|
I've been working for a company for about a year and recently they've suddenly asked if I would want to have part of my pay sent to a different account than the Chinese savings account that it was all previously accumulating in. This has prompted me to suddenly realize that I should probably figure out something with a longer view towards the future. My understanding is that there is no 401k or equivalent available to me, and so is what I should be doing basically going to somewhere like Vanguard and opening up a Roth IRA and filling it up? And am I correct in understanding that the benefit of a Roth IRA for me is that I can invest it and then much later if there are gains I can take those gains without tax? Something like a traditional IRA doesn't however make so much sense for me as using it for deductions is of no benefit to me now. Some other background information that might be relevant: I'm 24, US citizen, working and living in China.
|
#
¿
Jan 16, 2009 08:01
|
|
|
|
| # ¿ May 7, 2024 02:15 |
|
|
zmcnulty posted:Not exactly. If you make enough money overseas then you're over the Foreign Earned Income Exclusion (FEIE). Think it's $95K or so for 2011. Thus subject to both US taxes and taxes where you live. Anything you make over the FEIE is considered "taxable income" by the US so you are eligible to contribute to an IRA (maybe).
|
|
#
¿
Aug 11, 2011 07:00
|
|
|
zmcnulty posted:Yes, that's correct. Given that I have basically zero AGI on account of living abroad, is there any special thing that I should be looking at instead? What other gotchas might I be missing on account of being abroad?
|
|
#
¿
Aug 12, 2011 11:28
|
|
|
zmcnulty posted:There's the "kick in the rear end tax," part of the HEART Act, if you ever try to expatriate and have significant assets ($2MM or average income of $139k/year for past 5 years). Haha thanks for the reply and it seems I certainly don't have those to worry about, neither having that much money nor planning to expatriate. But since the Roth IRA is out and as far as I know I don't have any employer-related anything, what is there for me to do in terms of contributing towards retirement? Just buy some indexes and hold indefinitely?
|
|
#
¿
Aug 16, 2011 02:09
|
|
|
zmcnulty posted:...
|
|
#
¿
Sep 16, 2011 03:20
|
|
|
After contributing maximums to 401k and Roth IRA, what is a good thing to do with the money that accumulates in the savings account? Throw the "extra" into a non-retirement Vanguard account?
|
|
#
¿
Jun 28, 2015 17:54
|
|
|
pig slut lisa posted:If you think there's a decent chance you'll have college- or juco-bound kids, you may consider starting a 529 plan Leperflesh posted:Beyond that, yeah you're looking at taxable investments, in which case, you'll want to balance your non-sheltered investments vs. your sheltered investments with an eye to tax-efficiency in the non-sheltered portion of your accounts. Probably by any reasonable standard I am earning a lot of money, but, I also live in San Francisco at the moment so home ownership is not on the table now or perhaps ever. Mr. Glass posted:before jumping to taxable accounts, see if your 401k plan has an after-tax option, which will allow you to contribute up to the total $52k cap. it's also convertible to roth.
|
|
#
¿
Jun 28, 2015 20:21
|
|
|
What are the reasons one might or might not choose to move funds from a 401k account from a previous employer? My wife has a pile sitting in her previous company's fidelity account and I was idly considering moving it all, but wasn't sure what advantages or disadvantages there might be.
|
|
#
¿
Aug 18, 2015 00:03
|
|
|
Thanks for the answers! Currently I think it's all in a 0.11% ER target retirement fund. Having just now checked this I see there is also a .10% "management fee" which I hadn't noticed before...
|
|
#
¿
Aug 18, 2015 03:50
|
|
|
Mr. Glass posted:before jumping to taxable accounts, see if your 401k plan has an after-tax option, which will allow you to contribute up to the total $52k cap. it's also convertible to roth. My wife is changing jobs and her new employer's 401k company (Vanguard) allows her the choice of Traditional 401k or Roth 401k. She'd nearly hit the maximum contributions for the 401k at her previous job so what considerations are there when we're making choices here for the new one? When rolling over can you change from one kind to the other? Under what circumstances would we want to, or want to avoid changing?
|
|
#
¿
Oct 4, 2015 18:52
|
|
|
In breakdowns like that one with it's real estate chunk, what does that usually get taken to mean? Own an investment property? Buy up some chunk of REIT? Presumably it does _not_ refer to the house one lives in since that is not something one should view as an investment, usually?
|
|
#
¿
Jan 6, 2016 18:16
|
|
|
antiga posted:there's nothing obvious you need to be saving after tax dollars for, eg house Not really referring specifically to the quoted post, but when saving after tax dollars for something (ie a house) does that mean just dump it into a savings account until some sufficiently high dollar threshold is met? What vehicle is preferred here? I ask because before we had been thinking about saving for a house we were basically just dumping savings into Vanguard funds and forgetting about it. Is there a reason we shouldn't keep on doing that?
|
|
#
¿
Mar 4, 2016 22:33
|
|
|
Joiny posted:Well most people don't want to expose their savings for a specific purpose (house) to the market because of bad performance which can skew your timeline. Sure, you should eventually make your money back in the market over a long term but what if you want to put a downpayment on a house in less than 5 years and the market performs poorly, wiping out 20-50% of your savings? Do you just wait until the market recovers (could be a decade)? I guess house prices and market performance are also either sufficiently uncorrelated or the market crashes way out of proportion with housing prices that this makes sense. It's irrational but it feels weird to have this big chunk of change sitting there not doing anything, but I guess not fast approaching zero is a kind of doing nothing I should be happy about, rather than some misplaced fear of missing out on it going up. Probably time to figure out moving some of this stuff into cash then as this plan for a house gets more concrete.
|
|
#
¿
Mar 4, 2016 22:45
|
|
|
My Q-Face posted:If you're putting in enough at a time and have a definite timeline, Municipal Bonds with a coinciding maturity date are a good option. Plus, if they're issued in your state are (mostly) tax free and with interest rates up, you can probably buy some on the secondary market at a decent discount, and you will certainly get a better rate than a savings account. No definite timeline yet. That said, how much is "enough" re quoted bit, and how does one go about doing that? Edit: since all this money is in Vanguard already would it be dramatically more expensive to just shift it all to vcaix or its admiral equivalent? I am in CA for the moment anyway. waloo fucked around with this message at 20:58 on Mar 5, 2016 |
|
#
¿
Mar 5, 2016 19:17
|
|
|
My Q-Face posted:Edit: also, whether it's tax free or not depends on if you're a resident: i.e. You pay taxes in California, not just if you live there but are a resident elsewhere. Otherwise your home state will want a piece. (But you can do Muni bonds/funds in your home state tax free even if you're temporarily living in CA) I am a resident of CA now but just not particularly wedded to staying. Suppose I manage to get 100k saved up in these CA bonds. If I end up cashing out to buy a house in CA then great, tax advantages abound. What if I end up moving to another state? How does that work out tax wise?
|
|
#
¿
Mar 10, 2016 16:59
|
|
|
pig slut lisa posted:For my part, my wife and I plan to save for college with a mix of 529 and taxable investments. This is a hedge against oversaving for college. 529 funds must be spent on higher education expenses or else earnings are subject to taxation and penalty, so doing all the saving in a 529 seems risky due to the possibility of the kids getting scholarships, attending an inexpensive school, not attending college at all, etc. I can't speak to the other scenarios, but, I thought for scholarships if you get those, you get penalty-free withdrawals from the 529 for the amount of the scholarship?
|
|
#
¿
Apr 16, 2016 14:13
|
|
|
Ok, I'm reading the "Principles of tax-efficient fund placement" linked in the OP and I want to get a quick sanity check to make sure I'm thinking about this correctly. My wife and I have up until just recently been basically dumping savings into this pile of money we loosely refer to as "the down payment". Having now hit some arbitrary threshold where we don't want to keep adding to that, it seems it is time for us to think about tax efficiency in where to accumulate money in taxable accounts since we are optimistically looking at having a bit beyond our combined 401k and Roth IRA contributions to allocate this year. At this point it seems like what we should be doing is loading up the bond portion of things in the tax-advantaged space (assuming we have access to good options, I am not sure on this yet) and emphasizing stocks, especially the internationals, in the taxable stuff. This seems to be the very very condensed version of what I'm getting out of reading that page, with many many paragraphs dedicated to explaining why this may not be appropriate for everybody and criticisms and so on. Is there any point in actually changing the existing mix of where things are at in our already-contributed-to "retirement" accounts, or just use future contributions to tilt the scale in the above described direction?
|
|
#
¿
Apr 17, 2016 23:06
|
|
|
Neon Belly posted:If you look at your holdings across all accounts as one portfolio, you'll probably have to rearrange slightly to get the portfolio balance you want. It's also worth noting that it's easier to rebalance in tax advantaged accounts than in taxable, because you don't have to worry about triggering a taxable event when balancing in those. Ok, cool that makes sense. Something to ask about that occurred to me while I was turning this over in my head: for those of you who have setup 529 accounts, do you treat these as entirely separate from your other accounts ("this is for my kid to use to go to school") or as another piece of your accounts ("I'm paying for my kid to go to school from one or many of my accounts so I'll use this as just another tax-advantaged account in my mix")? Or is this just a dumb question in the first place?
|
|
#
¿
Apr 19, 2016 05:00
|
|
|
Based on this last year and expected increases in income for me and my wife this year, I'm not sure if we're going to be hitting the restrictions on contributing to our Roth IRAs. Am I right in thinking that the safe way forward here for us to wait until the end of the year and see where we end up on this, and if it turns out that we are above the Roth income limits, contribute instead to Traditional IRAs? I've never looked into Trad IRAs before but I guess we just open up a new accounts in Vanguard for that, too?
|
|
#
¿
Apr 24, 2016 03:00
|
|
|
Mr. Glass posted:just do a backdoor roth and then it doesn't matter one way or the other If I am reading this and this right... is there any reason I wouldn't do this? What are the circumstances in which a traditional IRA is a better choice than Roth? The case where I believe that our future tax rate is going to be lower than it is currently? I feel like I'm missing something here because if that were true would I still obviously want to backdoor roth?
|
|
#
¿
Apr 24, 2016 04:28
|
|
|
Desuwa posted:A Roth IRA is just plain better than a non-deductible traditional IRA, though. Compared to a deductible IRA you're making a tradeoff, but if you're near/over the limit for Roth IRA contributions you're well past the limit for deducting IRA contributions unless you don't have a retirement plan at work. Ohhh this makes a little more sense to me; since we're in the case where it's not deductible converting is basically the strongly dominating move here.
|
|
#
¿
Apr 24, 2016 16:13
|
|
|
If one is considering backdoor roth ira contributions, it's better to roll old 401k into current employer's 401k than a trad IRA, right?
|
|
#
¿
May 17, 2016 19:32
|
|
|
I was reviewing the various options available to me and my wife in our respective 401ks and I had a question I wanted to run by here. How should wanting to minimize expense ratios be weighed against wanting a broader diversification? The example that came up for me was that there's a 500 index with an ER of .045 and then there's the "extended market" one with an ER of 0.07. Both of these would presumably count against the "domestic stock" part of our allocation or whatever, but what's a good model for evaluating the trade-off here?
|
|
#
¿
Jul 24, 2016 00:55
|
|
|
Ohh here I am being dumb. quote:Seeks to provide investment results that correspond to the total return stocks of mid- to small-capitalization United States companies So probably what i could do is just use both in some appropiate proportion to approximate a "total index" with the 500 standing in for large.
|
|
#
¿
Jul 24, 2016 04:29
|
|
|
baquerd posted:Does anyone have 5 billion USD lying around? I just found out about VFFSX and want in. An old 401k I used to have access to had VIIIX as an option. Didn't realize there was still another tier above even that! I guess technically there wasn't back then.
|
|
#
¿
Aug 23, 2016 06:05
|
|
|
Trying to get a quick sanity check before I start moving all this stuff around. Having ignored rebalancing, and tax efficient placement for some time now, I’ve gone over the options available to my household (me + wife) and I wanted to make sure that I’m thinking about this in the right way. We’ve got a bunch of accounts because of a history of past 401k accounts that we didn’t roll over as we’ve changed jobs. The options were mostly progressively worse and worse. Maybe not worse enough to justify the added hassle I have now, but oh well. Selections in each of these many varied accounts were mostly either into Target Date funds, combinations approximating target date funds, or in one case a disproportionately large pile of cash in a savings account. I’m reworking this in a spreadsheet with the goals of:
Tax implications of this rebalance should be light-to-almost-nonexistent because most of this is in tax-advantaged accounts already or just in cash. Going forward, we should be able to keep things in balance and in the appropriate accounts (i.e. tax-advantaged or not) by simply increasing contributions to whatever ends up light, I think. Is this all good? What am I not thinking about that I should be?
|
|
#
¿
Sep 3, 2016 20:57
|
|
|
monster on a stick posted:Very good, you've implemented the three fund portfolio in its most optimal form. I would use VEXAX instead of VMCPX+VSCPX as the completion index, assuming that is available to you. Thanks! I think at our current holdings relative to expected future contributions, the problem of being forced to sell VTIAX shouldn't come up so we should be ok. It'll be a while before our ability to rebalance by steering new contributions stops being adequate, I suspect. re: VEXAX, it doesn't appear to be an option. Though in re-checking I do see that VITSX is in there and I just missed it so as before while I guess I could save a couple bucks it'll probably be easier to just take the total index and forget about it.
|
|
#
¿
Sep 5, 2016 05:10
|
|
|
What are some circumstances under which it's right to be thinking about I-bonds? What about EE bonds? I don't really feel like I totally understand the use cases for these. That is, what's a usual sequence of decisions that one runs through and arrives at the conclusion "I should buy some/all of the I-bonds I can this year"? Have maxed out tax advantaged space -> want to buy some REIT and put in to tax advantaged space -> expect to be paying less taxes in 30 years -> buy those I-bonds to shift some bonds out of tax advantaged account in order to make room?
|
|
#
¿
Oct 26, 2016 16:58
|
|
|
Droo posted:With that said, there are a lot of very risk averse people over on the early retirement forums who like to maximize their iBond purchases every year. Not related to my first question but are risk aversion and early retirement specially correlated? Or is it that specific combo of risk averse AND early retiree?
|
|
#
¿
Oct 27, 2016 02:44
|
|
|
Ah ok, that makes sense. Thanks for the explanation!
|
|
#
¿
Oct 28, 2016 04:07
|
|
|
Accretionist posted:Any strong opinions on robo-advisors, like Wealthfront? When I last was reading about them it seemed unsuitable for me because of two things. First, the only thing it was doing that would be valuable to me is the loss harvesting since I am already pretty set in terms of occasionally rebalancing and keeping on top of picking an allocation. Second, I couldn't benefit easily from the loss harvesting because I wouldn't want to deal with keeping track of wash sales between my different accounts. If you put _all_ your portfolio with one then this benefit may be more meaningful. So ultimately if I understood it right, it was more cost for basically same service, so I passed.
|
|
#
¿
Dec 4, 2016 17:03
|
|
|
baquerd posted:Don't run IRAs through betterment, you can't tax harvest there and without that, betterment is just an expensive target date fund. Just use vanguard in the first place. Is it a wash sale if i sell in my taxable betterment account but also have a transaction for the same fund in my IRA or 401k or whatever else?
|
|
#
¿
Mar 7, 2017 00:44
|
|
|
Ok that's what I thought; so it seems like you either have to go all in to a robo harvester so you dont wash sale by accident or just avoid entirely to avoid the headache (i am in the latter camp due to present understanding).
|
|
#
¿
Mar 7, 2017 02:36
|
|
|
Gray Matter posted:I'd like to start a second long-term savings fund for my daughter, 3, that I can put a small amount of money in monthly (20-50 bucks). I figure now's the best time to start compounding interest for her when she's this young. She's got a 529 already so I'm looking for something not restricted to withdrawals for certain expenses. She can't have an IRA without income, so is there some other tax-advantaged vessel I don't know about or should I just open a custodial brokerage account and put it all in VTSAX? I'm curious about this as well, so far as I could figure out the only non-education-specific option was basically UTMA which isn't tax advantaged per-se besides maybe potential kiddie tax implications.
|
|
#
¿
Mar 8, 2017 18:58
|
|
|
Hutzpah posted:I'm shocked that it works so easy. I was always under the impression that you needed to constantly be watching it. This has been an educating evening. My employer has screwed this up before and resulted in overcontribution. Check around the time when you expect to hit max to make sure all is right.
|
|
#
¿
Mar 14, 2017 04:28
|
|
|
pig slut lisa posted:Ugh, that sucks. Did you at least find out before the end of the tax year? Yeah it all turned out ok since I had maxed out early in the year, I was able to catch and correct all of this in the same tax year. Still a hassle but not the worst case by any means.
|
|
#
¿
Mar 14, 2017 18:18
|
|
|
Stryguy posted:Any recommendations for 529 plans? What state are you in? Some may be better for locals instead of shopping around to Utah or NY or CA or whoever the cheap ones are now.
|
|
#
¿
Apr 2, 2017 02:45
|
|
|
Ah ok yeah I remember comparing a few and deciding for some reason I liked CA's option best. Maybe for some asset allocations it is cheapest? But really just compare the costs for a few and go with it.
|
|
#
¿
Apr 2, 2017 05:55
|
|
|
alnilam posted:Thanks. Here's another backdoor roth question. So far, that is until getting married, I've been maxing my roth ira and then saving the rest in a taxable account. I have no other tax advantaged space available to me - no 401k or anything. Can only put 5.5k in IRAs (all of them combined, not each) per year, not infinity. Not sure about conversion rules, will let somebody else provide correct info there.
|
|
#
¿
Apr 17, 2017 15:39
|
|
|
|
| # ¿ May 7, 2024 02:15 |
|
|
Motronic posted:They are typically exempt from fed and almost always exempt from state if it's a muni in your state. I had the impression that this is true of the interest, but not of the capital gains. What states exempt you from that on muni bonds?
|
|
#
¿
Jun 18, 2017 04:18
|
|