four different loans/credit cards in my life. I don’t know if they will do that for you. Financial institutions do have an obligation to report accurate info to the bureaus, and by your own admission this is accurate. But if this is the only blemish, you have solid job history, you have a down payment saved, your debt to income ratio works, you have reserves after you buy the property, I don’t think this will be enough to derail things by a long shot, especially if it is that old.
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Oct 22, 2013 16:41
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Kilty Monroe posted:BAD IDEA. Sophia posted:bad decision. Point taken. I was hoping that turning over control to a real estate company and just letting them "handle it" would make it not a pain in the rear end for me, but it sounds like that isn't really the case. The "springy debt" as emergency fund idea sounds good. I'm about to request an increase on my current line of credit and I'm looking into a good gas/restaurants rewards credit card since I travel a lot for the job anyway. Aside from credit cards, the MMM article only specifically mentions home equity lines of credit. Are there any other options I could pursue as a non-homeowner?
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Oct 22, 2013 20:49
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Question: between a Roth IRA, a 401k and a HSA, what should the priority be? I will be 25 next year with below average health but no huge problems. I contribute to 401k match and max my IRA, but next year will be my first year with a hdhp.
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Oct 25, 2013 17:11
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The general order is: 1) 401k to match 2) Roth IRA fully 3) HSA fully 4) 401k fully 5) If you get here you win HSA and 401k might switch order if you had spectacularly bad investing options for your HSA, but in general a HSA has all the advantages of a 401k with the added befit of tax free withdrawals when used for medical expenses. Of course some people, including me, never actually use their HSA for their medical expenses if they can avoid it and treat it as an extra $3250 401k. Xenoborg fucked around with this message at 17:26 on Oct 25, 2013 |
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Oct 25, 2013 17:22
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Xenoborg posted:Of course some people, including me, never actually use their HSA for their medical expenses if they can avoid it and treat it as an extra $3250 401k. Not to open the  that is HSAs as investment vehicles, but why? I guess if you pay post-tax dollars, save your receipts, and itemize your out of pocket medical expenses at tax time it's no different than using pre-tax money from an HSA. Just seems like a lot of extra work.Maybe this is me being  , but one of the things I love about my HSA is that I can get the tax advantages without having to track medical expenses through the year.
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Oct 25, 2013 20:28
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canyoneer posted:Not to open the Why would this be a can of worms? HSA's are tax sheltered so you don't have to pay taxes on any gains.
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Oct 25, 2013 20:31
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An "hdhp" is a"high deductible health plan" which means antiga will be responsible for the first $X,000 of next year's doctor bills. A person with below average health should treat the HSA as part of those anticipated expenses and not as an extra 401k.
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Oct 25, 2013 20:32
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canyoneer posted:Not to open the The point isn't to take the deductions at tax-time, the point is to pay out of pocket now and let the money in the HSA grow tax-free for years. My HSA has grown about 15% in the past 2-3 years from being invested in some relatively low expense broad market funds. Presently I can afford to pay my small amount of medical costs out of pocket and just continue to contribute and max out my HSA and let it grow in the meantime. This way I also have several years' worth of the out-of-pocket-max on my HDHP if I were to need that much medical attention. I save any medical receipts just in case I need a reason to pull out some of that growing money tax-free in the future for non-medical expenses, maybe YEARS from now. But even if you didn't do that, eventually you are either going to have significant medical costs or you will reach 59.5 and can withdraw the money penalty free regardless. That could be many years of growth in a highly-advantaged account type. Guinness fucked around with this message at 21:03 on Oct 25, 2013 |
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Oct 25, 2013 20:59
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Xenoborg posted:The general order is: Roth and 401k may switch if you're at a point in your career where you're earning a lot more than you would draw (including SSI) in retirement.
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Oct 25, 2013 22:01
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Guinness posted:The point isn't to take the deductions at tax-time, the point is to pay out of pocket now and let the money in the HSA grow tax-free for years. My HSA has grown about 15% in the past 2-3 years from being invested in some relatively low expense broad market funds. Presently I can afford to pay my small amount of medical costs out of pocket and just continue to contribute and max out my HSA and let it grow in the meantime. This way I also have several years' worth of the out-of-pocket-max on my HDHP if I were to need that much medical attention.
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Oct 26, 2013 05:19
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Dik Hz posted:This only works if you've already exhausted all your other possible tax-sheltered options. If you're not maxing your 401k and your Roth, you can't possibly beat the 25% or 28% instant return of paying your medical expenses with pre-tax dollars. Can you clarify this logic? I get the 25% return part. Just not why that leads to your conclusion.
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Oct 26, 2013 13:15
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Rurutia posted:Can you clarify this logic? I get the 25% return part. Just not why that leads to your conclusion. I think he's saying that you could pay $100 of medical expenses out of your HSA then contribute that extra $100 (plus the 20%+ in taxes you saved by using the pre-tax funds instead of your after-tax money to pay the medical expense) to your 401(k) and come out ahead of leaving the money in the HSA and paying out of your post-tax income. In the former you end up paying less taxes overall on your total income because none of what you use gets taxed. Unless you've already maxed out your 401(k) contribution, in which case it makes more sense to leave it in the HSA if you can pay out of pocket, since you can't re-contribute to the HSA.
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Oct 26, 2013 14:05
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Since we're on HSAs... My HSA is in a non-interest bearing account at a local credit union. There are no investment options. The credit union was chosen by my employer. Can I move my HSA to a different institution?
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Oct 26, 2013 16:52
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At least for mine, you can't invest until you have $1000 in the HSA so that could be the reason. It should at least be earning savings rates for interest in the mean time though
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Oct 26, 2013 17:28
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Sophia posted:I think he's saying that you could pay $100 of medical expenses out of your HSA then contribute that extra $100 (plus the 20%+ in taxes you saved by using the pre-tax funds instead of your after-tax money to pay the medical expense) to your 401(k) and come out ahead of leaving the money in the HSA and paying out of your post-tax income. In the former you end up paying less taxes overall on your total income because none of what you use gets taxed. Unless you've already maxed out your 401(k) contribution, in which case it makes more sense to leave it in the HSA if you can pay out of pocket, since you can't re-contribute to the HSA. By paying for poo poo with pre-tax dollars, you're getting instant returns equal to your marginal tax rate. That will always be your best bet, unless you have completely maxed out your tax-advantaged accounts. In that case, the arithmetic becomes more complicated.
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Oct 27, 2013 01:12
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mlnhd posted:Since we're on HSAs... My HSA is in a non-interest bearing account at a local credit union. There are no investment options. The credit union was chosen by my employer. Can I move my HSA to a different institution?
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Oct 27, 2013 01:14
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Does an emergency fund size depend on the country? We have free health care in Aus for instance...should my emergency fund be smaller because of that? Three months instead of six, etc?
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Oct 30, 2013 04:32
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CelestialScribe posted:Does an emergency fund size depend on the country? We have free health care in Aus for instance...should my emergency fund be smaller because of that? Three months instead of six, etc?
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Oct 30, 2013 07:15
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