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fknlo posted:I opened a Roth IRA earlier this year with the back door thing from a traditional IRA. I'm assuming that to continue contributing to it that I need to do the back door thing again correct? Is there a limit on how many times you can do that or can I just toss money in and move it whenever? Yes, you'll need to continue to backdoor unless your income drops enough to front-door contribute again. There's no limit on the number of times you can do that in current law, but the federal spending bill being hammered out may very well kill the backdoor altogether. So keep an eye out for what actually makes it into law next year.
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Oct 28, 2021 22:52
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Anyone hear if this new bill includes the backdoor Roth stuff?
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Oct 28, 2021 22:55
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Hey thread, I have a (thankfully, very fortunate) situation that I’m not sure how to handle. A trust my parents had set up for me ended about a year ago. It’s ~$550k (since I know The Number can matter for the rest of this post). The money is managed by a financial advisor. He’s a licensed CFP, but the firm he’s with uses an AUM fee-only structure (it IS still fee-only though, no commissions) and some of the funds he’s selected go against the general consensus around only going with low cost funds. The thing that makes this a bit complicated for me is that my parents also use this company for their taxable investments, and the management company is using the combined value of my parents, my brother, and my portfolios to determine their fees. This ends up being about .6%, which from what I’ve read is good for the amount I have under management (though I realize that’s still a pretty big drag on performance overall). The account is using a pretty aggressive equities/bond ratio (95/5). About 2/3rds of the value is in low fee index funds. The remaining third are in higher fee, actively managed funds, some have which have over performed the market or their sector, some which have under performed. I haven’t gone in the weeds enough to determine where exactly I come out on this compared to a more traditional three/four fund portfolio. Some info about me/my goals since that’s probably relevant: early 30s, single, no kids. Job is stable, and I have about 1.1x my salary saved in tax advantaged retirement accounts. No major debts beside a mortgage at 2.875% and about 8k on an auto loan at 1.9%. I pay that all pretty comfortably every month, along with CC bills fully, etc. I’m torn on what I should do from here. On the one hand, I know the management fees are a significant drag on my return, statistically a simple low fee three/four fund portfolio performs best over the timeframe I’m looking at, and the account value isn’t really high enough for me to need to have someone manage it. On the other, it feels kinda lovely to just bounce and increase my parents fees, and it seems like it would be pretty expensive to substantially reallocate (due to capital gains). Ultimately, I guess my questions are: How big of a deal is this all, ultimately? I don't know if finding the absolutely optimal investment strategy would make that big of a difference and be worth the potential E/N stuff. If I did DIY this, how would I go about reallocating? Should I consult a fee based CFP in this case? Are there any good online tools to calculate a portfolios return over a historical time frame? scary gary fucked around with this message at 00:07 on Oct 29, 2021 |
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Oct 28, 2021 23:48
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Don't look a gift horse in the mouth. When you are in control of the money cast off of that trust you can do what you want. Is it optimal now per thread doctrine? No. Is it anywhere near awful? Also no.
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Oct 28, 2021 23:51
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Oh man, that's the Family Wealth Management Playbook right there. - Pulling your money will affect your family's fees - They probably "aren't quite sure" what your cost basis is on a lot of those assets and spook you into holding them due to capital gains - 2/3rds in index funds but charging you the AUM on the whole shebang Get it out of their care whenever you can because that 1/3rd in high fee, active management funds is being churned to generate them a nice big commish and serving you a healthy tax bill each year. Have you ever had to make quarterly income tax payments because of these jokers?
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Oct 28, 2021 23:56
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fknlo posted:I opened a Roth IRA earlier this year with the back door thing from a traditional IRA. I'm assuming that to continue contributing to it that I need to do the back door thing again correct? Is there a limit on how many times you can do that or can I just toss money in and move it whenever? I believe you are limited to one conversion per year
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Oct 29, 2021 00:13
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GoGoGadgetChris posted:Oh man, that's the Family Wealth Management Playbook right there. I should've made this more clear in my post: they use an AUM structure, but it's fee-only. They've also always been good about laying out tax implications in my limited experience with them (e.g. they do know the cost basis of stuff, and I can access that easily as well), and I haven't have any surprise quarterly tax payments or anything like that. The whole family fee thing is admittedly an assumption on my part, but I don't think it's too much of one to assume that number go down=fee percentage go up from what I've read about AUM fee structures.
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Oct 29, 2021 00:24
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How much the 0.6% AUM fee costs you depends on how long you're paying it and overall returns, but something like $100-300k less over a 30 year timeframe in a taxable account would probably be in the ballpark, though that number shrinks fast if you withdraw from it sooner than that and also depends on overall returns. Also who knows how the actively managed funds will do. Selling off a 3rd of the account to fix it will have decently sized tax implications depending on cost basis. Not unreasonable to just hold them unless the fees and turnover are super high. But if you're going to do it sooner rather than later would be preferable. Sounds like you'd need to talk it over with family on this though before doing anything and determine what the potential effects of any decision you make would be. It may be that you just accept the current management strategy. While it may not be 100% optimal, it's really not that bad and maybe not having to deal with family drama is worth it.
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Nov 1, 2021 03:31
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scary gary posted:The whole family fee thing is admittedly an assumption on my part You should probably find out what the actual situation is rather than making assumptions with 6-figure implications.
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Nov 1, 2021 06:35
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The rate for I bonds updated today, and it’s over 7%. I’m having trouble finding the fixed rate portion.
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Nov 1, 2021 19:07
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Valicious posted:I’m having trouble finding the fixed rate portion.  https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#past
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Nov 1, 2021 19:21
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the fixed portion has been less than 50bps and most commonly 0 since the great recession
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Nov 1, 2021 19:24
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Valicious posted:The rate for I bonds updated today, and it’s over 7%. CopperHound posted:Still zero, which means that is all based on inflation What is the implied inflation rate in this situation
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Nov 1, 2021 19:30
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There are people who bought I-Bonds in 2000 getting 3.5% fixed rate. Assuming they are still holding (I sure hope so), for six months they will be getting over 10.5%. I believe the annual limit was higher back then too. Crazy good deal that was.
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Nov 1, 2021 19:37
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80k posted:There are people who bought I-Bonds in 2000 getting 3.5% fixed rate. Assuming they are still holding (I sure hope so), for six months they will be getting over 10.5%. I believe the annual limit was higher back then too. Crazy good deal that was. I mean, what's 10k invested in the S&P in 2000 worth today? edit: 7.4%, 5.1% adjusted for inflation
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Nov 1, 2021 19:39
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Hadlock posted:What is the implied inflation rate in this situation quote:We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
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Nov 1, 2021 19:40
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Residency Evil posted:I mean, what's 10k invested in the S&P in 2000 worth today? That's a very different risk profile form ibonds.
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Nov 1, 2021 19:44
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Residency Evil posted:I mean, what's 10k invested in the S&P in 2000 worth today? Who cares... for 30 years, they have a 3.5% real returning instrument with (at this point) no redemption fees, no risk to principal and tax deferred. It's an amazing deal.
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Nov 1, 2021 19:46
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Motronic posted:That's a very different risk profile form ibonds. 80k posted:Who cares... for 30 years, they have a 3.5% real returning instrument with (at this point) no redemption fees, no risk to principal and tax deferred. It's an amazing deal. Yup, for sure. It's just much easier to say that in hindsight (S&P included) versus today. Still got my ibonds for the year though.
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Nov 1, 2021 19:50
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Them rates holy h*ck
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Nov 1, 2021 19:52
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It's only for 6 months. It's possible the rates tank in May and you're still stuck with the bonds for the year.
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Nov 1, 2021 20:03
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But until then weeeee
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Nov 1, 2021 20:06
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CopperHound posted:7.12% Lmao 
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Nov 1, 2021 20:08
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I'll take it as a minor temporary increase in risk of a small portion of my efund vs leaving it in my Cap1 act getting 0.5%
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Nov 1, 2021 20:10
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Jows posted:I'll take it as a minor temporary increase in risk of a small portion of my efund vs leaving it in my Cap1 act getting 0.5% Oh my god don't make me calculate how much our downpayment money will make versus our stupid I-Bond.
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Nov 1, 2021 20:12
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On a long enough time scale, that temporary(?) 7% inflation will get priced into your house you keep waffling on buying
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Nov 2, 2021 01:03
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I just signed up both my parents for Treasury Direct accounts and it went smoothly. Didn't ask me to mail anything and the accounts were created instantly. Heard a lot of horror stories.
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Nov 2, 2021 04:49
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Just signed up for Treasury Direct after having previously encountered some weird technical blocker. But jesus gently caress is the password entry via the goddamn digital keyboard an extraordinary pain to the point of being less secure because it encourages the use of the simplest password you can get away with.
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Nov 2, 2021 05:12
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Cugel the Clever posted:Just signed up for Treasury Direct after having previously encountered some weird technical blocker. But jesus gently caress is the password entry via the goddamn digital keyboard an extraordinary pain to the point of being less secure because it encourages the use of the simplest password you can get away with.
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Nov 2, 2021 06:12
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CopperHound posted:Yeah it is pretty awful, but 1password can still fill it in. Huh, I'm going to have to try that again - because I don't recall it working. Is there anything you need to set differently for that login?
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Nov 2, 2021 13:44
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Motronic posted:Huh, I'm going to have to try that again - because I don't recall it working. Is there anything you need to set differently for that login? So here is a workaround that works thanks to the good old F12 key (at least in firefox). Open inspector and delete the highlighted stuff: 
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Nov 2, 2021 16:10
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Lol, that's awesome. Thanks!
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Nov 2, 2021 16:28
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OMG that's incredible. Thank you! Related question for the thread: when does the current value of these update on the website? My wife and I do a monthly balance sheet of our accounts and I sold her on buying these as getting more interest than a bank account, but the current value is still showing 10k after a few months. Does it not update until after the lockout period?
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Nov 2, 2021 17:32
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You have to view details on the individual bond instead of just the summary page iirc, but I can't recall about it updating before lockout or not.
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Nov 2, 2021 17:37
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Jows posted:OMG that's incredible. Thank you! First, as CopperHound says, you have to click on the bonds and and view the individual holdings before you see the updated balance. However, the current balance is the redemption value. You will never see the most recent 3 months of interest until after the penalty period (I think 5 years?). So if you have only held a couple of months, you won't see any interest credited.
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Nov 2, 2021 18:04
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80k posted:First, as CopperHound says, you have to click on the bonds and and view the individual holdings before you see the updated balance. However, the current balance is the redemption value. You will never see the most recent 3 months of interest until after the penalty period (I think 5 years?). So if you have only held a couple of months, you won't see any interest credited. Ok, I wondered if it was related to that. So it is showing what the actual value to me would be if I withdrew today, which makes sense. I'll tell the wife to keep the faith and trust me then 
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Nov 2, 2021 18:12
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My aunt passed away a few weeks ago. She was one of my favorite relatives but I'll spare y'all the E/N stuff since this isn't the place for that. She named myself and my brothers as her beneficiaries. I just got my hands on my inherited IRA today, but the rest will take a few months or so. I know I've got ten years to withdraw it and I'll be speaking to our tax advisor about planning that. Anyway without further ado - here is what a professionally managed account looks like: code:I know I'll have to switch some things since I'm not near retirement age. First step is to figure out the fee and get out of this managed account situation. Second step will be switching to total market funds and cranking the bonds down to like 10%. I have purchase dates for these funds as well so I'll try to do some back-testing just out of curiosity. Anybody have a favorite resource for that? Also super basic question but just wanted to confirm - the whole amount withdrawn counts as ordinary income for tax purposes right? So it'd be better to do any trading in my own accounts?
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Nov 2, 2021 20:41
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In a big life achievement unlocked (not that big a deal), I finally setup a treasury direct account and bought an I Bond (just like, $100 so I could start it and have it for the future). Quick question: do I lay yearly taxes on the interest it accuses ? I assume the answer is yet, but just to confirm.
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Nov 3, 2021 15:56
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You can, but you can also defer it. TreasuryDirect link
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Nov 3, 2021 16:05
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| # ? Jun 8, 2024 20:20 |
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Rollovers for the purpose of conversion from a traditional to a Roth IRA conversion aren't subject to the one-per-year limitation (Pub 590A, page 24), and a "rollover" for this purpose means a temporary withdrawal of funds into your own name, not a transfer that remains in legal possession of the investment companies.
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Nov 3, 2021 16:34
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