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Post by chummer16 on Feb 16, 2019 11:28:24 GMT -6
Pre-tax. We stopped putting into the Roth because our income level is too high. I didn’t understand that but that is what the planner said. I guess he is assuming we will be at a higher tax rate now then later. We are putting 38k a year in 401k’s and 500 a month into a stock account which we pick a stock every few months to invest in. We should have our first million in assets in about 5 years. That puts me at 48 and my wife at 44. Glaring holes in the plan are 2 kids to put through college and a health care plan for retirement. As for NY, I grew up here and love it, it will be hard to leave but Cuomo is running it into the ground and making the decision easier. My wife makes the real money so the trick will be retiring 5 years before her and keep the cash rolling in. Do you have any traditional IRA money now, or is it all in 401k? If you have no money in traditional IRAs, I'd seriously consider a backdoor Roth IRA. It's a slick way to scoot right around those Roth income limits. There are more details to mind, but the big one is if you don't have a traditional, you've got a green light for a painless backdoor Roth. Also look at your tax pie. You gotta mind your ratios. What percentage of your retirement assets are: Tax free: Roth IRA, Roth 401k Tax deferred: 401k, traditional IRA, HSA Taxable: Your plain stock account etc. You don't want to be lugging too much tax load into retirement. Once you're too heavy in tax deferred stuff, you have to start discounting it's value, because to get at it, you're gonna have to give a huge chunk to AOC, or be relegated to smaller distributions to keep your tax bracket in line. www.rothira.com/what-is-a-backdoor-roth-iraIf I had to guess right now our breakdown is; 200k traditional ira 150k 401k 50k Roth 60k individual stocks 30k 529 college fund
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Post by Sandbur on Feb 16, 2019 11:30:56 GMT -6
I like the idea of bonds, laddered bonds even better.
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Post by MoBuckChaser on Feb 16, 2019 11:41:11 GMT -6
We put the max in the wifes 401K with the match. I put in the max every year into my SEP IRA. Or what ever my account tells me to. Is there such a thing as a back door sep IRA?
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Post by Foggy on Feb 16, 2019 11:47:35 GMT -6
IF YOU HAVE A YEAR WHERE YOU DONT HAVE TO PAY ANY TAXES......that would be a good year to convert IRA funds to a Roth IRA. I had a year like that but my planner and tax person blew it. I'm still miffed at them for not advising me on this. INstaed I had to pay taxes when I converted IRA money.
REMEMBER THIS....as you may get one of those times when it could be a big advantage......OR YOU MAY BE ABLE TO CREATE SUCH A YEAR?? Big Jerry???
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Post by MoBuckChaser on Feb 16, 2019 11:51:14 GMT -6
IF YOU HAVE A YEAR WHERE YOU DONT HAVE TO PAY ANY TAXES......that would be a good year to convert IRA funds to a Roth IRA. I had a year like that but my planner and tax person blew it. I'm still miffed at them for not advising me on this. INstaed I had to pay taxes when I converted IRA money. REMEMBER THIS....as you may get one of those times when it could be a big advantage......OR YOU MAY BE ABLE TO CREATE SUCH A YEAR?? Big Jerry??? I have never had a year I don't pay taxes. Its usually by trucks. I pay 2 -3 new trucks this time. When does a guy never pay taxes?
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Post by mnfish on Feb 16, 2019 11:57:32 GMT -6
ROTH IRA
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Post by mnfish on Feb 16, 2019 11:58:46 GMT -6
Zero income tax and you decide when to bring the money out from under the shelter. Traditional IRA's were the biggest lie ever sold to the public.
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Post by MoBuckChaser on Feb 16, 2019 12:06:04 GMT -6
Zero income tax and you decide when to bring the money out from under the shelter. Traditional IRA's were the biggest lie ever sold to the public. Thats fine for only a few grand a year, what else can be done?
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Post by sd51555 on Feb 16, 2019 12:31:23 GMT -6
Do you have any traditional IRA money now, or is it all in 401k? If you have no money in traditional IRAs, I'd seriously consider a backdoor Roth IRA. It's a slick way to scoot right around those Roth income limits. There are more details to mind, but the big one is if you don't have a traditional, you've got a green light for a painless backdoor Roth. Also look at your tax pie. You gotta mind your ratios. What percentage of your retirement assets are: Tax free: Roth IRA, Roth 401k Tax deferred: 401k, traditional IRA, HSA Taxable: Your plain stock account etc. You don't want to be lugging too much tax load into retirement. Once you're too heavy in tax deferred stuff, you have to start discounting it's value, because to get at it, you're gonna have to give a huge chunk to AOC, or be relegated to smaller distributions to keep your tax bracket in line. www.rothira.com/what-is-a-backdoor-roth-iraIf I had to guess right now our breakdown is; 200k traditional ira 150k 401k 50k Roth 60k individual stocks 30k 529 college fund Ok, backdoor Roth is out. It would create a tax nightmare. However, you can move your tax pie quickly if you decide that is best for you. Again consult with a pro on this, but here's an idea. First, here's how your tax pie breaks down: I'm guessing you're getting some kind of match in your 401k's, so absolutely keep doing that so you at least get your match. But kick around the idea of converting your entire traditional IRA to roth as you can afford it (It will take years). You can pick whatever amount you want to convert each year, but you have to mind your tax brackets. You don't want to inadvertently push yourself into a much higher bracket. There's no need to share the nitty gritty details of what you earn, but this analysis is fairly simple. Here are the federal and state brackets for a man that has succumbed to marriage. Also note, any conversions you do, you have to pay your marginal (rate on the next dollar) federal and state tax on that dollar amount.If your taxable income is under that $315,000 mark, you can about assume a total marginal tax rate of about 31% between state (7%) and federal (24%). This strategy is what I call " Using up your tax bracket." Let's say you have a taxable income of $250,000. That leaves you $65,000 more income you could incur before you have a major tax bracket change. Say you budget $8,000 per year to pay taxes on conversions from traditional to Roth. For simplicity, let's assume the market values do not change. Let's also assume you put $25,000 into your 401k's instead of $38,000 (to pay the tax on these conversions) and you continue with the $500/mo into your plain taxable account. $8,000 divided by a tax rate of 31% = ~$26,000 converted each year. (rounded off) It would take 9 years to do it (more likely 12 with real world gains), but here's how your tax pie would change. Nobody can tell you what the ideal ratio of tax deferred assets to take into retirement is, that is up to you to decide. If you plan to leave your high tax state when you retire, this is not a good strategy. However if you're going to stay, this may make more sense.
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Post by mnfish on Feb 16, 2019 12:33:31 GMT -6
Thats a great question. Fortunately for me not a real concern. Yrs ago when it was offered i converted all my traditional ira savings into a self directed ROTH. Invested the self directed money and turned it into a substantial amount of money, all tax free. Retired at 47 and at 59.5 will never pay income or capital gains taxs again (assuming the feds dont change the laws)
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Post by MoBuckChaser on Feb 16, 2019 12:35:38 GMT -6
Thats a great question. Fortunately for me not a real concern. Yrs ago when it was offered i converted all my traditional ira savings into a self directed ROTH. Invested the self directed money and turned it into a substantial amount of money. Retired at 47 and at 59.5 will never pay income or capital gains taxs again (assuming the feds dont change the laws)
Bahahahahahahahahahahahahahahahahahahahahahahaha! Your Fucked Jeff!
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Post by mnfish on Feb 16, 2019 12:38:04 GMT -6
Hahahah
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Post by sd51555 on Feb 16, 2019 12:55:57 GMT -6
We put the max in the wifes 401K with the match. I put in the max every year into my SEP IRA. Or what ever my account tells me to. Is there such a thing as a back door sep IRA? The way I read it, no. I'd also recommend against trying it outside a SEP. SEPs are treated just like traditional IRAs. If you've got a big SEP, you'd create a tax tracking nightmare by doing a backdoor Roth outside of it. If you want your eyes to bug out, read up on the pro-rata rule. www.marketwatch.com/story/dont-let-the-pro-rata-rule-trip-up-your-roth-2013-10-11
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Post by sd51555 on Feb 16, 2019 13:08:59 GMT -6
Zero income tax and you decide when to bring the money out from under the shelter. Traditional IRA's were the biggest lie ever sold to the public. Thats fine for only a few grand a year, what else can be done? If you're ready to retire and it's all balled up in tax deferred stuff, you need to leave MN and set up residency in a low tax/no tax state and then rent a place wherever the Cuda wants to be, to be by the grandkids. The state tax savings will provide you a shitload of plane tickets and extra cash to have a place in MN. Art and I own a cabin on Gull Lake we rent out in the winter for $800/mo + utilities that you can use. Even got a brand new Kubota cab tractor you can play with to push snow.
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Post by Freeborn on Feb 16, 2019 13:14:33 GMT -6
I don't but most of my stuff is pretty liquid so I can move the bulk of my investments very quickly. Most of my assets are in a 401k so I am limited to what's in the cafeteria therefore I'm in index funds. These funds can be moved easily. if you have a diversified portfolio particularly that is outside a 401k type structure it can be more complicated realigning assets as you have tax effects plus you have to sell each investment. This 40% is a rule of thumb and based on where the market is I would probably adjust that percentage. 40% long into the cycle and less on the start of a new cycle. All of this is predicated on having a pulse on the market/economy. Diversified to me is more risk probably than diversified to others. I lumped mine into 4 categories for the most part. a healthcare index fund, a tech index fund, a stock index fund, and a Utility ETF. Wrong or right, I am liking it for now.
Edit: I forgot, I just put my last 20% of investing cash into a small cap fund at vanguard (VSMAX) 2 months ago. And man is it tearing it up right now.
John your truly not that diversified but probably more diversified than most. I would bet Foggy has 60+ investments similar to my mother In-law. Before my father in-law passed he worked with professional money managers who developed his diversification strategy which I now oversee. Once my wife and I retire we will move our money to a similar manager applying a similar strategy. Here is the kicker, unless you have 5+ million they don't want to talk to you. Wealth managers want to manage big money, Foggy's level and much higher. That doesn't mean they won't work with you but it can be eye opening that your nest egg is not that big of deal. My mother in-laws strategy is to protect assets while generating a livable income. This is pretty easy for my mother In-law as her income requirements are minimal. If you want more income and you don't have the assets you need to move into riskier investments. By the way, we have bonds in my mother in-laws portfolio and they provide risk free income with some of them tax free. Bonds are not all bad depending on what your age and goals are.
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