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spf3million posted:I set up auto in-service conversions from after-tax 401k to Roth 401k this year. Most of the articles online regarding the mega background Roth imply that folks should be doing after-tax 401k to a Roth IRA instead. I believe Roth IRAs permit you to take out the contributions (but not the growth) before retirement; however, 401k(s) have much stronger legal protections in case you get sued or something.
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Feb 17, 2020 16:35
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Pollyanna posted:Are we sure this will hold? Not that I doubt a lower income after retirement, just that tax rates will remain lower than earlier in life. But in any case, if you want to move later in life, consider the tax rate differences between the states too.
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Feb 18, 2020 16:20
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Pollyanna posted:I’m under no delusion that the economy will change that much under a Bernie presidency. Politicians are still politicians, and although I’m eagerly awaiting the end of the American oligarchy, capitalism will reign for a long time still. Let's be honest, Congress will either drop his initiatives or change them pretty vastly.
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Feb 24, 2020 22:54
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KillHour posted:So if you work there for 20 years and make $50k, you'll get $20k/year in pension? Good luck surviving on that. I'd hope that's in addition to Social Security, at least.
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Apr 7, 2020 01:15
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literally this big posted:Can you just straight deposit cash into an HSA, or does it have to come thru payroll or something? It does not have to come through payroll, although IIRC you can save on Payroll tax too if you do.
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Apr 12, 2020 16:14
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Ancillary Character posted:When did you do the conversion? I think you have to file Form 8606 if you did it in 2019, but if you did the conversion in 2020 for contributions for 2019, you can wait to do so when you file taxes for 2020. The conversion will be counted in 2020 even if you do that. So you'll have to file 8606 both years (2019 for the contribution, 2020 for the conversion).
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Apr 18, 2020 02:14
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KillHour posted:The contribution and conversion both happened in 2020, but I applied it towards my 2019 contribution limit. But even if you do a prior-year non-deductible IRA, the conversion takes place in the current tax year. So you'll have two 8606s: 1) For 2019, indicating the non-deductible contribution and 2) For 2020, indicating the conversion to Roth
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Apr 18, 2020 03:16
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Leperflesh posted:The bluer skies are a reduction in smog. But, even if we eliminated 100% of car travel worldwide, that would not be enough to reverse the climate change trend. We have to get entirely off fossil fuels for our energy supply. People have been predicting the end of the world since forever. This isn't to say that there are not serious fundamental problems and it might not finally happen, but the future is notoriously hard to predict. Maybe someone will finally figure out nuclear fusion, or the next pandemic will kill a couple billion people in overpopulated parts of the world allowing for some environmental recovery.
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May 12, 2020 11:28
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Tortilla Maker posted:Can anyone point me to a primer on backdoor Roth IRAs? Backdoor Roth IRAs are used in cases where either you are above the income limit to make a normal IRA contribution. Everybody can contribute up to $6,000 annually into an IRA (more if you're over 50), but only some people are eligible to take advantage of preferential tax treatment. Both traditional IRAs and Roth IRAs have income limitations (although traditional IRA limits only apply if you have a workplace retirement program like a 401k). If you do not meet those limits, you can still contribute to a so-called "non-deductible IRA." This is essentially just a traditional IRA, but when you file your taxes, you are not eligible for a deduction and instead you need to file form 8606 to denote the nature of the contribution. Once you've made the non-deductible IRA contribution, simply call up whoever manages the investment and tell them you want to do a "Roth IRA conversion." This is a common request and they'll send you some paperwork to fill out. (A few places like Vanguard even permit you to do it online, IIRC.) You will also need to file form 8606 if you do a Roth conversion in a given year. As long as the amount in the account as equal to or less than your initial investment, the Roth conversion will be tax free. Note, however, that if you have any other IRAs (except Roths), that this gets messy and you may owe tax.
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Jul 3, 2020 03:13
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Guinness posted:FWIW, I max out my 401k as a traditional, and max out a (backdoor) Roth IRA. I also do this. Even if we assume the government will need more revenue than the current tax system provides in the future, it's always possible they may turn to a VAT or some other method of raising additional revenue. (IIRC, most every other country has a national VAT in addition to income tax.)
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Aug 4, 2020 03:32
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Mu Zeta posted:Biden does want to overhaul the 401k system to help benefit lower income people So if you're tax rate is high (say 40%) but you get, say, a 25% credit, doesn't that mean you're potentially get double-taxed on a portion of your IRA? Also, I'd have to wonder if all the states would follow along (i.e., implement a credit as well)? Otherwise you could potentially either get double-taxed at the state level, or you have to do 8606-style carry forwards every year for each state. Seems annoying. (And I know your pain, I spent most of my working years so far at a small company that couldn't be bothered to even setup a SIMPLE IRA, and I even offered to do the legwork.)
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Sep 2, 2020 20:29
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Ropes4u posted:People should be forced to save through payroll deductions, how and where is beyond me. Rather than requiring you to opt-in, there's been a push in some areas to have 401(k) deductions by default, unless you opt-out. (Obviously doesn't help anyone who lacks access to a 401k.)
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Sep 2, 2020 23:24
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Oscar Wild posted:Defined benefit plans would be optimal but there isn't enough of an incentive for businesses to grant them right now, and congress lacks the desire to offer legislative incentives. Like pension plans? I'm not sure I trust some of these companies to be around that long, and people seem to get screwed when those are handed over to the PGBC.
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Sep 3, 2020 01:25
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literally this big posted:While there are a lot of banks offering high yield savings accounts like this with lots of restrictions and activity requirements, I don't want to have to actively think about my accounts on such a regular basis, and then suffer negative consequences if I don't live my life in a way that satisfies their requirements. So I looked and I compiled a list of all the no-bullshit super high yield savings accounts on there, and I've posted about the a few times before. FYI Service Credit Union is apparently currently offering a $100 signup bonus
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Sep 28, 2020 04:20
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Inner Light posted:Are paper checks still really the standard for this type of transaction? I'd hope in TYOOL 2020 we would have a viable alternative. I don't have any paper checks. You can always go down to Walmart and get a money order, or use Plastiq (fee applies).
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Sep 29, 2020 03:19
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Capt. Awesome posted:Trying to figure out what to do with an old nondeductible traditional IRA I've got floating right now. Originally put in $5500 back in 2016, stuck it in VSTAX or whatever, and then promptly forgot about it. I had planned on backdooring it or something, but never figured it out and didn't do it. Fast forward 5 years, and it's worth ~$10500 or so. Looks like I have about ~$500 or so in dividends, and another $4.5k or so in capital gains. IIRC, you'd file an 8606 this year and basically subtract the prior basis from years back from the amount you converted to Roth, and that amount would be taxable. Keep in mind if you have any other non-Roth IRAs, this becomes more complicated. On another note, does anyone here have any suggestions for/against Solo 401(k) providers, or have they done Solo 401(k)s that permit voluntarily post-tax (not Roth) contributions? A few friends of mine and I have 401k(s) at work and have been talking about this as a way to increase retirement contributions from our individual respective side-gigs. SIMPLE/SEP IRAs are not desirable due to lower limits and since they complicate backdoor IRAs. Small White Dragon fucked around with this message at 06:55 on Dec 29, 2020 |
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Dec 29, 2020 06:34
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GhostofJohnMuir posted:i'm trying to determine the best tax advantage account setup for my personal situation First off, congratulations, you are way ahead of the game for most people in your situation. That said, I am not familiar with CalSavers (although I also worked at a place in CA without any sort of retirement benefits offered) but if that doesn't work for you, you can generally open an IRA somewhere else and have it auto-debit your account on a certain day. GhostofJohnMuir posted:recently i've become aware of the potential benefits of an hsa, and i do have a hdhp that would qualify me This is a great setup if you're healthy enough to benefit from it. You can take money out now for medical expenses and it's totally tax free. Two things of note: 1. Does your employer allow direction contributions to an HSA? Because these may be exempt from FICA (social security and medicare tax) if so. 2. California does not adhere to federal tax law for HSAs, so those contributions (and any growth) are not tax exempt on your state return. GhostofJohnMuir posted:i know i'm in a low tax bracket now, and i pray that i'll be in a higher bracket later in life, so the roth has some advantages, but my understanding is that a traditional ira is generally superior if you're re-investing all of the tax savings. also is the roughly 5 year delay for when penalty free withdrawals can begin with an hsa vs a roth something i should be concerned about? I think the tax bracket that would matter is when you retire, and do you really expect that to be higher when you retire? Opinions will vary, but I think if the tax rebate of the traditional IRA enables you to put more away, then you should pursue that. As another sidenote, you might be able to claim the retirement savers credit. (I think you can subtract out HSA and traditional IRA contributions and some other things when calculating income subject to it.). Probably worth looking into, might net you a free couple hundred bucks.
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Dec 31, 2020 04:26
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I'm curious, what would people consider "a conservative mix of stock and bonds" for the last box?
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Jan 11, 2021 04:18
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fart simpson posted:https://earlyretirementnow.com/2016/07/20/lower-risk-through-leverage/ If I have the option to plow a bunch of money into a Roth 401k + Roth/backdoor Roth (or a mega-backdoor Roth 401k), is there any reason NOT to go that route, assuming the fund options don't suck? (As compared to other saving/investment options.) Small White Dragon fucked around with this message at 08:25 on Jan 15, 2021 |
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Jan 15, 2021 08:16
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MJP posted:My wife is getting a promotion and a raise, and it puts us to the point where we have reduced Roth IRA contribution limits. Good problem to have If you're at a high-earning point in your life, you MIGHT be better off with some of all that going towards traditional pre-tax 401k contributions. If you're maxing that and if you don't have a lot of money in traditional IRAs, start taking advantage of the backdoor IRA on top of that.
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Jan 19, 2021 23:01
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MJP posted:We have yet to both hit the $19,500 per person 401k contribution limit. Should we both be maxed before looking into backdoor Rothing? Assuming you're hitting the max of any available match, it's really a personal preference.
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Jan 20, 2021 15:36
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Pollyanna posted:I have about 300k in various IRA, 401k, and post-taxed accounts, and apparently without further contributions it will grow to like 300% of its initial state assuming 3% yoy until 2055. I’m considering lightening up on the non-401k/IRA contributions so I can get a nicer apartments. 401k and IRA contribs have to continue tho, cause that’s apparently a pretty light amount of money without the additional contributions. Very nice. How long has this taken you, and has it been at a fairly consistent annual investment amount?
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Jan 28, 2021 22:06
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Roumba posted:Why do some 401(k) plans/providers allow after-tax contributions, but not all? I imagine they would want as much of my money as they can get, but they choose not to sometimes? I believe it's a fairly recent option, and it's not offered by default in a lot of plan prototypes. Also, by allowing contributions beyond the $19,500, you open yourself up to "means-testing" problems (where you may have a problem if the plan too heavily offers highly compensated employees.)
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Feb 3, 2021 06:03
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Raskolnikov2089 posted:If my new job doesn't have any employee match for 401k, should I just focus on my Roth first? This depends on your income level and the quality of funds available in your 401k. (And maybe also if you expect to move when you retire.) If the funds in the 401k are not great (or have high fees), then definitely Roth. Otherwise: If you are early in your career and you expect your income to go up, the Roth is probably advantageous to lock in the low tax rates now. On the other hand, if you are in the peak earning years of your career, the pre-tax 401k is probably more advantageous. Beyond this, if you expect you might move in retirement, consider the relative tax rates. For example, if you live in California (a very high tax state) but think you might retire to Nevada (a very low tax state), the pre-tax 401k is significantly advantageous.
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Feb 3, 2021 20:10
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The Big Jesus posted:Yea BUT THEN WHAT Enjoy yourself
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Feb 4, 2021 01:12
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bawfuls posted:The max annual IRA contribution is $6000. If you are putting 25% of your paycheck into an IRA and not going over the annual limit then you are presumably making less than $24k/yr. Your present tax rate is thus quite low and you should absolutely put it into a Roth instead of traditional IRA. Congratulations on being able to contribute to a tax advantaged account while making so little, that’s not easy. If you are really funding an IRA with that low of an income, do make sure to claim the Savers Credit.
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Feb 4, 2021 22:13
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jokes posted:I can also mirror the sentiment that doctors think they’re good at also every thing else. Lawyers to a lesser extent. Holy poo poo doctors are the worst with money though, Jesus Christ. They end up being “fine” financially but if they would pull back on the ego for like a second they’d have so much more money when they’re old. Doctors and lawyers are pretty much all the bad examples in the Millionaire Next Door.
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Feb 5, 2021 06:46
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pmchem posted:I made an semi-effort post over in the stocks thread about SCHX, the Schwab U.S. Large-Cap ETF: https://www.schwabfunds.com/products/schx I've heard about SCHG, I'm trying to figure out what the difference is.
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Feb 5, 2021 19:43
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Herr Tog posted:Thank you so much, could I move it to a trad IRA with a credit union and still pick stocks I am invested in? Others will undoubtably comment on the stock picking aspect of this, but just to note two things 1) Don't do this if you might ever want to do backdoor Roth IRAs. You'll get a tax hit in the conversion. 2) In the unlikely case you get sued or declared bankruptcy, 401ks have stronger legal protection than IRAs.
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Feb 5, 2021 19:50
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punk rebel ecks posted:I guess what I'm really asking is would it be better for the government to just issue everyone 401k accounts rather than just focus on increasing social security? Social security is a big part of the deficit whole 401k would be far cheaper for the budget. It might be useful if everybody knew how to manage their 401ks, but most people don’t so even if they have one, they might be badly managed/invested.
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Feb 10, 2021 22:06
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Space Gopher posted:Cuts to public higher education driving tuition increases way over inflation really hosed the past couple of generations in a unique way. The good news is that state and federal support is so low, the pattern can't continue! You say that, but I'm sure universities will find new and exciting expensive things to waste money on.
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Feb 15, 2021 00:46
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Although not quite as high, tuition increases at private, non-profit universities have also vastly outpaced inflation, which suggests there's probably more at work there.
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Feb 15, 2021 04:43
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Absurd Alhazred posted:And I'm going to be honest, I'm not comfortable with using weird loopholes (some of which should have been closed by Build Back Better, apparently!) to get more tax benefits. Honestly, and we can bitch about tax law all day, but a lot of this was caused by a loophole abused by the ultra-rich that the final versions of Build Back Better didn't actually close. ...But then again, seems like claiming to close tax loopholes while actually making sure the ultra-rich are unaffected seems to be the MO for a lot of Democrats these days.* * this statement is not intended as an endorsement of any opposing political party.
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Jul 2, 2023 08:07
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nelson posted:It’s less paperwork and better for cashflow to use it for expenses but if you are already maxing out your other tax advantaged accounts and have money left over it is better to pay cash and save receipts to take out the money later. What's the advantage of waiting, vs taking it out now (tax-free) and then re-investing it somewhere else? Maybe it's just me, but I worry about remembering expenses and still having legible receipts for them many years down the line -- plus possible changes to tax/health law.
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Aug 11, 2023 19:21
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Any reason not to roll an old solo 401k into the 401k of a new job?
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Aug 15, 2023 03:25
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Vesna posted:It's the investments in my former employer's (non-Fidelity) 401k that are all sitting at the 0.4-0.6% range, so I feel like it'd make sense to roll them over to my current employer's Fidelity plan and shove them into the same mix? 
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Sep 7, 2023 08:43
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Not a Children posted:I recently had a pow-wow with my 401(k) administrator (through Vanguard), a service offered for free through my employer. I've been lucky enough to be able to consistently max out my 403(b) and Roth IRA, and am trying to chart the best course for early retirement. Since I started my career I've been using pretax 401(k)/403(b)s, and ROTH IRAs as is the general wisdom. The advisor I spoke to was of the opinion that because I can afford it I should contribute to a Roth 403(b) rather than contribute with pre-tax income to reduce my taxable income in the future. I'm in my mid-30s, so it's not unreasonable that I'd be making more later on. I personally like to hedge my bets and do a bit of both (except for IRAs, which are all Roth to avoid messy conversions), especially since my income now is probably higher than it will be in retirement. Also, while I don't expect it to happen, there's always the possibility that a future Congress could gently caress around with Roths, whereas it's highly unlikely and logistically difficult for them to go back and take away your deduction from many years ago.
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Nov 11, 2023 08:34
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Jabarto posted:I worded that poorly, I was shocked to see a 401k with such low fees. 401k's tend to be lovely in general and getting 0.08 on one is amazing. I have a target date fund at Fidelity that's at 0.2% Which fund is that? Fidelity charges us a 0.65% fee for their "Fidelity Freedom" funds, which seems high to me but not obscenely high.
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Nov 28, 2023 08:44
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SamDabbers posted:Fidelity is sneaky. They also have "Fidelity Freedom Index" target date funds which are the same asset allocations as the "Fidelity Freedom" ones but composed of their low cost passive index funds instead of the expensive active equivalents. I'm kind of curious what Fidelity 401k users here recommend. Here's the options we have. (Large image I had to stitch together, so I won't link it inline.) Normally I'd go with the target date fund, but 0.65%?
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Dec 2, 2023 04:30
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(I also just noticed the BrokerageLink option, which I don't think was there last time I checked.)drk posted:FXAIX + Thanks! CubicalSucrose posted:All-in FXAIX depending on your age and risk tolerance and rest of your portfolio and target asset allocation. A lot of my 401k is pre-tax, but I do also have a smaller Roth IRA, much of which is invested in Vanguard ETFs (and a couple older mutual funds I invested in when I first started, although now I'm thinking I should ditch those). IIRC, the old adage is you should keep the more aggressive stuff in Roth.
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Dec 2, 2023 05:26
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