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I’m maxing out my 401k and IRA contributions, what’s the next best place to put “don’t wanna think about it until retirement” money? Is it just buying value funds in a normal brokerage account or are there other good options?
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Feb 28, 2020 18:09
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KillHour posted:If I do a backdoor Roth conversion for 2019 but I've already filed my taxes, do I have to file an amended return? I don't remember which year you have to file the 8606 in, but I do know that if you should have done it you don't need to amend your return. You can just mail the 8606 in separately.
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Apr 18, 2020 02:09
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If I'm reading things right, I can buy a Vanguard target date fund in a Vanguard IRA for free, or I can buy one in a Fidelity IRA for $75. Everything else I have is with Fidelity, and it would be nice to have everything in one place. It's free, albeit annoying, to transfer between the two. Am I missing something, or is the optimal strategy here to make a yearly purchase in a Vanguard account and then transfer it over? Because $75 feels right on the line of whether that's worth the hassle.
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Apr 18, 2020 19:38
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H110Hawk posted:Buy Fidelity funds if you are with Fidelity. Their target date funds have way higher expense ratios. Should I not be as married to them as I am? I like the idea because I'm pretty lazy and also if I start making active decisions I'm pretty sure I'm going to make bad ones.
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Apr 18, 2020 19:48
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Guinness posted:??? Oh, I didn't realize that each of these comes in both an actively-managed and an index version, and I was looking at the wrong one. Thanks!
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Apr 18, 2020 20:18
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MetaJew posted:Can anyone give me some quick advice as far as setting up my 401k contribution amount after being laid off from a previous employer? To date, I've contributed a little under $4,400 while at my previous employer, through March 31. I now need to set up my 401k at my new employer, and of course, the only option I have is to choose a percentage of my pay to be contributed to the 401k until I hit the $19,500 limit. Talk to your new company’s payroll department. This is a common problem and they should have a solution for it. They may require documentation of your existing YTD contribution. If they don’t, call Charles Schwab and ask.
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May 6, 2020 14:15
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MetaJew posted:I spoke to HR and to Charlse Schwab. Both told me that they can't do it, and I'll have to self manage it. Since the contribution is only from base-pay and not including any bonuses, I think I can calculate approximately to max it out-- and I may miss out on putting in a few tens of dollars, but the employer i think matches 3-6%. Somewhere in there, so I'll get the match, for sure. That’s extremely weird - if you overcontribute, CS is required to give you the excess back and the process is a pain in the rear end for everyone so I’m surprised that they don’t have a way to prevent it in the first place.
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May 7, 2020 00:01
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Why might the turnover rate for FDEWX as shown in Fidelity's fund browser thing be way different from the same fund's turnover rate as shown everywhere else, like (for example) Yahoo or Morningstar?
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May 14, 2020 23:17
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Thanks, that’s super helpful! I stumbled across this number while trying to figure out what to do with the long-term money in my taxable brokerage account. Target date funds appeal to my extreme laziness but I’ve been reading that high-turnover funds are bad fits for taxable accounts because they generate a lot of taxable events.
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May 15, 2020 01:33
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Keep in mind that tax law might be different by the time you retire. By all means, plan ahead, but it's not as simple as just solving a mathematical optimization problem.
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Jun 7, 2020 22:43
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actionjackson posted:Oh of course I totally agree, just thinking about it that's all. You know that tax brackets are applied marginally, right?
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Jun 7, 2020 23:41
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Ulf posted:One thing I didn’t see made explicit (though I probably just missed it): This being said, you can still transact freely within the account, which is a thing that confuses some newcomers. For example, you can sell your funds in the account to get cash and just leave that cash in the account. For long-term, passive investing, there aren't many good reasons to do this, but it's not like once you put money in you can never touch it again. You just can't get it out.
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Jun 19, 2020 04:10
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My company gives bonuses in both RSUs and S-SARs. (It’s already public.) The RSUs I plan to immediately exercise and sell upon vesting, but I’m not sure how to think about the SARs. I get how they work but I’m having trouble mapping that to my own risk profile. For example, if I also exercise and sell them immediately upon vesting, they’re effectively crappier RSUs. It might just be that that’s the case and it sucks, but nobody writes “How to best utilize SARs” guides.
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Jun 27, 2020 00:51
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H110Hawk posted:Having googled and read several sentences on what a S-SAR is it sounds like an option with different complications in that they just give you the upside in compensation. Sounds like money to me, but you don't have the option to hold them longer to make more money. It's basically a profit sharing plan. Cash them out like you would any other equity in the company. Here’s where this falls down for me: Say they’re underwater when they vest. Obviously I wouldn’t exercise them then, because it’d be throwing them away for nothing. But how much of a gain do I wait for? They take ten years to expire.
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Jun 27, 2020 16:28
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Anti-Hero posted:I changed jobs two years ago and have been dodging the paperwork requests to do something with my old 401(K) balance. Why do you need to do anything with it? Can’t you just leave it there?
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Jul 10, 2020 23:28
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I thought that the mega backdoor roth precluded use of a traditional 401k.
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Jul 13, 2020 17:28
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H110Hawk posted:Megabackdoor is using the money above and beyond the $19,500 limit, up to the max "all sources" limit of $57,000. At my job you have to max the "individual $19,500" limit first, trad or roth doesn't matter, before you can start in on the After Tax Mega Backdoor Roth 401k. Just make sure you understand your matching situation, and any trueups, because every dollar counts here up to $57,000. (As always, this excludes any outside rollovers into your 401k, that money was counted against the relevant years limits when you contributed it.) Yeah I just it thought it worked like a regular backdoor Roth, where you have to convert everything into the Roth IRA. I didn’t know you could only convert your after-tax contributions.
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Jul 13, 2020 22:20
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dexter6 posted:1. All of your 401k money is in one place (so less likely you’d lose account of it, you’d be surprised how many people have random accounts all over the place...). Note that this is pretty well mitigated already by Fidelity holding both accounts.
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Jul 16, 2020 01:34
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When I explained the backdoor Roth to my girlfriend the very first thing she immediately googled was “why is the backdoor roth legal.”
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Sep 2, 2020 19:07
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My new job gives me access to the mega backdoor Roth with automatic daily conversion which is like a goddamn tax loophole-exploiting robot. I think I can max it out too, so I'm maybe finally on the path to feeling caught on up my retirement savings. Now I just need to figure out how to convince my girlfriend to save anything at all for retirement...
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Dec 18, 2020 00:13
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Goons really can make any thread about food.
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Jan 11, 2021 05:57
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fart simpson posted:here’s a good primer on it, and this is interesting too: I’ve read this twice now and it still seems like “if you make more money, that’s effectively like not paying taxes!” which can’t be right.
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Jan 14, 2021 15:37
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fart simpson posted:what’s wrong with that idea? more specifically, it’s “if you make exactly as much more money as you would pay in taxes, then it’s equivalent to not paying those taxes” Why only make that much more? Why not double it? Triple it?
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Jan 14, 2021 16:15
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fart simpson posted:because the goal there is to offset taxes. also the key to it all is understanding this chart Why is offsetting taxes the goal, though, when the method is just “make more money?” That chart doesn’t even have tax rates on it, which is my point.
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Jan 14, 2021 17:01
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Mad Wack posted:the point is to create roth ira like conditions in a taxable environment, im extremely dumb but im assuming taking on even more leverage would substantially increase risk thus defeating the original purpose And that makes sense. But the original piece doesn’t tie tax rates to risk at all - it just picks your marginal tax rate as the spot to target without doing any evaluation of the risk of that particular spot, which is what confuses me.
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Jan 14, 2021 17:37
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skipdogg posted:2) I have an HSA account with a couple thousand in it from the old job with BofA. Is there anywhere I can move this to avoid the monthly maintenance fee? New company uses an HRA system which they fund, so I believe I have to use all the HRA funds first and then I can use the HSA funds. I won't use all the HRA funds they offer in a normal year. I know it's only like 30 bucks a year in maintenance, but hey, 30 bucks is 30 bucks. Fidelity offers a no-fee HSA you can roll your existing one into.
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Jan 14, 2021 18:28
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smackfu posted:Another back door Roth question: what’s current best practice for how long to leave it in the trad IRA before transferring? I know some people do it ASAP while others think one month or six months makes it look more like a legitimate two step transfer. But I vaguely remember that there was some recent ruling or tax bill that legitimized the backdoor Roth and might have changed this? Footnotes 268, 269, 276, and 277 of the 2018 tax bill explicitly condone the process so nobody's really worried about step-transition violations anymore.
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Jan 18, 2021 17:10
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Quaint Quail Quilt posted:I plan on doing both, I'm not sure if I can max both until my house is paid off though I could easily be misreading this, but you can’t “max both.” The IRA contribution limit is for traditional and Roth combined.
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Jan 19, 2021 15:47
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Today I learned about roll-ins, which is when a 401k plan lets you roll an IRA into it. Normally this is weird to do, but I think I'm going to use it for one particular useful purpose: I have a past 401k with both pre-tax and Roth components. I can roll it out into IRAs (one traditional, one Roth) and then roll the tIRA into my current 401k. This way I get the greater IRA control of the Roth portion without running afoul of the pro-rata rule when backdoor Rothing in the future. Do I have this right? Are there gotchas I'm not anticipating?
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Jan 28, 2021 00:39
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raminasi posted:Today I learned about roll-ins, which is when a 401k plan lets you roll an IRA into it. Normally this is weird to do, but I think I'm going to use it for one particular useful purpose: I have a past 401k with both pre-tax and Roth components. I can roll it out into IRAs (one traditional, one Roth) and then roll the tIRA into my current 401k. This way I get the greater IRA control of the Roth portion without running afoul of the pro-rata rule when backdoor Rothing in the future. Do I have this right? Are there gotchas I'm not anticipating? Update on this: Apparently some 401ks that allow roll-ins only allow them from a particular type of IRA, called a "rollover" or "conduit" IRA that you can create from a rollover out of a previous 401k. So if you want to do this, make sure to check if that requirement exists! (I didn't get burned myself because my 401k allows roll-ins from regular IRAs, and also because the rep I talked to knew this fact, which is how I learned of it.) The process is not yet complete, but it's begun!
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Jan 29, 2021 01:45
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Kefit posted:[*]Add a traditional IRA to my Vanguard account and max out my tax benefits for 2020 and 2021. Unfortunately, since I make more than $65k a year, and since I have a 401k, my limits here are fairly small. Going by the calculator here it looks like my tax deductible limit is $3600 for 2020, and probably $4200 for 2021. So maybe just dump $8k into a traditional IRA and call it a day for now?[/list] The IRA contribution limit is for traditional and Roth combined. You don’t get more space by adding another account.
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Jan 30, 2021 12:30
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Kefit posted:I guess I'm kind of screwed then when it comes to simple tax advantaged long term investment vehicles for the cash I have sitting my bank account? Would it make sense to open a trad IRA and just not enjoy the tax benefits, so that I can at least get some growth out of this cash? You could just put it in a taxable brokerage account. (I would.) I'm not sure what you mean by "open a trad IRA and just not enjoy the tax benefits" - if you contribute to it beyond your annual cap, even with after-tax money, the overcontribution amount will be taxed at 6% every year until you take it back out. It's not a good idea.
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Jan 30, 2021 22:44
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Kefit posted:Yikes, thanks for the info. I'll read up on IRAs more, but it's clear to me now that anything with the term "IRA" is off the table now that my Roth is maxed. Yeah, pretty much. You might want to read up on tax-efficient investment allocation.
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Jan 31, 2021 01:07
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jokes posted:Goone Wisdome is to check out Vanguard's offerings. Going with them is rarely a bad idea, although the entire company shares a single Apple 2 computer that they bought at a garage sale. FWIW, all my retirement accounts are with Fidelity and I’ve been consistently impressed with both their technology and their customer service.
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Feb 2, 2021 02:40
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moana posted:Your checking account won't ever crash 50% in value. Keep your emergency fund separate from your investing. Well, you could keep it in a cash fund within the brokerage. You might even be able to get FDIC protection. It would require discipline to keep it there though, and for minimal benefit.
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Feb 5, 2021 21:56
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thalweg posted:So I have a weird tax question about Roth IRA contributions. For 2020, due to not having a job most of the time, my contribution limit was apparently $2,733. I didn't know that you could have a lower limit by not making enough taxable money; I'd only heard of the high income cutoffs. But I contributed $6,000 out of savings into the IRA, not knowing this (thank you tax return website for educating me). If you're asking whether it's a good idea to ignore tax law and knowingly file a false return, then no, that is not a good idea and you should probably not do it. It is also a bad idea to leave money in a place that is taxed at 6% per year until it's all gone. You should withdraw the excess contribution before you file your taxes (and start ASAP, as it may not be the smoothest process, because it doesn't happen often). Whoever you have the IRA with will have a process for doing this - contact them and find out.
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Feb 8, 2021 23:00
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Is there some catch to the Connexus high yield checking account? 1.75% up to $25000 in a checking account as long as you spend $400/mo seems like a much better deal than I’ve seen anywhere else, and donating $5 to join the credit union isn’t onerous.
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Feb 10, 2021 16:54
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spwrozek posted:The catch is using a debit card. No thanks. Is there some problem with debit cards I’m unaware of? It’s $400 you don’t get credit card rewards on each month, but that doesn’t seem like enough to make the whole enterprise not worthwhile.
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Feb 10, 2021 17:43
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ROJO posted:Can someone clear something up for me regarding 401k in-plan conversions to Roth? My 401k is through fidelity, and I have already been maxing out a $19.5k Roth contribution, and get a 10% company match, and am fully-vested in everything. It turns out that our plan recently enabled you to choose automatic, daily, in-plan conversions to Roth for after-tax contributions if I want. I started doing this (also with Fidelity) a couple of paychecks ago and haven't had any problems. Their phone support is pretty good at walking you through it. H110Hawk posted:You also must front-load your regular salary deferral ($19,500) before you gain access to the rest of it. Next payday I will hit the Traditional 401k limit and start in on after tax at a much less breakneck pace spread evenly through most of the year. I don't have to front-load, so this might be plan-specific. In fact, the Fidelity rep I talked to specifically recommended against it, because some companies refuse to front-load their match even if you front-load your contributions, so you can miss out on matching dollars if you do it.
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Feb 11, 2021 01:32
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Everyones Favorite Poster posted:Thanks so much for the advice! Can you elaborate on the advantages of rolling over from a traditional IRA into my Roth rather than doing a direct contribution to the Roth (or point me to a place where I can read up on this)? Is it mostly for the sake of simplicity for tracking my overall IRA contribution? Sorry for my ignorance on this. There's effectively no income restriction on Roth IRA contributions because if you run into it you just use a Backdoor Roth to get around it. It's dumb as hell but not doing it leaves money on the table.
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Feb 11, 2021 05:55
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