Bogleheads.org

David Jay

Welcome to the forum! VTI (Vanguard Total US Stock) is the default, low regret choice for your US Equity Allocation. It holds the entire US market at market weight so it is fully diversified. Adding any of your other choices to VTI is a tilt away from the market. A tilt away from the market essentia...

David Jay

I am not surprised, it is a balancing act. Too much Roth conversion, pay excess conversion / IRMAA taxes. Too little Roth, pay excess RMD taxes.

Sounds like #2 is (a-la "Goldilocks") just right.

David Jay

jwc1754 wrote: ↑Sat Apr 10, 2021 3:37 pm Does it reset a clock if you transferred a Roth account from TD to Vanguard (opened a new Roth account in VG)?

No. The primary 5 year clock is since you first funded your first Roth IRA. Even if you later closed the account.

David Jay

I agree with “retired”, you should view all your accounts, combined as one portfolio and position assets in an optimal manner, rather than holding the 3-fund in every account.

David Jay

Virtually all of our portfolio is in tax-advantaged accounts. In order to meet specific qualifications (ACA, MI Homestead, etc.) we carefully move money from tax advantaged to a taxable account that I call our "distribution" account (at the brokerage) a couple of times a year. We then have...

David Jay

Succinct is good

David Jay

I vote for "typo" by the OP (projecting from my own experience).

Plus, neither the IRS or TurboTax are new at this...

David Jay

bungalow10 wrote: ↑Sat Apr 10, 2021 6:18 amAm I missing something? I feel like there used to be an option to do RMDs based on life expectancy.

This feature (sometimes called the “stretch” IRA) was eliminated for the heirs of individuals passing after January 1, 2020. Sorry.

David Jay

In normal times, when future interest rates are unknown, holding a range of bond durations probably make sense. There is a widely-described “barbell” strategy of holding short term bonds and long term bonds to cover a wide range of outcomes. In these near-zero interest times, I cannot bring myself t...

David Jay

The spouse with the higher earnings record should, under almost any circumstance, defer to age 70 because their benefit becomes the survivor’s benefit.

If the couple are well situated financially, it makes little difference what the lower earning spouse chooses.

David Jay

Welcome to the forum!

Your tax guy is mistaken. We have lots of folks here who do the backdoor Roth process every year.

Here is the Wiki on the backdoor Roth process, he may benefit from this page: https://www.bogleheads.org/wiki/Backdoor_Roth

David Jay

This is why we need the OP to explain his use. If he wants to pull the trailer 50 miles to the lake every spring and pull it 50 miles home in the fall, his truck will be fine. If he wants to pull the trailer out west and explore the Rockies, his truck won't cut it. There is a wide range of activitie...

David Jay

I read the article as saying that buy-and-hold outperforms day-trading( i.e. closing all positions each day).

David Jay

Welcome to the forum! First off, you need to establish your level of comfort. Since you don't need the money for living expenses, you can afford to be conservative. The primary "control knob" for growth versus stability is the percentage of stocks versus bonds (+ other fixed income), calle...

David Jay

1099-B is not the normal document for a stock sale through a brokerage house. Can you explain more about the 1099-B? Was this stock in a closely held company, perhaps not a public stock? Who issued the 1099-B? Guess I haven't sold any stocks in a taxable account for a while. I'm just used to gettin...

David Jay

Sure you can pull it. It won't be great in the mountains, where are you planning on driving? I wouldn't recommend putting 3000 pounds in the trailer, but I don't even think you can in a trailer of that size. We always figured we had 1000 pounds of "stuff", that would put you at about 5500 ...

David Jay

This website says that Schwab does not have an account closing fee: https://www.brokerage-review.com/expert/cancel-account/how-to-close-charles-schwab-account.aspx The best route is to talk to an IRA transfer specialist at eTrade. They will know the ins and outs. More generally, always work with the...

David Jay

Also, the index funds won't just automatically buy in the given scenario you've presented. Index funds hold stock in proportion to market cap, not the number of shares outstanding. If the number of shares outstanding increase with a concomitant decrease in price that leads to an equal market cap be...

David Jay

For the first 15 years or so, the AA of the target fund will not change. My point stands, I am referring to rebalancing, not changes in AA.

David Jay

There is a wiki on tax efficient fund placement across various types of accounts here: https://www.bogleheads.org/wiki/Tax-eff ... _placement

David Jay

retiredjg wrote: ↑Thu Apr 08, 2021 4:20 pm
David Jay wrote: ↑Thu Apr 08, 2021 4:06 pm This makes AA intensely personal. It is a negotiation between the head and the gut.
Such lovely wording and so true!

I stole “negotiation between the head and the gut” from someone here on BH, but it really set well with me.

David Jay

According to this link, Schwab does not have an account closing fee: https://www.schwab.com/pricing

David Jay

Supply and demand for labor. FWIW, increased "inequality" can be beneficial if the overall standard is rising. "Equality" is easy when everybody has nothing. In before the lock. How is that beneficial for everyone, from the fairness perspective? After all, the "overall stan...

David Jay

Here at BH we teach that asset allocation (AA) is the primary "control knob" for growth versus stability. More stocks, more growth but also more volatility. This makes AA intensely personal. It is a negotiation between the head and the gut. The head says: "More growth is logical"...

David Jay

Five-factor investing was “the latest thing” starting about 10 years ago. A number of 5-factor funds and ETFs opened between 2014 and 2018. Performance has been disappointing. Last week a question prompted me to go look at the performance. I looked at 3, including the Vanguard fund and the largest ...

David Jay

There are some pieces to the puzzle missing. It looks like your income is about $97K and year and your Retirement savings are about $26K a year. I would guess that your mortgage payment is about $1,200 a month or a bit less than $15K a year. FICA taxes are around $7K a year too. Those and a lot of ...

David Jay

If I was ever going to use a VUL (which I am not), I would probably start with TIAA. They will be among the lowest cost options. I would never hold SP500 inside a VUL. What is your marginal tax rate? 22%? 24%? You are just flushing money down the drain. If you keep it, I would hold 100% fixed accoun...

David Jay

Yes, there is one extra day to move from the mutual fund account. If you were to convert the mutual fund account (so all accounts are brokerage accounts), then you could do an "exchange" between funds - even in different accounts - so the assets do not need the extra step of going through ...

David Jay

I read the footnote on the Vanguard 2060 page [from the link above], it is not one benchmark, it consists of the (arithmetically combined) benchmarks for each of the underlying funds. By definition, a fund that holds the underlying funds in a constant ratio cannot match the composite benchmark becau...

David Jay

I would recommend two great videos from Ben felix. Some key take away points, 1. Trading sets the price of a stock not AUM. On trading, passive investing only accounts for 5% trading. It means, price is still dictated by the active traders. https://www.youtube.com/watch?v=Wv0pJh8mFk0 2. On other re...

David Jay

dmash wrote: ↑Wed Apr 07, 2021 6:38 pmShould I just buy more VTSAX & VTIAX, and convert my tax-sheltered account into more VBTLX when I do my periodic rebalancing?

Yes, this is exactly what you should do. Hold bonds in tax-advantaged space and hold only stocks in taxable.

David Jay

Zombie thread - no posts for 5 years until this afternoon...

David Jay

If I was going to pay double in expenses for a fund, then somebody better do some justification of what makes the "special sauce". Actually, you aren't paying double, you are paying infinitely more expense with FSKAX. :wink: Of course with FSKAX at 0.02% that infinitely higher ER only amo...

David Jay

Dude2 wrote: ↑Wed Apr 07, 2021 1:10 pm If I was going to pay double in expenses for a fund, then somebody better do some justification of what makes the "special sauce".

Actually, you aren't paying double, you are paying infinitely more expense with FSKAX. Do the math...

David Jay

investnoob wrote: ↑Wed Apr 07, 2021 10:18 am The answers lead me to believe that any retirement spending over what I spend is "high on the hog." Anything less than that isn't. Interesting.

Yup. It is mostly self-referential.

David Jay

Also, the index funds won't just automatically buy in the given scenario you've presented. Index funds hold stock in proportion to market cap, not the number of shares outstanding. If the number of shares outstanding increase with a concomitant decrease in price that leads to an equal market cap be...

David Jay

Per “000” above, TR Income is a reasonable choice as well. So, following my recommendation not to exceed 40% equities, here are 3 good choices at 3 different asset allocations:

40/60 LS Conservative Growth
30/70 TR Income
20/80 LS Income

David Jay

I'm not clear on this statement: there is an offsetting savings for making the 401K contribution I was under the impression there is no immediate benefit to making a Roth 401k contribution. Am I missing something? It probably could have been better phrased. Compare assets in your rollover IRA and a...

David Jay

Welcome to the forum! I would not pay taxes on the $100,000 while in the 24% tax bracket (plus state?). I would select option #1, as that is the only option where you do not need to pay taxes on $33,333 ($100,000 withdrawal divided 3 ways) of income for three years. [edit] Well, this is only logical...

David Jay

Option 1 - but no more aggressive than Conservative Growth (40/60). Even LS Income (20/80) would be acceptable.

60/40 is "freak-out" level for an 80 year old with no experience managing his own portfolio.

David Jay

Yes, this bonus will be reported on a W-2 for 2021 as "taxable compensation" (the IRS term for qualified funds), so this amount of income qualifies you to contribute that amount (up to the maximum of $7000, obviously) to an IRA. You may use the entire amount shown in Box 1 of your W-2 (Box...

David Jay

Do not base it on some percentage that aligns with... attitude toward risk ... I would completely disagree, I have been coming around to viewing Asset Allocation as pretty much exclusively a behavioral issue, not a math issue. One should not allocate more to equities than they can hold in the face ...

David Jay

3) Best option to replace the non-qualified annuity when the surrender charge drops to zero in 2024? Yes, I would strongly recommend surrendering the annuity. The one real purpose for an annuity is to provide an income stream. From what you have written above, her needs are covered and so she does ...

David Jay

By comparing the 3% yield with fees, it seems the actual yield would be 2.25% for contribution to retirement, which means I am paying 0.75% to secure a 2.25% yield. If my calculation is correct... Your calculation is not correct because you did not fully grasp my first post above. There is no 3% yi...

David Jay

Welcome to the forum!

In my opinion, someone in their early 50s should target a Withdrawal rate of 3%, which only provides about 100,000 a year. In order to retire, it would seem that some income is required or else a significant reduction in standard of living.

David Jay

In all cases, the amount of each conversion can be withdrawn tax free in 5 years. Pre-tax and after-tax conversions have somewhat different treatment. The future earnings (inside the Roth) on the conversion are taxable until age 59.5

David Jay

Follow your IPS - that's why you have one.

Go all the way to 75/25 today, with the nice up market.

David Jay

Option B - They will come to understand market gyrations at a young age. They will see the market drop and then exceed previous highs. What a great learning tool.

Alternate: 100% VTI

David Jay

Thanks, Taylor. I had read about the “Stamp Out Index Funds” poster but this article is the first time I have seen it.

David Jay

I agree with Googliebear - if you are not fully funding your retirement accounts i would use the funds for that purpose. If you have a work 401K, the process is to increase your withholding and then spend the cash for living expenses. This has the effect of “transferring” your Mom’s legacy into your...

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