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  2. VAIPX - Vanguard Inflation Protected Securities Fund (Admiral Shares)
  3. Good work so far! As to the asset allocation going forward, there's no objectively correct solution. You'll get endless opinions on how to handle that if you ask online. What you are suggesting sounds reasonable to me. A couple of things I would consider, though: what is the long-term plan for this money? Is it just about assuring the costs related to your uncle's long term care are covered or is part of the plan to build equity for heirs and/or charitable donations (in other words, how much is money that will be needed within the next few years versus long-term investment)? Also, bear in mind that having two utility stocks isn't a good proxy for stock market risk. If the answer to the question above is that a big chunk of the money won't be needed for a decade or more and you want to build additional equity for the future, then some broad-market (including international market) equity funds could actually add the benefit of diversification, though they would likely be more volatile in the short run than bonds, especially short term bonds. (I'm not sure what VAIPX is--did you mean VTAPX, the short term TIPS fund? Or VPAIX, Pennsylvania tax-exempt bonds?)
  4. Update: I've completed the transfer of the account from Etrade to Vanguard. The people at Vanguard were so helpful, and the process was similar to the one whyme described. My strategy right now, after reading-reading-reading, is to keep the 2 utility stocks in place, as to not incur another taxable event. They are paying good dividends, and cover my Uncle's expenses. Now, with the rest. To dial down the risk in this portfolio, I'm thinking of a combination of VBTLX, VAIPX, and money market. Presently, the 2 remaining utility stocks make up approximately 58% of his total portfolio. I hesitate to get into any kind of balanced fund, as the result will be an increased exposure to stocks. Any opinion on this strategy? By the way, my Uncle is 85, in good health, and stable in assistive care.
  5. Steve - Do you use VBTLX for your bond?
  6. This link provides the Security Benefit Direct Invest phone # that has worked best for other posters. https://board.403bwise.com/topic/7056-security-benefit’s-nea-directinvest-number/ I would call SB up and find out exactly what they need. If they are already on your school district's 403b vendor list, they should have your employer's plan document. Find out if SB is indeed on your district's vendor list. There's nothing about the NEA Direct Invest 403b that would require anything from the district different from SB's other expensive plans. I think the plan number is a number that the district or the Third Party Administrator assigns to each vendor, although perhaps it can be assigned to each vendor's plan? If the latter, perhaps no one in your district has opted for NEA Direct Invest, so it doesn't have a number yet?? If your district uses a TPA, ask them for the SB plan number. If not, ask your district. Sometimes the TPA's or district's websites provide the plan number. Don't get discouraged. You are in this for the long haul. NEA DI is worth pushing for!
  7. Hey Guys, I applied online to SB NEA Direct Invest and it took about a month but I just recieved a letter from them stating that they’ve recieved my application but are unable to establish a new account because they have not recieved the employer documentation. I need to “contact my employer to submit the required plan documents” and have no idea what this means. I sent over to the BA office a salary reduction agreement yesterday and I am not sure if this is what they need. Also, who has my “plan number”, is this something I get from SB or my school directly? Thank you, TonyZ
  8. Scott and I had the privilege of attending (along with 403(b) warrior Nancy Bachety) and presenting at the Next Gen Personal Finance Changemaker Summit 2019 in San Fransisco this weekend. You can read about this amazing event here. So many highlights including Steve Schullo getting a shout out from the great Bill Bernstein. - Dan
  9. Your welcome, and thanks for reporting back! We're glad it went smoothly. I don't think you can make a real mistake, whether you contribute to the 403b only, or contribute to both the Roth IRA and the 403b. Hopefully as your salary increases, you'll be able to max them both eventually.
  10. The main thing is put as much as you can afford in your tax advantaged accounts. It's always good to have a mix of tax deferred and Roth. Higher income years defer more. Lower income years do more Roth.
  11. Ah, the Roth vs Traditional discussion is a fun one. You’ll be fine either way, but I still enjoy the debate.
  12. I want to thank you all for helping me getting into the Security Benefit NEA Self Directed Plan. My school district and/or plan manager has not hassled me about it all, it seemed to get rather seamlessly. Now I just need to decide if I should set up a Roth IRA to augment it or keep adding all my money into this plan. Thanks again!
  13. Tara Siegel Bernard, a personal finance reporter, recommends apps for budgeting, investments and helping little ones as young as 6 understand the value of money. https://www.nytimes.com/2019/03/13/technology/personaltech/spending-is-as-easy-as-pushing-a-button-the-hard-part-keeping-track.html
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  15. I’ve got just enough curiosity to learn about parts of the tax code that might benefit me. Initially I’m always overwhelmed and think that I’ll just keep it simple and never use what I learned. Then time passes and as I get more comfortable, I just can’t resist. I felt that way about filing my own taxes without software, using tax advantaged accounts, tax loss harvesting, and now executing a Backdoor Roth. One topic I haven’t taken on yet is the Mega Backdoor Roth, which is very much different than the Backdoor Roth we’ve discussed in this thread, but it lets you sock away another roughly 40k in a Roth account as opposed to putting it in a taxable account. Who knows, maybe that’ll be on my list after I study paying 0% tax in retirement.
  16. No, no, no! I know enough to no that I don't know much. Just a few things I've picked up from the Boglehead forum, and doing our own taxes (with TurboTax). We do have a taxable retirement account so that can complicate our taxes. Roth IRAs started in 1998 and by then we had been retired 6 years. We did do some conversion of traditional to Roth that first year. They allowed the tax hit to be spread over 2 years which was nice. Maybe we should have done more conversions? Maybe not? Hard to know. The 40k that I converted to a Roth IRA is now 189k. Not bad for an asset allocation of 40 to 50% equities---about 9% over 20 years? I doubt very much that we will ever take a distribution from our Roth IRAs. We have no kids but have a niece and nephew who are the beneficiaries.
  17. Yea, Ed, and you krow36, could not only be a tax professional but a tax attorney as well. I kept things simple and used only the regular Roth IRA and the 403(b). I have plenty in my Roth currently. The 403b Roth, 457b Roth and the 401k Roth are a recent addition to employer-sponsored retirement plans, came along after I retired.
  18. The Backdoor Roth comes up a lot on the Boglehead forum. Ed did a great job of explaining it. The final step is dealing with the Form 8606, which keeps track of things so that there's no double taxation. This year, Ed will use a 2018 Form 8606 to report the contribution to a non-deductible tIRA. Next year he will use a 2019 Form 8606 to report the conversion to a Roth IRA. Why bother with a Backdoor Roth IRA instead of putting the 6k in a taxable account? There's no further taxes on the Roth IRA! The taxable account produces taxable dividends every year and capital gains when it's sold. It's a no-brainer.
  19. Close. I’m performing two maneuvers that are independent, but related. Maneuver 1 My Traditional IRA has a bunch of pre-tax money because I rolled over a bunch of old 401ks and I may have even had normal Traditional IRA contributions before my income grew and prevented me from making Traditional IRA contributions. I’m taking all of this money and moving it into my current employer’s 401k. Manuever 2 I contributed $5,500 to my Roth IRA at the beginning of 2018. Since then it has grown. Collectively my wife and I earned more income than ever before and more than I expected. As a result we are in the phase out range for Roth IRA contributions, which means we weren’t allowed to contribute the full $5,500 so that has to be undone in one way or another. My approach is to recharacterize my Roth overcontribution, which will move that money (and its associated earnings) to my now empty Traditional IRA. However, because I make way too much money to contribute to a Traditional IRA in the normal way, this will be classified as a non-deductible contribution, which means I can’t deduct it from my taxable income, which of course is THE reason most people put money in a Traditional IRA. Then immediately after that money is recharacterized, I will convert it to a Roth. As a result I will have to pay ordinary income tax on the earnings, but the initial contribution amount I made back in 2018 (the basis) will not be taxed. So the money that went into the Roth in 2018, it’ll go into a Traditional and then right back to the Roth. Why two maneuvers? If I didn’t execute Maneuver 1 then when I went to convert the money back to a Roth, I’d have to pay income tax on more than just the earnings. I’d have to pay income tax on a percentage of the conversion as determined by the ratio of pre-tax to post-tax money in the account, something like: (Pre-tax money in Traditional)/(Total Value of Traditional) The Loophole The Traditional and Roth IRA has income restrictions on who can use them, the idea being that wealthy people like me don’t need another tax break. However, there are no income restrictions on making non-deductible contributions to a Traditional IRA and there aren’t any income restrictions on converting the Traditional IRA to a Roth IRA. As a result wealthy people can get money into a Roth IRA even when their income is too high to directly contribute to a Roth IRA. This is called a Backdoor Roth and I believe the loophole was introduced in 2006 (tax increase prevention and reconciliation act) and took effect in 2010. 2019 In 2019 this won’t be so complex. I’ll just make a $6,000 non-deductible contribution to my empty Traditional IRA and immediately convert it to a Roth. It’s only dramatic now because I hadn’t planned for this, my initial contribution was made to the Roth directly, it generated earnings, and I had a bunch of pre-tax money in my Traditional IRA.
  20. Hi Ed, Let me get this straight: You are talking about four different retirement vehicles that the same money is passing through: 1. traditional IRA, 2. employer 401k, 3. nondeductible traditional IRA and 4. finally the Roth IRA. This looks like one of the biggest tax loopholes that the tax code gives us. Fascinating.
  21. Thanks for the link. I gave it a quick read. Unfortunately, I’ve been side tracked because I realized our taxable income for 2018 caused the allowable Roth IRA contribution to partially phase out. So after lots of reading I’m in the process of rolling my Traditional IRA into my employer 401k, recharacterizing the overcontribution to be a nondeductible Traditional IRA contribution, filling out the IRS form for that, and the converting the nondeductible Traditional IRA back to a Roth IRA. I’m happy I have the choices to pull this off, but I wasn’t pumped to learn all of this right now, especially with the tax deadline looming.
  22. Ed, perhaps you've read this article by the WCI? https://www.whitecoatinvestor.com/0-income-tax-retirement/ As always the comments are interesting also.
  23. For 2018 tax year, it's a 12% income tax bracket. Due to an oversight by Congress, the top of the 0% cap gains bracket is slightly lower, but let's ignore that and assume it's the same. If your taxable income, excluding what might qualify for the 0% cap gains rate is: A. over the top of the 12% income tax bracket, your cap gains and qualified dividends will not be taxed at 0%, but at 15%. B. under the top of the 12% income tax bracket by 10k and you have 30k of cap gains and QDI, 10k will be taxed at 0% and 20k will be taxed at 15%. Here’s the IRS cap gains worksheet for figuring out whether your cap gains will be taxed at 0%, 15% or higher. https://apps.irs.gov/app/vita/content/globalmedia/capital_gain_tax_worksheet_1040i.pdf It’s a very non-intuitive worksheet, at least for me, but I think you can look at your income tax records and figure out what’s going on. There are a number of excellent BH threads on this subject, including this one: https://www.bogleheads.org/forum/viewtopic.php?f=2&t=251561&p=3971176#p3970451
  24. I think of the future as being quite difficult to predict so I’m not assuming anything about my wife or her job in the future. I’m just wondering out loud in terms of a generic married couple, or a single individual for that matter. You are right though, married joint filers have to include their income together and if my wife kept working then we’d certainly be paying taxes because her income exceeds the standard deduction by a lot Are you sure the capital gains rate is applied like that? I always thought that whatever bracket you were in determined the rate for all of your capital gains? Obviously that isn’t how ordinary income is treated for federal income tax, where you get to fill up the lower brackets taking advantage of the lower rates on your way to the higher rate. ...I’m looking into this more it seems like if your ordinary income is in the 0% bracket and adding in your capital gains takes you into the 15% bracket then the 0% rate will be applied to the portion of your capital gains that takes you up to the 15% bracket and the 15% will be applied to the rest of the capital gains. Is that how it works? Am I wrong in concluding that it is pretty easy for normal people (i.e. people who don’t need a lot of money per year to live) to avoid taxes entirely in retirement? It seems too good to be true so I’m wondering if I’m missing something.
  25. Are you assuming that your wife retires when you do but does not start her pension until later? From what you've written previously she enjoys her teaching career and plans to go into administration! If you file MFJ, you have to include her income along with any cap gains, right? Remember that the cap gains are added to all other non-cap gain income, to see which cap gains tax rate applies*. If you have no earned income and the wife's taxable income is 70k, and you have 20k of cap gains, only about 9k will be in the 0% cap gains tax bracket. The other 11k will be in the 15% cap gains tax bracket. * I learned this the hard way, paying 15% on some cap gains that I thought would be taxed at 0%.
  26. I’ve only casually looked into this, but I’m curious what you guys think. The standard deduction for a married couple is 24k so every year you could convert 24k from a Traditional IRA to a Roth IRA. This will result in $0 of federal income tax The upper income limit on the 0% capital gains rate for a married couple is just shy of 80k (presumably the profits from a taxable sale count towards this limit). So you could cash out roughly 56k of profit from your taxable account without paying any tax. I don’t need anywhere near that much money per year to live. Thats to say nothing about money that is already in a Roth account. I understand that at a certain age social security or teacher pensions will likely play a roll in increasing taxable income. I always assumed I’d be paying taxes in retirement, but all of this just occurred to me (research to come) and I think I might have a 0% tax rate during retirement. What do you guys think?
  27. It would be nice if the non-institutional shares were 0.09%. As things stand now I can’t justify paying almost 3x the price relative to a 3 fund Vanguard portfolio. Then when I start looking at Fidelity’s ZERO fee funds...paying 0.15% begins to feel absurd. ...honestly I don’t understand why their all in one funds cost more than the individual funds contained within them.
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