Also dummy you don't get paid just for TALKING ABOUT IT.
I have a FB friend who makes claims like this all the time. It makes NO sense. In fact, just today she posted:
"Every single time I post on Facebook , I make money. Do you??? THAT is why I love my job! Let's face it, we all spend too much time on our cell phones, but are you getting paid to do it?? THAT is why you should be joining me on this adventure I'm in."
Dont tell my boss... but yup. With benefits to boot.
You will have to pay taxes on the gains in a brokerage account as well so keep that in mind. I contribute to my IRA and keep it in cash until I convert. Honestly the taxes wouldn't be that much if it were invested even if it were a really good year, I just don't want to deal with it. Since it would be short term gains it would be taxed as ordinary income so whatever your tax bracket is.
Is this just filling out a 1099-int?
This is only subject to federal and maybe state income tax right? Medicare is only wages or all income?
Also - should mention I expect our income to be same as last year but we might end up in the phase out area bc we are contributing much more pretax and overall to retirement and there's always a chance we don't get certain bonuses. I know you can recategorize but I'm trying to make this easy on myself.
I would probably just submit it as it were mine. Also I didn't know you could still get solution through Fsa - I thought when they changed thinks maybe 4 ys ago there were far fewer Otc items Fsa would cover.
I would et another realtors opinion. The only time I've known of people selling to investors is when it's the we buy ugly houses sort of deal or an estate that doesn't care about top dollar and just wants to unload.
I think this is robbing Peter to pay Paul. I'd be curious to see actual numbers. What are the actual #s here? We were pressured to do so by our agent when we bought and we refused and I'm glad we did. We put 5% down and saw the property as a short term (under 7 years) home so it was cheaper to pay a slightly higher rate than pmi. We ended up refinancing to a 15 year ahead of time anyways. Many of my friends have done 2 loans to either avoid pmi or get them over the jumbo limit (I'm hcol as well so I know it is difficult).
kadams767 just out of curiosity is the early-withdrawal ladder system you mentioned part of any strategy why someone do that other than just wanting the $$ back in their pocket?
If your H has a current account with TIAA CREF he can meet with an advisor for free to go over all his accounts. I do this every few years to keep on track.
We've done that and that's how we are at this point but most of his investments have a 1%+ ER and we've never felt they explained a thing to us.
I think his employer does 4% now and dh does 7%. We were going to bump him up to 20% to hit the 18k max but I was confused about the investment options and the difference between the plans and I also started to worry that investing in something lower cost and I could almost understand in a taxable acct would be better. Ive barely started to understand my 401k so I'm working up hill here.
Retirement Annuity (RA), Group Retirement Annuity (GRA), Supplemental Retirement Annuity (SRA), Group Supplemental Retirement Annuity (GSRA)
The accounts with two One is normally employer contributions and the other is employee contributions
I had no problem doing a direct rollover to my TSP for the majority of the money in my account
The TIAA traditional has the silly 10 year distribution clause. You should be able to rebalance the investments and move that money to other investment types prior to doing a rollover to avoid it. Mine was a small portion so I left it just in case I want to move stuff around into real estate option at a later date.
His TDA plans are his contributions only. The DC plans are his and his employers. He's not a public employee so tsp doesn't apply to us. Further we can't have him roll old plans into an Ira because we make too much $ to do a Roth IRA so we have to do the back door option. I think he can roll stuff into his new plan but the investment options aren't great for it (or really any of the plans).
I'm confused about all the talk about Tiaa traditional and Tiaa real estate on bogle heads. He has like 2k on Tiaa traditional at 7%. I have no idea what the 10year rule means.
I would do different since you mention you are both healthy. the Indiv deductible / oop max is less than for a family. If something bad were to happen causing either of you to have to reach your oop it's likely it wouldn't happen to you both in the same year so you can self insure to some extent by putting a little more savings away saving the difference in premium. Where I live uhc and bcbs are widely accepted so I wouldn't even expect you would need different doctors. I've had bcbs and uhc. The uhc website is the pits and bcbs is much more user friendly. If I had to pick all other things about plans being the same I would go w bcbs but my first choice would definitely be to each have your own plans.
I figured leave them for now so I can do the Roth and I understand I have to report them no matter what if I open the Ira in 2017. I'm looking at the investment options for his Tiaa account and the less impressed I become. I was wrong when I said most expense ratios are ~.6 - their target date is 1.3%!!! All 3 of the employers have nearly identical offerings. I know Tiaa cref is just for nonprofits but what is the deal here seriously?
I'm looking at other options - they most are over 1% only a few under that: Cref equity index qceqrx w .59 exp ratio Cref global equities QCGLRX .71% Cref growth QCGRRX .65% Cref stock QCSTRX .72% Tiaa access equity index .80
Poppy so I could fund the Ira to a mm acct or something to ensure no gains and convert - but if I am converting 100% post tax I don't have to continue reporting In perpetuity? (Hearing the word perpetuity scares me!)
What if they get rid of the backdoor option and I decide to then actually roll my 401k to an Ira and never do a Roth again - nothing there ever has to be reported because the conversion was done with 100% post tax $$ (assuming they were 2 different calendar years) ?
mokes when you say it will count as income this tax year do you mean it will be counted against me twice? That's the part I'm having trouble with. None of the funds I'm converting are in existing iras or pretax vehicles. I've already paid taxes on the $22k. Sorry to be dense here - this is my biggest confusion and what your saying seems to be different from what was said upthead.
1) Yes. Between the two of you, you can do $22k at basically the same time ($5.5k/person for both 2016 and 2017).
2) Better to convert immediately so you don't have to worry about the gains. Lots of people put the trad IRA contribution in a money market account for this reason.
3) Careful! I believe that if you roll your 401(k) in 2017, it will "count" and you'll have to prorate your conversion. I think on form 8606 it asks for IRA balance at the end of the year. Why do you want to roll over? You could either leave your old 401(k)s where they are or possibly roll them into your current 401(k) plans.
So on #1 even if I converted everything at once the only taxes are on gains? Not sure I want to convert 22k now but for ease it may be worth it. You can always withdraw principal or is there a waiting period for that? We prob have more cash than we should in our efund but it's a peace of mind thing.
Why convert? Well I feel like everyone always says the options are better in an Ira. I don't know whether the options in the old acts are good or not (and I wouldn't roll anything over til I did more research). I'm looking at my hs and the only options are Tiaa cref and expense charges are .6%+. right now my old 401k is in a jpm target date fund.
I don't know how great current options are in our current plans. H is current plan is invested in a Tiaa target date fund w expenses 1%+ and the other options seem to be only Tiaa funds as well. I am in Vsmpx, vtsnx, vweax,vipix.
1. We have not already funded our 2016 Roth IRAs because h and I weren't sure if we would phase out since we had some bonus $$ at the end of the year. We thought we could contribute for 2016 in 2017, but from reading the article linked above it looks like you can contribute for past years but conversions are always counted for the current tax year. So is it possible to fund the 2016 Roth now and convert it right away, and then also contribute and convert for 2017 this year as well?
2. For 2017, if you have to do a backdoor Roth do you fund it all at once and then convert? Or do you contribute to an Ira throughout the year and then convert once you reach the $5500 limit? In which case you'd have to pay taxes on any gains?
3. Lastly, we have no iras at the moment but we do have old 401k accounts we would like to roll over (edit meaning to a traditional Ira). If we wait to roll them over into an Ira after the conversion that seems to work for this year but what about future years when we can't convert just $5500? If we put our iras (from old employers) into say a fidelity account and then opened an Ira with schwab for example would this be an easy clean way to do it?
Right now I have $$$ sitting in savings I planned to fund 2016 with and I'm wondering if I should say screw it cut my losses and just start doing this for 2017 going forward. Thanks
I would go talk to a bank or a broker and see what they say. I refinanced my student loans with a private lender and then immediately refinanced my house right after and I was concerned about the same thing. The mortgage lender had to talk to the loan refinance bank but there was no problem.
Thanks for all the feedback. H is on board w upping to 20%. With bonus the rest of the year that gets him to around 15.5 including what he's already contributed. I'm fine w doing that instead of trying to get to 18k this year - 20% would work out to 18k if we started in Jan. He's up for a raise in June so that may help close the gap a bit. Really intimidating posting since you all have it together but I appreciate the advice
i switched back to trad on mine. And it will be nice to take home a few more dollars every pay period.
Eh, i think this should go hand-in-hand with your dh maxing. If he won't i think you doing a Roth could be a second-best option. Better than spending it now. At a minimum ideal would be to put the tax savings in a taxable account designated for retirement rather than increasing lifestyle. Assuming we're talking about retirement versus an extra bottle of wine at dinner. Not retirement versus separating two-ply toilet paper into single ply. I don't think Roth is that serious.
I had planned to do a Roth for each of us anyways. I have the 2016 set aside and then I planned to start funding both of ours for 2017. Seriously half the reason I'm so behind on doing 2016 Roth is because I have to go through the whole compliance rigamarole at work. I'm plenty ignorant about personal finance that nothing I hear on the job can be used to my advantage 😂
I had also wanted to start a brokerage account because we have a lot of cash not making any money and I would like to do some automatic saving.. But I'm a bit paralyzed by fear. We don't really have any goals besides just to slowly grow our savings and have a nice life. Neither of us are motivated to retire early so 65-67 sounds right. We'd like to move up in house but we have enough equity to fund 20% and then some. I have some student loans and ridiculously low interest I refinanced. And that's really it. I feel like we have enough money that we don't have to worry but not enough excess that we can really grow it or lead a much better lifestyle.
After much struggling on the issue, my thinking is that no one I can think of should be using a Roth 401k unless all traditional options have been maxed out. There's no sense in leaving that tax benefit unused, particularly at high incomes. Tell DH to get over it and contribute the max if you can afford it Tell him to look at his 401k statement and your tax savings if he needs an ego boost. (I'm the lower earner in my relationship, so I get it, but I also had to get over it.)
As far as saving too much, I don't think you're anywhere near that territory. It's really hard to save too much. And if you manage to do that, all of your Roth IRA contributions (not earnings) are available without penalty before retirement. I may be wrong about this, but I believe that if you change jobs and roll your Roth 401k into an ira, that might be available for early withdrawal as well. And you can use ira distributions to pay for college as well. I think you should be looking to stash as much as you possibly can in the tax-advantaged accounts available to you.
I have to agree with this post. I am the higher earner in my relationship, but DH needs to max his 401(k) too, we need the tax benefit. I know it's hard to "see" such a small paycheck for him, but too bad. :-) For reference, DH makes about $60k, but only takes home about $2400/month after 401(k) and taxes.Â
I'm convinced - it's just convincing him! He's on board for the 15% and I will talk to him about increasing over time. I've increased mine up a point every couple months til I hit the max so maybe that will be easier for him til he gets to 20 (which factors in bonus)
i switched back to trad on mine. And it will be nice to take home a few more dollars every pay period.
After much struggling on the issue, my thinking is that no one I can think of should be using a Roth 401k unless all traditional options have been maxed out. There's no sense in leaving that tax benefit unused, particularly at high incomes. Tell DH to get over it and contribute the max if you can afford it Tell him to look at his 401k statement and your tax savings if he needs an ego boost. (I'm the lower earner in my relationship, so I get it, but I also had to get over it.)
As far as saving too much, I don't think you're anywhere near that territory. It's really hard to save too much. And if you manage to do that, all of your Roth IRA contributions (not earnings) are available without penalty before retirement. I may be wrong about this, but I believe that if you change jobs and roll your Roth 401k into an ira, that might be available for early withdrawal as well. And you can use ira distributions to pay for college as well. I think you should be looking to stash as much as you possibly can in the tax-advantaged accounts available to you.
Too much wasn't the right choice of words - more like too much in 401k where we should save elsewhere. We can afford to save more in retirement vehicles if we have to go above and beyond in order to catch up enough. I just want to be where I should be now - or get there. I always heard 1x salary at 30 and we still aren't there
Oh and re taxable income - what assumptions do you use for how much taxes can increase before the Roth 401k becomes the better deal? While 28% is a high tax rate and if I don't need my full income I would be bumped down, I don't see it lower than 25% bracket in today's terms. I'm a novice at all this but I'm just worried about going to 80s/90s rates and my understanding is that someone with my income (adjusted for inflation) would be paying in the 35%+ in taxes. I would still fill up the lower buckets in the link from my match and the portion that we contribute pretax no?
Poppy, I think you linked to those in other threads and I did read them. I was pretty set I should be doing Roth 401k until I read those and started to doubt it.
I told h to bring home the form from HR and he is upping his contribution to 15% from 7. So that will bring him up to $10500/year before his bonus is factored in. I would like and we can afford to have him contribute the full 18000/year but I think psychologically he would have trouble bringing home a paycheck with such a huge dent in it. Do you think it Would it be necessary in our shoes to do so in order to catch up? With his increased contribution plus the Roth IRAs that will bring us to 15% of our salary in retirement. We both didn't start though til our mid/late 20s and even then we were doing about 7% each on a combined salary of about 110k.
I've literally used every calculator out there and they range from "pray for an early death" to you'll be just fine.
Oh ya - another question. I settled on vanguard and picked vanguard funds based in part on some recommendations here for our Roth IRA then realized we can't use vanguard at my work. All IRA accounts need to be reported and they have ones that do it automatically and vanguard isn't one of them. I forget all the options but I think schwab, etrade, Merrill lynch, and fidelity are the ones we can use. Can I buy vanguard funds in a fidelity Ira? And if so is it more expensive?
I do think you have 3 days to cancel it. I had a situation where something I was promised I wouldn't have to pay showed up on my first bill. I called and they got a supervisor on the line quickly who apologized and said the store person didn't have the authority to give me certain accessories (that were supposed to be free). Anyways it was an hour of my time but they apologized profusely and took care of it.
Per OPs, I'd probably let the rates decide. Our PMI was nearly $600/mo and we had to do a pricey refi to drop it after 6 months (once we hit 20% equity).
Another thought - Have you looked into refinancing some of your SLs? If they're all federal, you might want to stick w/them b/c they're discharged in death and the freeze options are probably better in case you have money problems. But you can find fixed rates for as low as 4.5% these days. I had a NJ loan that was 6.9% and I refied to 4.5% fixed.
All but about $23k are Federal. Anything I've seen with a refi would be a weighted average. But I haven't explored that in about a year so maybe there are new options. If I did that I think I would be better to wait until we bought just due to having a 100k credit inquiry no?
@juno I agree with your rationale. But it's counter to most recommendations. I think the most they can ever garnish is 10%? That's still my full monthly payment, so it's not like that gets me anywhere.