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The Big Jesus posted:Well that loving blows that they're trying to get rid of backdoor/mega backdoor regardless of account balance I'm only personally upset about it because I /finally/ got to the point where I can afford to do the backdoor Roth myself 
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Sep 13, 2021 22:12
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As a country we can only fix tax loopholes that allow middle class citizens to financially better themselves after the multi-billionaires have exploited it to the fullest extent possible and made their money.
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Sep 13, 2021 22:14
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Unsinkabear posted:I feel like this will never pass the senate (or even the house, given how slim their majority is these days) but god, I hope it does. I have a feeling old rich people will spend more money lobbying against this then they would've lost just moving their assets to a taxable brokerage and paying capital gains, but we'll see. Maybe some form of this bill will get through.
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Sep 13, 2021 22:44
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I might misunderstand some of the accounting details, but according to https://www.propublica.org/article/...free-piggy-bank, Thiel setup his ULTRA-IRA prior [1999] to the creation of the backdoor [2010] - the elimination of the backdoor/mega-backdoor aren't addressing how Thiel & co were able to create egregiously valuable IRAs. He was just under the income limit at the time, and still would be able to do that if this part of the bill were to become law. The target is upper-middle class people who are outside the Roth contribution limit but still doing retirement saving. Edit - Missed the part about the RMD, that would keep it from getting Thiel-big ($10m is still a very large Roth-IRA) bacon! fucked around with this message at 22:58 on Sep 13, 2021 |
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Sep 13, 2021 22:55
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Back door and mega back door always sucked. Either give everyone the higher limit straight up or don’t. The lovely process of “you get extra tax advantages if you have an accountant and maybe a job with a provider that enables this One Weird Trick” is a bad way to offer people a chance to get ahead.
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Sep 13, 2021 23:02
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bacon! posted:I might misunderstand some of the accounting details, but according to https://www.propublica.org/article/...free-piggy-bank, Thiel setup his ULTRA-IRA prior [1999] to the creation of the backdoor [2010] - the elimination of the backdoor/mega-backdoor aren't addressing how Thiel & co were able to create egregiously valuable IRAs. He was just under the income limit at the time, and still would be able to do that if this part of the bill were to become law. The target is upper-middle class people who are outside the Roth contribution limit but still doing retirement saving. His investment in a private company might fall into the "accredited investor" section and be not allowed? If that is the case in 2024 the account would no longer be an IRA. Never is going to pass though.
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Sep 13, 2021 23:06
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doingitwrong posted:Back door and mega back door always sucked. Either give everyone the higher limit straight up or don’t. The lovely process of “you get extra tax advantages if you have an accountant and maybe a job with a provider that enables this One Weird Trick” is a bad way to offer people a chance to get ahead. Our entire "retirement system" is a joke. You have to count on an employer to providing a benefit program to be able to put away more than $6,000 a year. $6k a year may work for a decent retirement if you can start doing that at your very first job and do it every year, but that's just not realistic with student loans, low starting salaries, etc. People tend to need to "catch up" mid career and that's just not an option in tax advantaged accounts. Or you need to get creative with side businesses and accountants........ But you really don't need an accountant to backdoor. It's quite simple. (It's still bullshit)
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Sep 13, 2021 23:09
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Everyone can still save as much money as they want to and are able to for retirement, they just won't be able to do so tax-free. The proposed legislation (which is likely to be modified and then added to the giant reconciliation bill, so I'm more optimistic that it passes that way than some of you) forces huge accounts to take distributions (which means you have the cash and can then invest it... but you pay taxes on your capital gains), closes the backdoors, and prohibits after-tax 401(k) contributions. It seems like employer contributions (which are above your 401k maximum contributions) still remain in effect, so it'd still be possible to sock away $50k+ into a 401(k), especially if you're self-employed and can "pay yourself" enough to throw in that much. But basically I don't think it's a huge burden for long-term retirement investors with millions of dollars saved, to have to pay the long term capital gains tax on their earnings. That would still not bring the actual tax paid by the very wealthy up to the same percentage as the tax paid by income-earners! But it'd be a nice start.
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Sep 13, 2021 23:18
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Leperflesh posted:Everyone can still save as much money as they want to and are able to for retirement, they just won't be able to do so tax-free. Of course, I phrased that imprecisely. But for most people the tax benefits are what make both saving and good retirement outcomes much more possible. This should be locked behind employer percs and self employment/accounting tricks.
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Sep 13, 2021 23:22
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And of course nothing in here addresses the elephant in the room of being able to fund SSA and increase benefits if they just removed the income cap altogether.
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Sep 13, 2021 23:41
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H110Hawk posted:And of course nothing in here addresses the elephant in the room of being able to fund SSA and increase benefits if they just removed the income cap altogether. As someone who has regularly exceeded the social security income max I'm still pissed off about that stupidity. I'd gladly pay providing everyone else is as well.
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Sep 13, 2021 23:48
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Motronic posted:As someone who has regularly exceeded the social security income max I'm still pissed off about that stupidity. I'd gladly pay providing everyone else is as well. Yeah, pretty much all of the SSA solutions are no-brainers, except the political answer is do nothing until we hit the cliff (and maybe still do nothing then). My exception to "pretty much all" solutions is the idea of raising the minimum retirement age, since the people who actually need it probably destroyed their bodies in retail, manufacturing, construction, etc. and need it more than anyone else as soon as possible.
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Sep 14, 2021 00:15
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Speaking of which don't forget to pay your quarterly taxes if you have to. 
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Sep 14, 2021 00:46
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H110Hawk posted:Speaking of which don't forget to pay your quarterly taxes if you have to. One of these years I'm going to start doing this instead of being angry every year.
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Sep 14, 2021 00:55
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Residency Evil posted:One of these years I'm going to start doing this instead of being angry every year. I only do it to avoid penalties. I think I just got myself into the safe harbor though so gently caress it until April 15. Looked at last years transcript and they wrote off $0.24. Take that, the man.
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Sep 14, 2021 01:03
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H110Hawk posted:I only do it to avoid penalties. I think I just got myself into the safe harbor though so gently caress it until April 15. Looked at last years transcript and Thankfully I haven't had to pay any penalties yet, although I'm a bit worried about this year since calculating our tax burden this year with a move, selling a house, variable deductions, etc, isn't easy. We'll see what happens. 
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Sep 14, 2021 02:09
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Residency Evil posted:Thankfully I haven't had to pay any penalties yet, although I'm a bit worried about this year since calculating our tax burden this year with a move, selling a house, variable deductions, etc, isn't easy. We'll see what happens. Did you underpay last year? If no, there are no penalties. You have to be a repeat offender above some limit I can't remember.
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Sep 14, 2021 02:30
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Motronic posted:Did you underpay last year? If no, there are no penalties. You have to be a repeat offender above some limit I can't remember. I think I've been underpaying for the past 6 years straight now, but haven't paid any penalties. I think as long as you pay more in taxes than the previous year, you're ok?
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Sep 14, 2021 02:40
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Residency Evil posted:I think I've been underpaying for the past 6 years straight now, but haven't paid any penalties. I think as long as you pay more in taxes than the previous year, you're ok? This is why I have a CPA. From what I recall it's something like under $1k doesnt' count. But also, I just always paid all of that poo poo before I filed my taxes (like days before) and it's never been an issue about not being distributed evenly per quarter. Standard disclaimer: I'm not a CPA as you know.
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Sep 14, 2021 02:46
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110% of last years tax owed is the safe harbor for rich people as I recall. Remember, play dumb games and win dumb prizes. I owed several tens of thousands of dollars come return time in 2020, on top of whatever I estimated. I'm an overpaid computer toucher for a living so yeah hire a cpa. Remember you gotta make money to owe money above poverty thresholds.
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Sep 14, 2021 02:57
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Leperflesh posted:It seems like employer contributions (which are above your 401k maximum contributions) still remain in effect, so it'd still be possible to sock away $50k+ into a 401(k), especially if you're self-employed and can "pay yourself" enough to throw in that much. quote:But basically I don't think it's a huge burden for long-term retirement investors with millions of dollars saved, to have to pay the long term capital gains tax on their earnings. That would still not bring the actual tax paid by the very wealthy up to the same percentage as the tax paid by income-earners! But it'd be a nice start.
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Sep 14, 2021 03:09
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Motronic posted:This is why I have a CPA. From what I recall it's something like under $1k doesnt' count. But also, I just always paid all of that poo poo before I filed my taxes (like days before) and it's never been an issue about not being distributed evenly per quarter. Wait, so you paid your taxes due from the previous year days before you filed your taxes? And that’s okay? Nice. H110Hawk posted:110% of last years tax owed is the safe harbor for rich people as I recall. Remember, play dumb games and win dumb prizes. I owed several tens of thousands of dollars come return time in 2020, on top of whatever I estimated. I swear I’ll be better next year! I really need to find a CPA at some point.
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Sep 14, 2021 03:09
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Residency Evil posted:Wait, so you paid your taxes due from the previous year days before you filed your taxes? And that’s okay? Nice. I'm not sure it's okay, but I've never gotten an IRS notice about it........so........yeah......
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Sep 14, 2021 03:15
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Residency Evil posted:Wait, so you paid your taxes due from the previous year days before you filed your taxes? And that’s okay? Nice. I can actually ask our Boulder or Denver offices for cpa rec's from people if you are serious. Lots of people with complicated taxes - probably more complicated than yours unless you need accounting work done on your contracting work if you are still doing that. And yeah I aggressively napkin math it and generally make one payment in September / October ish timeframe, and then another one in April. This is on top of the married/3 withholding I do on my salary. (Single income, you should probably do single/3 assuming you earn roughly the same as your wife, as in around the same single filing bracket.) It's only technically "OK" to pay as you go if you couldn't have estimated your burden, which is easy for me - it's all on stock sales. Who could have known what they were going to be worth prior to the sale?
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Sep 14, 2021 03:20
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Motronic posted:I'm not sure it's okay, but I've never gotten an IRS notice about it........so........yeah...... So uh, basically I would: 1. Estimate my taxes on Feb 1st in TurboTax 2. Send in my overdue taxes on Feb 2nd 3. Re-calculate my taxes in TurboTax, taking into account the payment I just made. 4. File my taxes normally, without any penalty (if one applied) One weird trick?
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Sep 14, 2021 03:24
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I will not agree nor disagree with this last post.
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Sep 14, 2021 03:25
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I am not broken up about backdoors possibly going away, if and only if it comes with the requisite wealth redistribution changes that must occur sooner rather than later if we are to ever make our country a better place to live. Start from the top, don't just concentrate all the wealth in one place.
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Sep 14, 2021 16:30
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Hello I am absolutely empty brained about my retirement accounts. With my dinky, garbage paying movie theater job in my early 20s I hopped into their 401k program. I've got another job now with its own 401k program, and all the materials I've read in regards to merging/transferring these accounts into the other suggest "maybe? Who knows." Should I just leave these 401ks to themselves, or should I look into merging them?
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Sep 14, 2021 19:09
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You're going to have more freedom to invest the money in your old 401k if you move it into an IRA. Odds are that the options for funds that you are able to invest in are not good in either of your 401ks, whereas you can set up an IRA with any provider you want. If your new 401k is with Vanguard, Fidelity, or Schwab, you can roll it into your new 401k and be fine, but otherwise I would move the old money into an IRA at one of those 3 places and invest it into low fee index funds. If you ever leave your current job, you can roll your current 401k into that same IRA.
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Sep 14, 2021 19:15
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Shinjobi posted:Hello I am absolutely empty brained about my retirement accounts. With my dinky, garbage paying movie theater job in my early 20s I hopped into their 401k program. I've got another job now with its own 401k program, and all the materials I've read in regards to merging/transferring these accounts into the other suggest "maybe? Who knows." Yeah, switch it to vanguard, get a target date retirement fund if you don’t want to worry about balancing it, get a mix of US and international total stock market mutual funds if you do. https://investor.vanguard.com/mutual-funds/list#/mutual-funds/asset-class/month-end-returns https://www.bogleheads.org/wiki/Three-fund_portfolio
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Sep 15, 2021 12:54
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I have no retirement at all except for a paid for house. I just signed up for a Roth ira with Vanguard, and chose the max 6k to put in. I am hoping that is a somewhat good start. I am 44. When the funds arrive how will I know what is best to pick? I want to maximize growth as I am starting late in life, but I don't want to risk it all and lose it all. Goal would be for my kids to be comfortable one day when grown. Was opening a Roth with the 6k a smart or dumb first move towards investing? Thanks for any info.
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Sep 15, 2021 15:26
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everdave posted:I have no retirement at all except for a paid for house. A paid off house is definitely good. Opening a Roth IRA and contributing the max is also good. Buy a target date fund for the easy option. Later dates are more aggressive/risky for a growth focused allocation. You probably won't be able to make your kids rich by maxing your Roth IRA each year, but you can make your own retirement more secure and comfortable, and that will make you less financially dependent on your kids after you stop working.
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Sep 15, 2021 15:39
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everdave posted:I have no retirement at all except for a paid for house. A Vanguard Roth IRA is an excellent component of any retirement plan. If you can afford to max it each year, it's in your best interests to do so. I think your best option would be to invest in one of the Vanguard target date retirement funds or in one of their "Life Strategy" funds. Both of these types of funds are similar in that they invest your money in portions of the total U.S. stock market, the total international stock market, the total U.S. bond market, and the total international bond market. The target date retirement funds adjust the proportions of their holdings over time so that they sell stocks and buy more bonds, which are lower return but more stable. The life strategy funds hold a consistent proportion of stocks and bonds, periodically selling one to buy the other as needed to maintain their target percentages. "Maximizing growth while not risking losing it all" is asking to square the circle, it's impossible. You cannot have reward without taking risk (unless you're doing insider trading  ). If you're hoping to leave it to your children as opposed to needing to withdraw it in ~20 years or whenever your intended retirement time is, putting it into a life strategy fund may actually be a better choice than a target date fund. The Life Strategy Growth fund, symbol VASGX, holds 80% stocks and 20% bonds, while the Moderate Growth fund, symbol VSMGX, holds 60% stocks and 40% bonds. Do you have other wealth? A pension? Cash on hand? How likely are you to need this money at a particular time? These factors influence your risk tolerance and should guide your strategy. This thread will certainly help you but ultimately it relies on your factors.
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Sep 15, 2021 15:40
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I do not have any other retirement funds. I have savings to cover 2 years of reasonable expenses. I do believe I will go for the TARGET DATE option, is there a guideline of when that should be? Is it better to be in a Roth IRA regardless of which I pick versus not (I assume)? Thank you for the input...if I get the basic idea, if I at least start with maxing the Roth each year that is a good start? I do appreciate the quick input and advice.
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Sep 15, 2021 15:44
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everdave posted:I have no retirement at all except for a paid for house. Edit: goddamn, beaten by two posts. But yeah, my question below in employer retirement options is def something that we need answered to best help. No judgement, but 44 means def starting behind on retirement, although having a paid off house hopefully means you now hopefully have extra freed up income to catch up. The best first thing to do with retirement savings is simply to start, so yes $6k in a Roth is a good move. The best time to invest was yesterday, the next best time is today, so glad you are getting a start. It’s kind of hard to give a full recommendation without knowing your income / general situation / extra money to put towards retirement. It sounds like you’re doing ok if you had $6k to drop at once. For the Roth / vanguard, see what I just posted, a mix of passive index mutual funds is the best bet. Vanguard has total US stock market, total international, which you could instantly start with with $6k. Bonds are more conservative , in my opinion I wouldn’t fret much on Bonds and lean 90-100% in stock mutual funds like said two, but there’s no 100% right answer there. Are you employed or self employed? If employed, does your company do a match? The next step is doing a pre tax retirement , which is normally via your company. If you’re self employed someone here will know what the best step is, but either way you should be able to put about $17-18k a year pre tax into a standard retirement plan. The employer ones usually only have 10-20 options, so just pick the mutual funds with the most diversity and lowest expense ratio. Finally: not quite following if you’re asking about yourself or kids on the last part, but the best first thing you can do is make sure you have money for yourself for retirement so your kids will not have to worry about supporting you. Duckman2008 fucked around with this message at 15:48 on Sep 15, 2021 |
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Sep 15, 2021 15:46
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I am self-employed - no one matching anything here. Being self-employed beyond my savings I have no guarantee that I will make a certain income next week, month or year. So no match on 401k, etc... from anyone.
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Sep 15, 2021 15:52
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everdave posted:I do not have any other retirement funds. I have savings to cover 2 years of reasonable expenses. Usually you want the target date to correspond with your intended retirement date. So a target 2040 or 2045 would likely be reasonable for you. These are going to be more conservative (contain more bonds and fewer stocks) than the 2055 or 2060 target date. Assets in a Roth account are free of tax on withdrawal, since the money is taxed before it is put into the account. So if the 6,000 you contribute today grows into 20,000 at the time you withdraw it, that 20,000 can be withdrawn and spent without incurring any additional taxes. If you have Roth account space available, and you have money available to contribute to it, it is almost always in your best interests to fill it up.
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Sep 15, 2021 15:53
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If you are self employed there are a few options - Solo 401(k) has some tax advantages for you. If you are self employed you also should have a decent accountant you can talk to about this.
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Sep 15, 2021 15:58
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Kylaer posted:Usually you want the target date to correspond with your intended retirement date. So a target 2040 or 2045 would likely be reasonable for you. These are going to be more conservative (contain more bonds and fewer stocks) than the 2055 or 2060 target date. Got it - and others as well thank you. Of course wish I could have started earlier but I started today... will look into the solo 401k and do some research as well, right now I plan on contributing the max to the Roth each year as long as I can
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Sep 15, 2021 16:02
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You can also invest additional long term savings in a taxable account. You aren't limited to the ROTH for making your plans. It's just a tax advantaged option, not a ceiling on retirement savings. Obviously. you want to maximize your tax shelter but don't let a lack of tax sheltering prevent you from investing further.
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Sep 15, 2021 16:20
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