Personal Finance Advice and Education! (2 Viewers)

[SFBayDuck]

I've been reading through the thread and had a couple of questions...

I'm 46 years old and have been a W2 contractor since I was 30. I never stayed with one firm long enough to start a 401k. I have a family of 5, so all of my money went to supporting them and not into any financial vehicles. I'm at a point now with a one off to college and another getting ready to go that my family expenses have gone down enough that I feel better about investing. Call me crazy (my wife does), but I always put the family before my retirement. Make sure they had the things I didn't have, then focus on me when I had the opportunity.

I don't plan on retiring early. I see myself working for another 20 years. No 401k plan to join, so looking at opening a Roth IRA. I know little about the market, less about picking the right stocks. I'm considering opening an online account and working my own investments. Or is it better to hire a guy to do that for me? I worked with a guy once in my 20s, but he was a car salesman type of led me into some bad investments. Lost a little then and never went back. Are firms still this way? Are the tools easier now to just jump in and go? I don't mind a little risk, but I'm more averse now than I was back then. Any insights, suggestions?

You don't need a guy. A Target-Date Retirement Fund, or just 3 index funds (domestic, international, and bonds in some mix) inside your Roth is fine. Once it hits a million, then ask if you need a guy.

Pretty much what @Runkle said.

Think of your "extra" money as water filling a series of buckets, so as one is filled it flows down to the next. Some may move one of these up or down a spot or two, but in general:

Maximize any "free money" (typically a 401K match or, a little more controversially, an ESPP. Doesn't sound like these apply to you)->
Emergency Fund ->
Pay off any high interest debts (credit cards) ->
Fund an HSA if you are eligible ->
Max out traditional and Roth IRAs (as income limits allow)->
Max out 401K (again, not an option for you right now) ->
Fund 529 plans if relevant (might be too late on this one if you haven't already, other than there might be a tax benefit to doing so depending on your state) ->
Pay off "medium" interest debt, like auto or student loans ->
Taxable brokerage/real estate, etc

Automate it. Set up automatic withdrawals from your bank to go right to whichever bucket you're filling. The major providers (Fidelity, Vanguard, etc) allow you to set up automatic investment into mutual funds as soon as the funds hit, so you can set it and forget it. Then if you get any windfalls or bonuses during the year, you can supplement this based on the above order of operations.

As for what to invest in, pick 1, 2, or 3 low/no cost ETFs or mutual funds and call it good. Some people with at least 15-20 year timeframes are comfortable with 100% stocks, something like VTI. Others want a little less risk/more diversification, so spread it out like Runkle and @Peggy suggested across three funds or just use a single target date fund which does that for you.

 

[DadIssues]

Thanks for all of the suggestions, I appreciate it. I thought it was going to be a little daunting at first, but it sounds simple enough to manage. Glad to know I can do it in my own and not have to worry about someone else.

 

[matttyl]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

 

[NutterButter]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

So 81k from pretax and how much from SS?

 

[Sand]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

Those numbers are worse if it's just your wife left (let's face it, for most of us married blokes we'll go first) and she's filing single. At this point what you have in there is what you have. I don't know if there is a specific answer to this as these rules can and have changed recently. But, for me, at least, I plan on slowly doing Roth conversions to work the tax system the best I can to blunt that eventuality. Maybe staying within the 15% tax bracket or similar. After that the chips will fall where they fall.

 

[ConstruxBoy]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

I think it's more of an issue for higher net worth folks. If you've got some passive income coming in along with SS, you may have all the $ you need and not want to take any or very little from your traditional retirement accounts so it can keep growing for an inheritance. You're certainly correct though that the longer time in between retirement and RMDs mandated, the less of a difference.

 

[matttyl]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

So 81k from pretax and how much from SS?

Ha, you really expect there to be SS in 30+ years? I say that in jest, but I get what you mean - other income can bump you into next bracket. I just mean that if pre tax will be the bulk of your retirement income, and all you want to do is fill up the brackets under ~20% annually from ~63 to 75, and start SS at full retirement age (67 at best, unless increased), it will take an initial amount in pre-tax at retirement in the millions before RMDs at age 75 (or higher if increased) could negatively impact you.

 

[NutterButter]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

So 81k from pretax and how much from SS?

Ha, you really expect there to be SS in 30+ years? I say that in jest, but I get what you mean - other income can bump you into next bracket. I just mean that if pre tax will be the bulk of your retirement income, and all you want to do is fill up the brackets under ~20% annually from ~63 to 75, and start SS at full retirement age (67 at best, unless increased), it will take an initial amount in pre-tax at retirement in the millions before RMDs at age 75 (or higher if increased) could negatively impact you.

If you and your wife both are getting max SS (meaning starting at 70), then you'd be looking at 115k in SS income of which 98k is taxable. So in your scenario, that actually exceeds your pre-tax withdrawal. So now most of that social income is getting hit at 22%. I take it you're not getting that much in SS, but something to consider.

 

[matttyl]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

I think it's more of an issue for higher net worth folks. If you've got some passive income coming in along with SS, you may have all the $ you need and not want to take any or very little from your traditional retirement accounts so it can keep growing for an inheritance. You're certainly correct though that the longer time in between retirement and RMDs mandated, the less of a difference.

That sounds counterintuitive- if you don’t touch it and let it grow, it will potentially be large enough later in life that RMDs will become an issue. Also, and I know it’s not popular or even advised around here - but in terms of “inheritance” for my kid, I/we have life insurance for that (I mean currently it’s for income replacement, if we’re still alive at retirement that would shift to inheritance so that we can “free up” retirement assets to be used for their designed purpose -retirement). I mean I’d much rather give my kid totally tax free money/inheritance without any strings from the IRS (life insurance), rather than a totally taxable sum that the IRS mandates must be depleted (and taxed) over ten years (which could very much negatively impact his situation at that time).

 

[ConstruxBoy]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

I think it's more of an issue for higher net worth folks. If you've got some passive income coming in along with SS, you may have all the $ you need and not want to take any or very little from your traditional retirement accounts so it can keep growing for an inheritance. You're certainly correct though that the longer time in between retirement and RMDs mandated, the less of a difference.

That sounds counterintuitive- if you don’t touch it and let it grow, it will potentially be large enough later in life that RMDs will become an issue. Also, and I know it’s not popular or even advised around here - but in terms of “inheritance” for my kid, I/we have life insurance for that (I mean currently it’s for income replacement, if we’re still alive at retirement that would shift to inheritance so that we can “free up” retirement assets to be used for their designed purpose -retirement). I mean I’d much rather give my kid totally tax free money/inheritance without any strings from the IRS (life insurance), rather than a totally taxable sum that the IRS mandates must be depleted (and taxed) over ten years (which could very much negatively impact his situation at that time).

Well, I was really giving an example of RMDs being bad. The best strategy is probably to convert traditional to roth year by year. But the situation is really that you may already get enough income to live and not want to "have" to take any more. So the issue is not that you don't think you will ever get taxed on those traditional amounts, it's that you want to delay it as long as you can and take the amounts you want each year.

 

[matttyl]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

So 81k from pretax and how much from SS?

Ha, you really expect there to be SS in 30+ years? I say that in jest, but I get what you mean - other income can bump you into next bracket. I just mean that if pre tax will be the bulk of your retirement income, and all you want to do is fill up the brackets under ~20% annually from ~63 to 75, and start SS at full retirement age (67 at best, unless increased), it will take an initial amount in pre-tax at retirement in the millions before RMDs at age 75 (or higher if increased) could negatively impact you.

If you and your wife both are getting max SS (meaning starting at 70), then you'd be looking at 115k in SS income of which 98k is taxable. So in your scenario, that actually exceeds your pre-tax withdrawal. So now most of that social income is getting hit at 22%. I take it you're not getting that much in SS, but something to consider.

Current estimate of SS at full retirement age (67) is like $5-6k a month combined for us. While hopeful, I just can’t plan on that and will see it as a bonus if/when it does. Lets say $65k in SS, about $55k taxable - at that time would still likely leave lots of space before hitting next bracket.

 

[matttyl]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

I think it's more of an issue for higher net worth folks. If you've got some passive income coming in along with SS, you may have all the $ you need and not want to take any or very little from your traditional retirement accounts so it can keep growing for an inheritance. You're certainly correct though that the longer time in between retirement and RMDs mandated, the less of a difference.

That sounds counterintuitive- if you don’t touch it and let it grow, it will potentially be large enough later in life that RMDs will become an issue. Also, and I know it’s not popular or even advised around here - but in terms of “inheritance” for my kid, I/we have life insurance for that (I mean currently it’s for income replacement, if we’re still alive at retirement that would shift to inheritance so that we can “free up” retirement assets to be used for their designed purpose -retirement). I mean I’d much rather give my kid totally tax free money/inheritance without any strings from the IRS (life insurance), rather than a totally taxable sum that the IRS mandates must be depleted (and taxed) over ten years (which could very much negatively impact his situation at that time).

Well, I was really giving an example of RMDs being bad. The best strategy is probably to convert traditional to roth year by year. But the situation is really that you may already get enough income to live and not want to "have" to take any more. So the issue is not that you don't think you will ever get taxed on those traditional amounts, it's that you want to delay it as long as you can and take the amounts you want each year.

Ok, I got you. I’m a big fan of Roth conversions, and will likely do them if I have additional room in lower brackets heading into or while in retirement.

 

[GoBirds]

For some reason I still am hesitant to put all my cash in online accounts but have a good chunk in Vanguard with some in the Cash Plus and the rest in their MM account getting .5% more. Does anyone go with the Cash Plus for the insurance or is there nothing to worry about with their money market fund?

Also am I an idiot for keeping money at Truist getting over 1% less just for the comfort of being able to go to a branch?

 

[gianmarco]

That sounds counterintuitive- if you don’t touch it and let it grow, it will potentially be large enough later in life

 

[dino259]

Looking for some advice for taxes for my 16 yr old. He received a 1099-NEC for working for the local youth baseball organization (umpiring and field maintenance). I was hoping he would fall under the free versions of tax file softwares. Started with Taxact and because of the 1099-NEC and some other lawnmowing income that would be filed on a schedule C they want to charge to file his taxes. I guess the free would be for a simple W2 only filing. Has anyone recently helped there child with this? It showed he owes self employment tax but is still under any Federal tax.

After figuring out the tax side, I would also like to match his income to make a deposit to an IRA to get him started. I think this would also be a factor towards financial aid but with my income, odds are not good for much of that.

 

[BeTheMatch]

Looking for some advice for taxes for my 16 yr old. He received a 1099-NEC for working for the local youth baseball organization (umpiring and field maintenance). I was hoping he would fall under the free versions of tax file softwares. Started with Taxact and because of the 1099-NEC and some other lawnmowing income that would be filed on a schedule C they want to charge to file his taxes. I guess the free would be for a simple W2 only filing. Has anyone recently helped there child with this? It showed he owes self employment tax but is still under any Federal tax.

After figuring out the tax side, I would also like to match his income to make a deposit to an IRA to get him started. I think this would also be a factor towards financial aid but with my income, odds are not good for much of that.

FreeTax USA supports that form, I'm pretty sure

 

[-OZ-]

Two new things came up today and I was wondering about what y’all think.

1. Robin Hood’s new 3% cash back on everything card. That could easily become our go to. Plus with their bonus for transferring money in, it’s worth considering.

2. Worthy now gives 7% on their bonds, through 2026. I had used worthy as our escrow account for a while, before M1 was paying 5% on savings. I’m thinking of putting money in there earmarked for our next vehicle.

 

[Peggy]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

Those numbers are worse if it's just your wife left (let's face it, for most of us married blokes we'll go first) and she's filing single. At this point what you have in there is what you have. I don't know if there is a specific answer to this as these rules can and have changed recently. But, for me, at least, I plan on slowly doing Roth conversions to work the tax system the best I can to blunt that eventuality. Maybe staying within the 15% tax bracket or similar. After that the chips will fall where they fall.

Yes, this.

 

[Sand]

Two new things came up today and I was wondering about what y’all think.

1. Robin Hood’s new 3% cash back on everything card. That could easily become our go to. Plus with their bonus for transferring money in, it’s worth considering.

What is your current card at? Since it costs $60 a year to be eligible for this you'd need 6k of spending to get more than all the 2% cards out there. Marginal.

 

[Peggy]

I’m not really sure how to phrase this question that has been rolling around in my head lately, other than “are RMDs really that bad?”

I understand most folks have a majority of their “retirement” money tied up in traditional 401k/IRAs (pre-tax $). I’m in that situation myself. I mean we also do ROTHs each year, and have that option in my 401k though I stay traditional (rather have tax break now). But just doing some “back of the napkin” math, you’d need an exceedingly large amount for RMDs to really be that big of a hindrance (at least one you can’t plan around). For someone my age they don’t hit till age 75, and I plan to retire pre-65 if possible. So I’ll be depleting those pre-tax dollars for at least 10 years prior to RMDs even coming into play. If my wife and I still have say $2M in qualified assets at that point, after 10+ years of distribution, the RMD is only like $81k - which even today is only thr 12% bracket. Even at age 85 an RMD on $2M is $125k - though the number of folks that would still have that much in qualified money at that age can’t be too big, especially if they’ve been living off of it for 20+ years.

So at what age/accumulated amount do RMDs even come into play in planning where to allocate retirement savings?

So 81k from pretax and how much from SS?

Ha, you really expect there to be SS in 30+ years? I say that in jest, but I get what you mean - other income can bump you into next bracket. I just mean that if pre tax will be the bulk of your retirement income, and all you want to do is fill up the brackets under ~20% annually from ~63 to 75, and start SS at full retirement age (67 at best, unless increased), it will take an initial amount in pre-tax at retirement in the millions before RMDs at age 75 (or higher if increased) could negatively impact you.

If you and your wife both are getting max SS (meaning starting at 70), then you'd be looking at 115k in SS income of which 98k is taxable. So in your scenario, that actually exceeds your pre-tax withdrawal. So now most of that social income is getting hit at 22%. I take it you're not getting that much in SS, but something to consider.

Another argument for taking SS early.

 

[Peggy]

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

 

[Desert_Power]

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

I was such a hater of the preferred rewards program internally when BofA rolled it out because it is too good of a deal for the customers. I have two cards that get 5.25% for online shopping but being able to put up a solid 3.5% on Costco is strong too.

 

[NutterButter]

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

Looking at the boa website, it seems like grocery and wholesale clubs are predefined at 2% and its just the 3% category is customizable; "3% cash back in the category of your choice, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases". Are you saying that's not the case?

 

[Peggy]

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

Looking at the boa website, it seems like grocery and wholesale clubs are predefined at 2% and its just the 3% category is customizable; "3% cash back in the category of your choice, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases". Are you saying that's not the case?

Perhaps I have the 3 and 2 backwards? I chose restaurants and always use the wife's card for gas.

 

[NutterButter]

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

Looking at the boa website, it seems like grocery and wholesale clubs are predefined at 2% and its just the 3% category is customizable; "3% cash back in the category of your choice, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases". Are you saying that's not the case?

Perhaps I have the 3 and 2 backwards? I chose restaurants and always use the wife's card for gas.

Shot in the dark but do you know if the required boa checking account for the platinum status needs to have a balance? I know you need a combined balance of 100k which I can meet with a merrill account (have schwab now so that's a straightforward lateral move) but I prefer not to actually use this checking account and this 3-2-1 is only worth it if you get at least some preferred member boost.

 

[SFBayDuck]

Ok, I got you. I’m a big fan of Roth conversions, and will likely do them if I have additional room in lower brackets heading into it while in retirement.

I always get hung up on the pro rata rule, and should probably just ask a tax guy to explain it to me. But let's start here! Do I have it right in that, as long as there isn't a mix of pre and post-tax funds in your IRA, you only have pre-tax money, this doesn't apply? I think that's right.

Assuming that is correct, I'm wondering about the post-tax 401K contributions I just started for the first time last year. These are automatically converted into a Roth 401K via an in-plan conversion. So I think I'm still safe from the pro rata rule complications because I don't have any post-tax funds laying around anywhere in any kind of traditional IRA or 401K account.

Do I have all that right?

 

[Peggy]

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

Looking at the boa website, it seems like grocery and wholesale clubs are predefined at 2% and its just the 3% category is customizable; "3% cash back in the category of your choice, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases". Are you saying that's not the case?

Perhaps I have the 3 and 2 backwards? I chose restaurants and always use the wife's card for gas.

Shot in the dark but do you know if the required boa checking account for the platinum status needs to have a balance? I know you need a combined balance of 100k which I can meet with a merrill account (have schwab now so that's a straightforward lateral move) but I prefer not to actually use this checking account and this 3-2-1 is only worth it if you get at least some preferred member boost.

I think it's just a combined 100K across all BoA/ME accounts. So if you want your savings account somewhere else just have $1.00 in a BoA account which is linked to ME.

If you're thinking about putting 100K or more into ME make sure you sing up for preferred deposit fund in the brokerage account before investing the money. You need 100K to apply, then no minimum after that. It's the only fund I could find at BoA/ME that pays the ~5.0% interest on basically what amounts to a savings account fund. It's not a sweep fund though so you have to wait a day between deposits/withdrawals.

 

[Peggy]

Ok, I got you. I’m a big fan of Roth conversions, and will likely do them if I have additional room in lower brackets heading into it while in retirement.

I always get hung up on the pro rata rule, and should probably just ask a tax guy to explain it to me. But let's start here! Do I have it right in that, as long as there isn't a mix of pre and post-tax funds in your IRA, you only have pre-tax money, this doesn't apply? I think that's right.

Assuming that is correct, I'm wondering about the post-tax 401K contributions I just started for the first time last year. These are automatically converted into a Roth 401K via an in-plan conversion. So I think I'm still safe from the pro rata rule complications because I don't have any post-tax funds laying around anywhere in any kind of traditional IRA or 401K account.

Do I have all that right?

The pro-rata rule only applies to a tradition IRA. A traditional IRA is set up by an individual not an employer. I think what's being discussed is converting employer retirement accounts (401K, employer IRA, etc.) to a Roth IRA. If it's all inside the employer 401K the pro rata rule does not apply. If there is a mix of funds the bank knows how much of each and can convert them separately which are two different things:

1 - After tax 401K can be converted to Roth at any time without penalty. Sounds like yours is automatic.
2 - Pre tax 401K you would convert to Roth in early retirement years when you are in a low tax bracket because you owe tax as income.

Are you sure the automatic in-plan conversion is to a 401K Roth? It should just be to a regular Roth account outside the 401K. OR is your contribution directly to a 401K Roth (no conversion necessary)?

The way I understand it, everything you typed out, the pro-rata rule does not apply to you and you are safe. The key being you "don't have any post-tax funds laying around anywhere in any kind of traditional IRA". But note, even pre-tax funds laying around in a traditional IRA, such as consolidated old 401K accounts, would invoke the pro-rata rule.

 

[SFBayDuck]

But note, even pre-tax funds laying around in a traditional IRA, such as consolidated old 401K accounts, would invoke the pro-rata rule.

There's the issue then. I, like I imagine most people that haven't spent their whole careers at one job, have old 401Ks that I've rolled into traditional IRAs. That's why I've wondered how so many people seemingly are able to do these rollovers, because, as you stated, unless everything you have is in an employer plan this gets complicated.

 

[Instinctive]

But note, even pre-tax funds laying around in a traditional IRA, such as consolidated old 401K accounts, would invoke the pro-rata rule.

There's the issue then. I, like I imagine most people that haven't spent their whole careers at one job, have old 401Ks that I've rolled into traditional IRAs. That's why I've wondered how so many people seemingly are able to do these rollovers, because, as you stated, unless everything you have is in an employer plan this gets complicated.

Two ways:
1. People under 40 who were well informed in college knew not to roll old 401(k)s into IRAs
2. You can always just leave the 401(k), I think. So the lazy option would keep you eligible.

 

[SFBayDuck]

But note, even pre-tax funds laying around in a traditional IRA, such as consolidated old 401K accounts, would invoke the pro-rata rule.

There's the issue then. I, like I imagine most people that haven't spent their whole careers at one job, have old 401Ks that I've rolled into traditional IRAs. That's why I've wondered how so many people seemingly are able to do these rollovers, because, as you stated, unless everything you have is in an employer plan this gets complicated.

Two ways:
1. People under 40 who were well informed in college knew not to roll old 401(k)s into IRAs
2. You can always just leave the 401(k), I think. So the lazy option would keep you eligible.

Makes sense. Used to be investment options in 401Ks were pretty limited and often expensive. So getting those funds out of there and into an IRA opened up a myriad of less expensive options, the ability to trade individual stocks, etc.

But these days they are pretty good. Our plan with Fidelity now has the BrokerageLink option - you roll your funds to it and you can invest in whatever you want, but it's still under the umbrella of the 401K. I've done that with my Roth funds, makes overall asset location so much easier.

 

[SFBayDuck]

Are you sure the automatic in-plan conversion is to a 401K Roth? It should just be to a regular Roth account outside the 401K. OR is your contribution directly to a 401K Roth (no conversion necessary)?

Coming back to this - yes, these are after tax dollars between the $30K (I'm over 50) + company match and the $69K total annual cap. We do have a Roth 401K option for that initial $30K bucket as well, but I'm currently doing traditional with those contributions.

 

[Peggy]

Hang on guys.

Even in a traditional IRA we're still just trying to pay taxes on the pre-tax dollars early in retirement (at a low tax bracket) and converting to a Roth. That's exactly what the pro-rata rules does, makes sure you pay those taxes. It keeps you from doing a back door Roth because it treats the rollover as one lump sum so you end up paying tax on $7,000 of after tax money, but, it doesn't stop you from taking advantage of rolling it all over in retirement.

Right?

 

[Instinctive]

Hang on guys.

Even in a traditional IRA we're still just trying to pay taxes on the pre-tax dollars early in retirement (at a low tax bracket) and converting to a Roth. That's exactly what the pro-rata rules does, makes sure you pay those taxes. It keeps you from doing a back door Roth because it treats the rollover as one lump sum so you end up paying tax on $7,000 of after tax money, but, it doesn't stop you from taking advantage of rolling it all over in retirement.

Right?

Yeah for a Roth ladder - that's what you're describing, i think - that's totally fine. I think Duck is getting at the backdoor, where you put POST-tax dollars from 401(k) or traditional IRA and convert it into a Roth IRA. if you do this, but you have other pre-tax dollars in a traditional IRA, then it converts pro rata. So if I had $7k pre tax in one from last year, and this year I tried to backdoor $7k post tax into a traditional and convert it, by rule I would actually convert $3,500 pre tax and $3,500 post tax.

If you're just retired, then the common path is to convert as much of your traditional funds (401k or IRA) to Roth as you can up to whatever limits trigger higher taxes. At the very minimum, you'd want to convert at least up to the standard deduction.

And you don't have to wait to retirement. Many of my cohort took savings from between undergrad and grad school and did conversions during grad school - especially those who weren't doing some biglaw or consulting internship that still paid $30k+ for the summer.

 

[Peggy]

Are you sure the automatic in-plan conversion is to a 401K Roth? It should just be to a regular Roth account outside the 401K. OR is your contribution directly to a 401K Roth (no conversion necessary)?

Coming back to this - yes, these are after tax dollars between the $30K (I'm over 50) + company match and the $69K total annual cap. We do have a Roth 401K option for that initial $30K bucket as well, but I'm currently doing traditional with those contributions.

Right, you're the same as me, and we are at Fidelity too. Check and see, but, the Roth that the after tax 401k rolls into is not inside the 401K account. It's just a regular Roth sitting there with Fidelity. And how the gosh darn do you have it set up automatically? I have to call in every six months.

Me too - I'm currently doing the traditional 30.5K contribution just for the reasons we are discussing (pay tax in a conversion early in retirement at a low tax bracket instead of a very high tax bracket now). And another 46K after tax to Roth.

 

[Peggy]

Hang on guys.

Even in a traditional IRA we're still just trying to pay taxes on the pre-tax dollars early in retirement (at a low tax bracket) and converting to a Roth. That's exactly what the pro-rata rules does, makes sure you pay those taxes. It keeps you from doing a back door Roth because it treats the rollover as one lump sum so you end up paying tax on $7,000 of after tax money, but, it doesn't stop you from taking advantage of rolling it all over in retirement.

Right?

Yeah for a Roth ladder - that's what you're describing, i think - that's totally fine. I think Duck is getting at the backdoor, where you put POST-tax dollars from 401(k) or traditional IRA and convert it into a Roth IRA. if you do this, but you have other pre-tax dollars in a traditional IRA, then it converts pro rata. So if I had $7k pre tax in one from last year, and this year I tried to backdoor $7k post tax into a traditional and convert it, by rule I would actually convert $3,500 pre tax and $3,500 post tax.

If you're just retired, then the common path is to convert as much of your traditional funds (401k or IRA) to Roth as you can up to whatever limits trigger higher taxes. At the very minimum, you'd want to convert at least up to the standard deduction.

And you don't have to wait to retirement. Many of my cohort took savings from between undergrad and grad school and did conversions during grad school - especially those who weren't doing some biglaw or consulting internship that still paid $30k+ for the summer.

Agree on all points, but, I don't think Duck is too worried about the backdoor. He's got 46K of megabackdoor he can max out first.

 

[SFBayDuck]

And you don't have to wait to retirement. Many of my cohort took savings from between undergrad and grad school and did conversions during grad school - especially those who weren't doing some biglaw or consulting internship that still paid $30k+ for the summer.

That's awesome to hear, that in your younger days y'all were thinking about this stuff and acting on it! My daughter is a year from graduation, and I'm going to try to coach her through some of these things to hopefully build some great habits from the start, starting with helping her do her taxes when I visit her next week and helping her make a 2023 Roth contribution.

Right, you're the same as me, and we are at Fidelity too. Check and see, but, the Roth that the after tax 401k rolls into is not inside the 401K account. It's just a regular Roth sitting there with Fidelity. And how the gosh darn do you have it set up automatically? I have to call in every six months.

Just double checked, those after-tax dollars are inside of the 401K in a bucket called "Roth In-Plan Conversion". There is a separate bucket of "Roth Deferral " which has some funds from 2022 when I did contribute some directly to that. I've moved most all of those funds over to BrokerageLink, which I can see in NetBenefits when I dill down into those two buckets.

And I did have to call twice to get them to set up the auto rollover initially, as they screwed it up the first time. I only started taking advantage of this the past 5-6 months, so I'll pay attention to see if I have issues.

Agree on all points, but, I don't think Duck is too worried about the backdoor. He's got 46K of megabackdoor he can max out first.

True! Not right now anyway, but when I (hopefully) retire in a couple of years I'd love to take the opportunity of having minimal income to do some backdoor rollovers and stuff some lower tax brackets as I'd be living off LTCGs for a few years, so just trying to wrap my head around it.

 

[Instinctive]

And you don't have to wait to retirement. Many of my cohort took savings from between undergrad and grad school and did conversions during grad school - especially those who weren't doing some biglaw or consulting internship that still paid $30k+ for the summer.

That's awesome to hear, that in your younger days y'all were thinking about this stuff and acting on it! My daughter is a year from graduation, and I'm going to try to coach her through some of these things to hopefully build some great habits from the start, starting with helping her do her taxes when I visit her next week and helping her make a 2023 Roth contribution.

My dad played a huge role in me being somewhat financially savvy as a 20 year old in college. I had a Roth IRA since I was 16! With laws as they are now, the #1 "wouldn't think of it" thing is to keep the backdoor roth option open.

Sounds like you're the kind of dad I'll be aspiring to be over the rest of my life, given our firstborn is 5-weeks old LOL.

 

[Peggy]

Right, you're the same as me, and we are at Fidelity too. Check and see, but, the Roth that the after tax 401k rolls into is not inside the 401K account. It's just a regular Roth sitting there with Fidelity. And how the gosh darn do you have it set up automatically? I have to call in every six months.

Just double checked, those after-tax dollars are inside of the 401K in a bucket called "Roth In-Plan Conversion". There is a separate bucket of "Roth Deferral " which has some funds from 2022 when I did contribute some directly to that. I've moved most all of those funds over to BrokerageLink, which I can see in NetBenefits when I dill down into those two buckets.

And I did have to call twice to get them to set up the auto rollover initially, as they screwed it up the first time. I only started taking advantage of this the past 5-6 months, so I'll pay attention to see if I have issues.

Interesting. We may have had to have ours outside the retirement account because it's set up to buy company stock with. And you certainly can covert after tax 401K to any Roth, inside or out and I don't see that it makes any other difference.

 

[Andrew74]

But note, even pre-tax funds laying around in a traditional IRA, such as consolidated old 401K accounts, would invoke the pro-rata rule.

There's the issue then. I, like I imagine most people that haven't spent their whole careers at one job, have old 401Ks that I've rolled into traditional IRAs. That's why I've wondered how so many people seemingly are able to do these rollovers, because, as you stated, unless everything you have is in an employer plan this gets complicated.

One can check to see if their current 401(k) allows funds to be rolled into the plan. I had an old IRA and once I wasn’t able to contribute directly to a Roth, I was able to roll the IRA into the plan so I could start doing backdoors.

 

[-OZ-]

Two new things came up today and I was wondering about what y’all think.

1. Robin Hood’s new 3% cash back on everything card. That could easily become our go to. Plus with their bonus for transferring money in, it’s worth considering.

What is your current card at? Since it costs $60 a year to be eligible for this you'd need 6k of spending to get more than all the 2% cards out there. Marginal.

Different cards. 6% on grocery (but with an annual fee), 5% gas, 5% restaurants, 3% Warehouse clubs, 2.5% at select places like apple (includes Apple Pay), Home Depot, Lowe’s, etc, 5% on utility bills, 5% (or 6%) on Amazon, 1.5% on everything else. Our default is decent.

Visa Signature | Credit Cards | Personal | Redstone Federal Credit Union

For members who want the most out of life, our premier credit card, Redstone’s Visa Signature has it all: a great rate, no annual fee,1 unlimited rewards, and dozens of exclusive benefits.

www.redfcu.org

It’s the everything else that might make it worthwhile. But we can probably do better by churning.

BOA 3-2-1 card with platinum member 75% boost gets me 5.25% back on grocery (by far our largest monthly expense), 3.5% on gas and restaurants.
BOA travel card for everything else gets 2.625%.
No annual fees for either.

That’s pretty sweet. I could transfer our regular brokerage to get into this. Not sure it’s really worth while.

 

[jm192]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

 

[SFBayDuck]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

There's a long-running thread on the topic if you really want to dig in: https://forums.footballguys.com/threads/do-you-hoard-credit-card-points.762601/

I haven't really done anything to play this game or optimize, other than getting a travel card when I'm going on a trip if I don't already have one associated with the airline or hotel. So I have Hilton and Marriott cards, and Alaska, Southwest, United, and American cards. Got the bonuses for each, and obviously use them for booking any travel with any of them to get that boost.

But the AMEX Platinum is the first one I've gotten outside of that model, and while the lounge access has already been great I'm interested in how the travel options work. I just got it so don't have any points in my account yet, so when I go to their portal they don't show me how many points things cost. I had a promotional $99 companion fare on Alaska that was about to expire so I booked flights for the lady and I to Kona in November, hoping to use the AMEX points to cover at least some of the lodging. If no good options I'll look at Marriott or Hilton properties and likely just use points there.

 

[-OZ-]

Kona in November,

 

[SFBayDuck]

Kona in November,

Oh man, I didn’t even think about that! But it’s a month earlier.

 

[McBokonon]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

There's a long-running thread on the topic if you really want to dig in: https://forums.footballguys.com/threads/do-you-hoard-credit-card-points.762601/

I haven't really done anything to play this game or optimize, other than getting a travel card when I'm going on a trip if I don't already have one associated with the airline or hotel. So I have Hilton and Marriott cards, and Alaska, Southwest, United, and American cards. Got the bonuses for each, and obviously use them for booking any travel with any of them to get that boot.

But the AMEX Platinum is the first one I've gotten outside of that model, and while the lounge access has already been great I'm interested in how the travel options work. I just got it so don't have any points in my account yet, so when I go to their portal they don't show me how many points things cost. I had a promotional $99 companion fare on Alaska that was about to expire so I booked flights for the lady and I to Kona in November, hoping to use the AMEX points to cover at least some of the lodging. If no good options I'll look at Marriott or Hilton properties and likely just use points there.

No real reason to use points in the portal (same with Chase, Cap1, Citi) and never book with cash through it unless you're booking a Hotel Collection or Fine Hotels and Resorts property to get the credit. Otherwise, portals are poor value and transferring points to partners is better if you have them to use, and if not just book directly with the airline/hotel and get their rewards (you don't earn rewards through, for example, Marriott if you book through AMEX unless it's a Fine Hotel and Resort and even that's not a sure thing.) I know you earn 5X AMEX points if you book through the portal but I usually make out better booking direct. Plus, if there's an issue, you're dealing with Expedia or whoever operates the AMEX portal instead of the airline/hotel itself.

Hilton and Marriott are both partners, fwiw, so you can transfer your points directly to them.

 

[SFBayDuck]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

There's a long-running thread on the topic if you really want to dig in: https://forums.footballguys.com/threads/do-you-hoard-credit-card-points.762601/

I haven't really done anything to play this game or optimize, other than getting a travel card when I'm going on a trip if I don't already have one associated with the airline or hotel. So I have Hilton and Marriott cards, and Alaska, Southwest, United, and American cards. Got the bonuses for each, and obviously use them for booking any travel with any of them to get that boot.

But the AMEX Platinum is the first one I've gotten outside of that model, and while the lounge access has already been great I'm interested in how the travel options work. I just got it so don't have any points in my account yet, so when I go to their portal they don't show me how many points things cost. I had a promotional $99 companion fare on Alaska that was about to expire so I booked flights for the lady and I to Kona in November, hoping to use the AMEX points to cover at least some of the lodging. If no good options I'll look at Marriott or Hilton properties and likely just use points there.

No real reason to use points in the portal (same with Chase, Cap1, Citi) and never book with cash through it unless you're booking a Hotel Collection or Fine Hotels and Resorts property to get the credit. Otherwise, portals are poor value and transferring points to partners is better if you have them to use, and if not just book directly with the airline/hotel and get their rewards (you don't earn rewards through, for example, Marriott if you book through AMEX unless it's a Fine Hotel and Resort and even that's not a sure thing.) I know you earn 5X AMEX points if you book through the portal but I usually make out better booking direct. Plus, if there's an issue, you're dealing with Expedia or whoever operates the AMEX portal instead of the airline/hotel itself.

Hilton and Marriott are both partners, fwiw, so you can transfer your points directly to them.

Thanks, like I said brand new cardholder so hadn’t really looked into this yet. And based on this article, transferring for Bonvoy or HH points doesn’t seem to be the best value anyway, so may just start looking at my other lodging options and save these points for flights.

 

[McBokonon]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

There's a long-running thread on the topic if you really want to dig in: https://forums.footballguys.com/threads/do-you-hoard-credit-card-points.762601/

I haven't really done anything to play this game or optimize, other than getting a travel card when I'm going on a trip if I don't already have one associated with the airline or hotel. So I have Hilton and Marriott cards, and Alaska, Southwest, United, and American cards. Got the bonuses for each, and obviously use them for booking any travel with any of them to get that boot.

But the AMEX Platinum is the first one I've gotten outside of that model, and while the lounge access has already been great I'm interested in how the travel options work. I just got it so don't have any points in my account yet, so when I go to their portal they don't show me how many points things cost. I had a promotional $99 companion fare on Alaska that was about to expire so I booked flights for the lady and I to Kona in November, hoping to use the AMEX points to cover at least some of the lodging. If no good options I'll look at Marriott or Hilton properties and likely just use points there.

No real reason to use points in the portal (same with Chase, Cap1, Citi) and never book with cash through it unless you're booking a Hotel Collection or Fine Hotels and Resorts property to get the credit. Otherwise, portals are poor value and transferring points to partners is better if you have them to use, and if not just book directly with the airline/hotel and get their rewards (you don't earn rewards through, for example, Marriott if you book through AMEX unless it's a Fine Hotel and Resort and even that's not a sure thing.) I know you earn 5X AMEX points if you book through the portal but I usually make out better booking direct. Plus, if there's an issue, you're dealing with Expedia or whoever operates the AMEX portal instead of the airline/hotel itself.

Hilton and Marriott are both partners, fwiw, so you can transfer your points directly to them.

Thanks, like I said brand new cardholder so hadn’t really looked into this yet. And based on this article, transferring for Bonvoy or HH points doesn’t seem to be the best value anyway, so may just start looking at my other lodging options and save these points for flights.

Yep, flights are the best value, specifically international, but takes a bit of work. Worth it if you're a dork like me and enjoy figuring it out. Feel free to reach out whenever if you have questions.

 

[NutterButter]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

There's a long-running thread on the topic if you really want to dig in: https://forums.footballguys.com/threads/do-you-hoard-credit-card-points.762601/

I haven't really done anything to play this game or optimize, other than getting a travel card when I'm going on a trip if I don't already have one associated with the airline or hotel. So I have Hilton and Marriott cards, and Alaska, Southwest, United, and American cards. Got the bonuses for each, and obviously use them for booking any travel with any of them to get that boot.

But the AMEX Platinum is the first one I've gotten outside of that model, and while the lounge access has already been great I'm interested in how the travel options work. I just got it so don't have any points in my account yet, so when I go to their portal they don't show me how many points things cost. I had a promotional $99 companion fare on Alaska that was about to expire so I booked flights for the lady and I to Kona in November, hoping to use the AMEX points to cover at least some of the lodging. If no good options I'll look at Marriott or Hilton properties and likely just use points there.

No real reason to use points in the portal (same with Chase, Cap1, Citi) and never book with cash through it unless you're booking a Hotel Collection or Fine Hotels and Resorts property to get the credit. Otherwise, portals are poor value and transferring points to partners is better if you have them to use, and if not just book directly with the airline/hotel and get their rewards (you don't earn rewards through, for example, Marriott if you book through AMEX unless it's a Fine Hotel and Resort and even that's not a sure thing.) I know you earn 5X AMEX points if you book through the portal but I usually make out better booking direct. Plus, if there's an issue, you're dealing with Expedia or whoever operates the AMEX portal instead of the airline/hotel itself.

Hilton and Marriott are both partners, fwiw, so you can transfer your points directly to them.

Is this just a hotel thing? Chase gives 1.25 back when redeeming through the portal so that 5% I got when booking tickets now becomes 6.25% when redeeming those points. I only use points for flights since I predominantly book airbnbs and turos.

 

[McBokonon]

Love seeing the Credit Card talk. I probably need to branch out. We've really gone heavy on Chase.

There's a long-running thread on the topic if you really want to dig in: https://forums.footballguys.com/threads/do-you-hoard-credit-card-points.762601/

I haven't really done anything to play this game or optimize, other than getting a travel card when I'm going on a trip if I don't already have one associated with the airline or hotel. So I have Hilton and Marriott cards, and Alaska, Southwest, United, and American cards. Got the bonuses for each, and obviously use them for booking any travel with any of them to get that boot.

But the AMEX Platinum is the first one I've gotten outside of that model, and while the lounge access has already been great I'm interested in how the travel options work. I just got it so don't have any points in my account yet, so when I go to their portal they don't show me how many points things cost. I had a promotional $99 companion fare on Alaska that was about to expire so I booked flights for the lady and I to Kona in November, hoping to use the AMEX points to cover at least some of the lodging. If no good options I'll look at Marriott or Hilton properties and likely just use points there.

No real reason to use points in the portal (same with Chase, Cap1, Citi) and never book with cash through it unless you're booking a Hotel Collection or Fine Hotels and Resorts property to get the credit. Otherwise, portals are poor value and transferring points to partners is better if you have them to use, and if not just book directly with the airline/hotel and get their rewards (you don't earn rewards through, for example, Marriott if you book through AMEX unless it's a Fine Hotel and Resort and even that's not a sure thing.) I know you earn 5X AMEX points if you book through the portal but I usually make out better booking direct. Plus, if there's an issue, you're dealing with Expedia or whoever operates the AMEX portal instead of the airline/hotel itself.

Hilton and Marriott are both partners, fwiw, so you can transfer your points directly to them.

Is this just a hotel thing? Chase gives 1.25 back when redeeming through the portal so that 5% I got when booking tickets now becomes 6.25% when redeeming those points. I only use points for flights since I predominantly book airbnbs and turos.

I almost certainly overgeneralized if we're talking all card options. I guess the bottom line is compare all the different ways you can book something and choose the best option. AMEX Plat (focusing on this since that's the card being discussed) gives 5X on purchases made directly with airlines so no real reason to book plane trips on the AMEX portal even if just for the potential customer service issues mentioned earlier. Unless there's a significant price difference but that's unlikely. And I'm sure the redemption value of the rewards is better if you transfer directly to the airline instead of using the portal. Of course, the airline/hotel may not be a transfer partner so that's a whole different set of decisions.

For hotels, it depends if you want your status recognized (it likely won't be recognized if booked through the portal EXCEPT for Fine Hotels). Then, if you have a cobranded card for the hotel chain you normally use and maybe there's a promotion which effectively boosts the rewards earned. Then decide if 5X AMEX points for booking through the portal is worth more to you than whatever you get in the hotel loyalty program plus recognized status and easier customer service resolution by booking direct. The AMEX points are more flexible so all things being equal, sure, use the portal. And, if it's a hotel chain you almost never use so status/rewards don't matter, then the portal is fine (but again, remember changes and other customer service issues will be more of a hassle.)

Also @SFBayDuck if you are having trouble thinking of how to use the AMEX $200 airline credit and you ever fly United, make them your selected airline and use the United Travel Bank. You can deposit $200 annually at United and it's credited back to your AMEX account. Essentially, "free" (using quotes because of the annual fee) $200 towards a United flight every year - need to use it within 4 years.