Search found 11711 matches

by FiveK
Thu Aug 05, 2021 2:38 am
Forum: Investing - Theory, News & General
Topic: How do you define your goals when considering Roth IRA conversion?
Replies: 51
Views: 3955

Re: How do you define your goals when considering Roth IRA conversion?

However, I was not able to reproduce Curmudgeon’s social security taxation results. Using the calculator here https://www.covisum.com/resources/taxable-social-security-calculator a couple whose only income in 2021 was $100,000 in SS has taxable income of $11,100—less than the standard deduction, so...
by FiveK
Wed Aug 04, 2021 11:20 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 192
Views: 16440

Re: Traditional versus Roth wiki update

No need to have a set of draft pages for what will likely be relatively few changes. Also not currently planning to delete things, just move them so the simple concepts are up front while complexity and details go either further down or to the examples page.
by FiveK
Wed Aug 04, 2021 7:30 pm
Forum: Personal Investments
Topic: American Rescue Act
Replies: 3
Views: 546

Re: American Rescue Act

by FiveK
Wed Aug 04, 2021 2:12 pm
Forum: Personal Investments
Topic: Should my mother annuitize?
Replies: 14
Views: 1719

Re: Should my mother annuitize?

It does not appear this annuity will provide a 4% return.

At least, =RATE(10*12,6610,-680000,0,0)*12 calculates 3.1%.

See How to use the Excel RATE function if unfamiliar with that.
by FiveK
Wed Aug 04, 2021 12:47 am
Forum: Personal Investments
Topic: Should my mother annuitize?
Replies: 14
Views: 1719

Re: Should my mother annuitize?

$6610/mo for 10 years is what one could withdraw from a $680K investment earning 3%/yr.

What are the rest of her finances (see Asking Portfolio Questions)?
by FiveK
Tue Aug 03, 2021 8:47 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: [**Update] - Metrics to Compare Roth Conversion Scenarios ??

^Thanks, that made it clear. You might take a look at this post regarding assumptions that need to be specified, and the two tools mentioned in the More complicated situations of the t vs. R wiki. The tax drag in a taxable account manifests itself in two ways: 1) annual taxes on interest, dividends,...
by FiveK
Tue Aug 03, 2021 5:31 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: [**Update] - Metrics to Compare Roth Conversion Scenarios ??

Not sure if anyone took a look at the Tax Drag Example spreadsheet posted upthread. Reposting to provide support for McQ that the drag is real and will be more noticeable over time. To see a demonstration of the Tax Drag in action, you can inspect this simple Excel model. The size and impact of the...
by FiveK
Tue Aug 03, 2021 1:48 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Withholding Estimator for Multiple Jobs
Replies: 2
Views: 196

Re: Tax Withholding Estimator for Multiple Jobs

The US and state income tax calculator - Bogleheads.org thread mentions several options. Often an "eye of the beholder" as to which is best.

Assuming single filing status, the numbers in the OP indicate ~$69K federal tax for 2021 (using the toolbox spreadsheet mentioned in that thread).
by FiveK
Tue Aug 03, 2021 1:00 pm
Forum: Investing - Theory, News & General
Topic: MarketWatch article about FIRE, 4% SWR and 30+ yr retirement
Replies: 70
Views: 5389

Re: MarketWatch article about FIRE, 4% SWR and 30+ yr retirement

It's all about the assumptions. As the article states (emphasis added) At a 30-year horizon, there is an 18% chance of running out of money. While low, this is higher than found in the original research, primarily because Vanguard assumed that stocks’ and bonds’ returns in the future would be lower ...
by FiveK
Mon Aug 02, 2021 7:38 pm
Forum: Personal Investments
Topic: New to investing! Any help so appreciated :)
Replies: 4
Views: 471

Re: New to investing! Any help so appreciated :)

It really depends on your desired Asset allocation.

A good place to get started is - no surprise here ;) - the Getting started wiki. Good luck!
by FiveK
Mon Aug 02, 2021 7:29 pm
Forum: Personal Investments
Topic: Retired Firefighter with self employed spouse
Replies: 2
Views: 662

Re: Retired Firefighter with self employed spouse

If they file MFJ, he can make IRA contributions based on her earned income (aka compensation). A pension is not Compensation - see that link for more. See also IRA Deduction Limits | Internal Revenue Service and links therein for details. They could use Open Social Security: Free, Open-Source Social...
by FiveK
Mon Aug 02, 2021 6:49 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional versus Roth wiki update
Replies: 192
Views: 16440

Re: Traditional versus Roth wiki update

Started moving some things to the examples page. Intent is to simplify the main page so it is more accessible to the "ordinary investor" who needs a place to start. The examples page - or perhaps further down the main page - can continue to be a repository of all the details.
by FiveK
Mon Aug 02, 2021 12:52 am
Forum: Personal Investments
Topic: Complex analysis- High income.. convert IRA to Roth, or Rollover to Employer 401k?
Replies: 16
Views: 1498

Re: Complex analysis- High income.. convert IRA to Roth, or Rollover to Employer 401k?

If you rollover $206K from IRA to 401k at +1% expense ratio in order to free up IRA for back-door Roth, you are effectively paying $2060 now and every year going forward for the privilege of avoiding capital gains tax on the returns on $6000 per year in 20+ years. Under current policy, it appears y...
by FiveK
Sun Aug 01, 2021 11:55 pm
Forum: Personal Investments
Topic: Roth/Traditional 401k Options To Reduce Administrative Fees
Replies: 16
Views: 1139

Re: Roth/Traditional 401k Options To Reduce Administrative Fees

1. Custodial Services = 0.050% of Plan Assets 4. Asset Based RK Fee = .140% of Plan Assets ...total plan assets currently sit around $100,000. A detailed breakdown of the most recent Quarterly fees: 1. Custodial Services = $44.35 3. Recordkeeping = $0.16 Those don't look bad at all for a 401k. But ...
by FiveK
Sun Aug 01, 2021 8:40 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: [**Update] - Metrics to Compare Roth Conversion Scenarios ??

Assumption 5b is indeed a wrinkle not yet covered in the BH True enough, but I wonder what is the impact of tax drag due to invested RMDs in the grand scheme of Roth conversions. Is it the 20% that provides 80% of the benefit, or is it the 80% that provides 20% benefit. Great question! Of course th...
by FiveK
Sun Aug 01, 2021 8:29 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: [**Update] - Metrics to Compare Roth Conversion Scenarios ??

Assumption 5b is indeed a wrinkle not yet covered in the BH True enough, but I wonder what is the impact of tax drag due to invested RMDs in the grand scheme of Roth conversions. Is it the 20% that provides 80% of the benefit, or is it the 80% that provides 20% benefit. Great question! Of course th...
by FiveK
Sun Aug 01, 2021 6:28 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: [**Update] - Metrics to Compare Roth Conversion Scenarios ??

To advance the discussion, let me suggest that Woodspinner is attempting to model an n-period game, n > 2 (and mostly, > 20). Since he is attempting to model real world results under the US system of taxation, as it is today and as it will become, Woodspinner must model a very particular kind of n-...
by FiveK
Sun Aug 01, 2021 4:41 pm
Forum: Personal Investments
Topic: Can I max 401k and 457b in the same calendar year?
Replies: 6
Views: 428

Re: Can I max 401k and 457b in the same calendar year?

Southtonorth wrote: Sun Aug 01, 2021 4:02 pm My understanding is that I can contribute max to both 401k and 457b. Is that correct?
Yes.
by FiveK
Sun Aug 01, 2021 1:56 pm
Forum: Personal Investments
Topic: Backdoor Roth Questions
Replies: 7
Views: 607

Re: Backdoor Roth Questions

Should I contribute monthly to each tIRA and immediately roll to Roth each month or should I wait until I receive my bonus and do the same thing with each account? On average, the market goes up, so the earlier you invest the better. Of course, "on average..." does not equal "it's gu...
by FiveK
Sun Aug 01, 2021 12:10 am
Forum: Personal Finance (Not Investing)
Topic: Cashflow Spreadsheet question
Replies: 2
Views: 509

Re: Cashflow Spreadsheet question

Based on the text in column A, cell D23 is the catch-all for "Taxable Interest, non-qual. dividends, etc." The comment for cell D23 is "The non-qualified dividend amount is the difference between boxes 1a and 1b on a 1099-DIV." E.g., if one gets a 1099-DIV with $5000 in box 1a an...
by FiveK
Sat Jul 31, 2021 8:36 pm
Forum: Personal Investments
Topic: Confusion around Non-deductable IRA for non-working spouse
Replies: 16
Views: 1043

Re: Confusion around Non-deductable IRA for non-working spouse

Boatguy wrote: Sat Jul 31, 2021 7:51 pm I’m not sure if anyone mentioned this or not, but aren’t non-deductible IRAs subject to RMDs just like pretax?
Yes.
by FiveK
Sat Jul 31, 2021 8:35 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

Marginal rate (at 62) for No Conversions is 18% (Fed 12%, CA 6%) Marginal Rates (at 62) for IRMAA Tier1-3 are (31.3%, 33.3%, and 33.3%). You get a year free of IRMAA concerns at age 62 - might be a good year to make a large Roth conversion. - Once RMDs begin at 72 the Marginal Rates are much closer...
by FiveK
Sat Jul 31, 2021 6:17 pm
Forum: Personal Investments
Topic: Confusion around Non-deductable IRA for non-working spouse
Replies: 16
Views: 1043

Re: Confusion around Non-deductable IRA for non-working spouse

etfan wrote: Sat Jul 31, 2021 6:08 pm Doesn't a Roth IRA have the benefit of being able to exchange investments without creating a taxable event?
Yes, as do traditional IRAs, 401ks, 403bs, etc.
by FiveK
Sat Jul 31, 2021 5:53 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

Why do you think the Total After Tax Portfolio Value (TATPV) is not immediately breakeven? Given equal marginal tax rates for current and future conversions, I would expect "no change" in TATPV when the conversion occurs. Because you could die before it actually breaks even. Because it is...
by FiveK
Sat Jul 31, 2021 5:34 pm
Forum: Personal Finance (Not Investing)
Topic: Seeking comment on proposed revisions to Marginal Tax Rate and Traditional v. Roth wiki articles
Replies: 479
Views: 26708

Re: Proposed Change to Marginal Tax Rate Page

Lee_WSP wrote: Sat Jul 31, 2021 3:15 pm I'm not dead set on anything other than emphasizing that the marginal rate is not on the last dollar, but on the last unit of measurement, which is usually not a single dollar.
No objection to that. :)
by FiveK
Sat Jul 31, 2021 2:26 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

Why do you think the Total After Tax Portfolio Value (TATPV) is not immediately breakeven? Given equal marginal tax rates for current and future conversions, I would expect "no change" in TATPV when the conversion occurs. Because you could die before it actually breaks even. Because it is...
by FiveK
Sat Jul 31, 2021 2:23 pm
Forum: Personal Investments
Topic: Should I pause my Roth Conversion in 2022?
Replies: 7
Views: 1348

Re: Should I pause my Roth Conversion in 2022?

You might look at the Roth Conversion and Capital Gains On ACA Health Insurance article from The Finance Buff (member tfb here), and use the tool mentioned there to analyze your situation. The Roth IRA conversion game is all about marginal tax rates. The chart in that wiki article is from the same ...
by FiveK
Sat Jul 31, 2021 1:24 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

1. Roth Conversions as a Tax-Arbitrage scheme won't break even until Spouse1 is about 84-88 years old. For equal current and future tax rates, we know Roth conversions are immediately "break even" based on the commutative property of multiplication. How are you defining "break even&q...
by FiveK
Sat Jul 31, 2021 1:07 pm
Forum: Personal Investments
Topic: might or might not need to backdoor Roth -- how do I prepare?
Replies: 5
Views: 750

Re: might or might not need to backdoor Roth -- how do I prepare?

Good to see that was helpful, and thanks for the feedback! Added a sentence to the backdoor Roth wiki referencing the recharacterization process, which I thought was there all along but wasn't.
by FiveK
Sat Jul 31, 2021 12:30 am
Forum: Personal Investments
Topic: Should I pause my Roth Conversion in 2022?
Replies: 7
Views: 1348

Re: Should I pause my Roth Conversion in 2022?

You might look at the Roth Conversion and Capital Gains On ACA Health Insurance article from The Finance Buff (member tfb here), and use the tool mentioned there to analyze your situation. The Roth IRA conversion game is all about marginal tax rates. The chart in that wiki article is from the same t...
by FiveK
Sat Jul 31, 2021 12:23 am
Forum: Personal Investments
Topic: Confusion around Non-deductable IRA for non-working spouse
Replies: 16
Views: 1043

Re: Confusion around Non-deductable IRA for non-working spouse

Can anyone ELI5 how "investments to grow tax-free and defer taxes on gains" is advantageous vs tax efficient taxable account capital gains tax? I don't think it's advantageous at all. +1 falafelraptor, you could look through Non-deductible traditional IRA - Bogleheads to find the unusual ...
by FiveK
Sat Jul 31, 2021 12:16 am
Forum: Personal Investments
Topic: Who do my parents need to see to get their retirement in order?
Replies: 28
Views: 3790

Re: Who do my parents need to see to get their retirement in order?

They would benefit from collecting and reviewing the information suggested in these three posts
Some Important Questions to Answer Before Asking - Can I Retire?
How To: Write a "Case Study" Topic
Asking Portfolio Questions

Is that something they are willing to tackle?
by FiveK
Fri Jul 30, 2021 7:54 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

1. Roth Conversions as a Tax-Arbitrage scheme won't break even until Spouse1 is about 84-88 years old. For equal current and future tax rates, we know Roth conversions are immediately "break even" based on the commutative property of multiplication. How are you defining "break even&q...
by FiveK
Fri Jul 30, 2021 2:54 pm
Forum: Personal Investments
Topic: Roth 401(k) vs. Traditional 401(k)
Replies: 15
Views: 1004

Re: Roth 401(k) vs. Traditional 401(k)

...it seems to come down to my expected future tax rate in retirement, and I have absolutely no idea how to even estimate what that might be. I am currently 35 years old but have no retirement savings Unless you expect a pension, without significant funds (at least $300K) in your traditional accoun...
by FiveK
Fri Jul 30, 2021 2:25 pm
Forum: Forum Issues and Administration
Topic: Forum etiquette: Letting users know what you decide and/or how things went
Replies: 20
Views: 2611

Re: Forum etiquette: Letting users know what you decide and/or how things went

Maybe could add a closing sentence in "Asking Portfolio Questions" to encourage OP to come back in a few years and tell us how things worked out. There's a whole paragraph in Asking Portfolio Questions : Many posters put a great deal of effort into their replies. We simply ask that if you...
by FiveK
Fri Jul 30, 2021 2:18 pm
Forum: Personal Investments
Topic: How do I qualify for ACA subsidy with $90K in income?
Replies: 29
Views: 3802

Re: How do I qualify for ACA subsidy with $90K in income?

There is no subsidy cliff in 2021 and 2022 due to the American Rescue Plan. Health insurance premiums are capped at no more than 8.5% of household income during these two years. +1 In other words, if the smaller of the Second Lowest Cost Silver Plan (SLCSP) or the OP's actual premium is above $7650...
by FiveK
Fri Jul 30, 2021 2:06 pm
Forum: Personal Investments
Topic: Calculator: Taxes owed in retirement
Replies: 14
Views: 1642

Re: Calculator: Taxes owed in retirement

I already have an excel for this, but I just realized that my excel assumes I'm paying cap gains taxes on 100% of the annual withdrawal (~4%) from my brokerage account, when I should only be paying it on the portion that is gains. I realize this could be really complicated because someone could be ...
by FiveK
Thu Jul 29, 2021 10:24 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

Consider that marginal rate is the "sum of costs / related change of income." As such, IRMAA charges get added to the numerator along with your other costs. ^Yes, exactly that. As the wiki article says, Marginal tax rate is the tax rate on a change in income (i.e. change in tax/change in ...
by FiveK
Thu Jul 29, 2021 7:54 pm
Forum: Personal Investments
Topic: Roth Conversion Tax Question
Replies: 11
Views: 1117

Re: Roth Conversion Tax Question

I would have thought that you would just pay taxes on the cost basis when converting since that is what you would have been taxed on if you had contributed originally to a Roth rather than traditional. Roth conversion doesn’t seem as great if you are taxed on the growth at conversion which doesn’t ...
by FiveK
Wed Jul 28, 2021 11:25 pm
Forum: Personal Investments
Topic: Roth/Traditional 401k Options To Reduce Administrative Fees
Replies: 16
Views: 1139

Re: Roth/Traditional 401k Options To Reduce Administrative Fees

The expense ratio is 0.03% on the index fund, but the plan administrator has their own fees which are quite high. For example, quarterly the plan administrator takes a fee of about $40 (from that $60,000 balance). 4*$40/$60,000 + .03% = 0.297%. While not as good as one can do in an IRA, that's not ...
by FiveK
Wed Jul 28, 2021 10:37 pm
Forum: Personal Investments
Topic: RETIREMENT: Does Non Statutory Stock Options Exercise & Sale reported on W2 count as earned income?
Replies: 24
Views: 1602

Re: RETIREMENT: Does Non Statutory Stock Options Exercise & Sale reported on W2 count as earned income?

Be careful if Fidelity is your brokerage as they report the basis incorrectly. You need to read the last page of the statement to find the supplemental information which has the correct information. Not just Fidelity. :( This thread I bookmarked years ago is likely still relevant: Your 1099-B form ...
by FiveK
Wed Jul 28, 2021 5:27 pm
Forum: Personal Finance (Not Investing)
Topic: [**Update] - Metrics to Compare Roth Conversion Scenarios ??
Replies: 151
Views: 9626

Re: Metrics to Compare Roth Conversion Scenarios ??

However, I think (and certainly could be wrong) that the Internal Rate of Return (IRR) is a better financial metric for evaluating expenses versus returns. That's certainly possible, and it could be that I don't understand the details of how you are implementing it. I'm familiar enough with the con...
by FiveK
Wed Jul 28, 2021 2:44 pm
Forum: Personal Investments
Topic: Before-Tax, After-Tax, and Roth in 401K
Replies: 25
Views: 1590

Re: Before-Tax, After-Tax, and Roth in 401K

Would you mind explaining why? I've only read that order of priority should be backdoor Roth / megabackdoor Roth before pretax. I suppose you might have read this somewhere but it seems like a minority opinion to me. Or a misunderstanding. Tax-deferral (using your pretax 401k space) is usually the ...
by FiveK
Wed Jul 28, 2021 12:01 am
Forum: Personal Investments
Topic: IRA, 401k, Or Back door Conversion options
Replies: 1
Views: 215

Re: IRA, 401k, Or Back door Conversion options

MochaTheDog, welcome to the forum. last week i ask to cash out my account.... By "cash out" do you mean - withdraw everything from the IRA, or - sell all stocks and bonds within the IRA but leave the cash there? because i was considering rolling my IRA into my employers 401K so i can start...
by FiveK
Tue Jul 27, 2021 11:47 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity TurboTax Import - Allocation of Taxes Across Accounts
Replies: 2
Views: 229

Re: Fidelity TurboTax Import - Allocation of Taxes Across Accounts

...would like to understand the tax impact of each component. The marginal tax rate of each component will depend on what you have assumed for the other components. E.g., if filing single and under age 65 with $12550 interest-only income from both accounts A and B, whichever you add first will have...
by FiveK
Tue Jul 27, 2021 7:04 pm
Forum: Personal Investments
Topic: Ceiling on converting tIRA to Roth IRA
Replies: 6
Views: 1027

Re: Ceiling on converting tIRA to Roth IRA

+1 to anon_investor's reply.

If the $6300 was from contributions made before 2021 (and any gains on those), you can still make a $6000 contribution for 2021. That applies whether you use the backdoor Roth process or not.
by FiveK
Tue Jul 27, 2021 1:39 am
Forum: Personal Investments
Topic: Roth Conversion Questions / Limits /Age
Replies: 10
Views: 796

Re: Roth Conversion Questions / Limits /Age

I am considering doing some Large Traditional IRA to Roth IRA conversions. As the saying goes, forewarned is forearmed so you might want to review the Roth IRA conversion - Bogleheads wiki. In particular, if you are at all comfortable with Excel, see the Using a spreadsheet section of that article ...
by FiveK
Tue Jul 27, 2021 1:32 am
Forum: Investing - Theory, News & General
Topic: 457 plan vs traditional IRA if latter has
Replies: 1
Views: 225

Re: 457 plan vs traditional IRA if latter has

See Expensive or mediocre choices for how to assess high fee employer plans.

By "traditional Roth" do you mean "traditional IRA" or "Roth IRA"?