Personal Finance Advice and Education! (4 Viewers)

[-OZ-]

Talk to me about REITs. I don't have any in my personal portfolios. How do I invest in them?

You definitely don’t need to. I’m starting to build mine up a bit just because they tend to offer a more stable return, but that’s not always true. In a way they’re similar to other dividend paying companies.

A decent article: https://blog.massmutual.com/retiring-investing/reits-portfolio-invest

Should you invest in REITs?​

According to Devine, REITs may be suitable for investors who seek a source of steady income, a subset that often includes retirees. Unless you have the time and expertise to analyze the commercial real estate industry carefully, however, it is generally best to leave the decisions on which specific REITs to buy or sell to a professional, he said.

“I recommend REITs within a managed portfolio,” Devine said, noting that most investors should limit their REIT exposure to between 2 percent and 5 percent of their overall portfolio.

 

[Runkle]

Talk to me about REITs. I don't have any in my personal portfolios. How do I invest in them?

I think, if you do, I'd recommend some of the super-broad Vanguard funds so it's just general "real estate exposure" rather than any REIT focused on any specific development, project, type, etc.

Additionally, I believe you should try to hold your REITs in a Roth IRA so that you don't have to deal with the taxes being passed to you. It's extra return and less paperwork.

 

[Sand]

REITs are a separate income class and can be added in. Allocation, in general, is recommended to be pretty small - 5-10%. So not a huge deal either way.

 

[-OZ-]

Additionally, I believe you should try to hold your REITs in a Roth IRA so that you don't have to deal with the taxes being passed to you. It's extra return and less paperwork.

Either Roth or traditional works here with the same benefit. Just don’t buy in your regular brokerage.
I put mine in traditional because they tend not to generate as large total return as large cap growth or small cap value.

 

[pecorino]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Who pays 2% any more? That’s ridiculous. Peers and I talk often about running away from human advisors charging just 1%. Surely a two or three fund allocation in index funds would be superior. Do a search on two-fund ETFs or the like. There are many.

 

[dkp993]

Thank you. I just saw this for the Roth in my plan details:

Roth Contributions
Your plan permits Roth after-tax employee contributions. You may contribute a minimum of 1% and your total employee contributions (Roth after-tax and Traditional pre-tax deferrals combined) may not exceed $xxx annually ($xxx if you are at least age 50 and your plan has a catch-up feature). If permitted by your plan, you may be able to make additional catch-up contributions between the ages of 60 - 63. Annual limitations are set by the IRS and are subject to change.

Is this recommended here? I know no one knows my financial situation, but I am looking to save a bit more. Is the Roth a good conduit for this?

Edit: I just edited out the numbers, werent completely sure if they were particular to me or not

While I am far from an expert, so take my advice with a grain salt, I’m the same age as you and starting adding the Roth 401k into my mix solely for the reason of having some non-tax income to withdraw when I retire. I went crazy going down the rabbit hole of should or shouldn’t you Roth 401k vs traditional. Ultimately the idea of having some flexibility in my future withdrawals pushed me to doing it. I’m currently doing a roughly 75% traditional and 25% Roth 401 deposit mix.

 

[Sand]

Just finished my taxes and got a good look at my expenditures this year. Broken down:

Taxes - 48%
Food - 11%
Home maintenance - 10% (new roof)
Insurance - 6.5%
Travel - 5%

Nutso, just nutso that taxes were almost equal to all the rest of my expenditures for the year. SALT limitations and higher interest rates (CDs, money markets) boosted my amount owed, but still what I shell out in taxes is kinda crazy.

 

[Nugget]

Just finished my taxes and got a good look at my expenditures this year. Broken down:

Taxes - 48%
Food - 11%
Home maintenance - 10% (new roof)
Insurance - 6.5%
Travel - 5%

Nutso, just nutso that taxes were almost equal to all the rest of my expenditures for the year. SALT limitations and higher interest rates (CDs, money markets) boosted my amount owed, but still what I shell out in taxes is kinda crazy.

Is this just looking at expenses? Or as a percentage of income? I may spend close to the same, but that is taking probably 40% of my income as savings first.

 

[-OZ-]

Just finished my taxes and got a good look at my expenditures this year. Broken down:

Taxes - 48%
Food - 11%
Home maintenance - 10% (new roof)
Insurance - 6.5%
Travel - 5%

Nutso, just nutso that taxes were almost equal to all the rest of my expenditures for the year. SALT limitations and higher interest rates (CDs, money markets) boosted my amount owed, but still what I shell out in taxes is kinda crazy.

Property taxes included? I was about to ask about your state before I saw who I was replying to.
Fwiw, we’re nowhere near that.

 

[Sand]

Just finished my taxes and got a good look at my expenditures this year. Broken down:

Taxes - 48%
Food - 11%
Home maintenance - 10% (new roof)
Insurance - 6.5%
Travel - 5%

Nutso, just nutso that taxes were almost equal to all the rest of my expenditures for the year. SALT limitations and higher interest rates (CDs, money markets) boosted my amount owed, but still what I shell out in taxes is kinda crazy.

Is this just looking at expenses? Or as a percentage of income? I may spend close to the same, but that is taking probably 40% of my income as savings first.

Just expenses, not income. We save a decent amount, but it blows my mind I spent as much on taxes as I did everything else.

Property taxes included? I was about to ask about your state before I saw who I was replying to.
Fwiw, we’re nowhere near that.

Yeah, property taxes included (yes, AL RE taxes are low, but Jefferson County is at the top of the state - nothing like IL or NJ, though). Fed, state, local income taxes. RE tax, SS, FICA, car registrations. Only thing not in there is the hard to track stuff - sales taxes, etc.

 

[-OZ-]

I spent last week with mom, as dad died on Saturday. I’m far more concerned about her than I’m sad about dad. He’ll be missed of course but he died painlessly in his sleep.
I was worried about her finances but thankfully it turns out she’s done a lot better than I had expected, not wealthy but she’ll be fine with dad’s teacher pension, SS and her investments. He was 78, she’s 81 blind and basically deaf. Her facility is great, which certainly helps. The pension and SS covers her expenses, her investments probably wouldn’t without the pension. Which just really hits the point about long term care insurance if you don’t have a pension or if your pension won’t transfer to your spouse.

On a brighter note, I took the opportunity to check our long term plans. It looks like SS for both of us will basically equal my military pension plus VA, my civilian pension will add about half as much as either of those, altogether these add up to about $15k in today’s money, so tax planning will be even more important for years 60-70 (retirement to when we take SS) than I thought. OTOH, when I die she’ll only get $6k of that (we passed on SBP), so maybe leaving a couple million in the traditional accounts for her after I die will be the prudent move. Fwiw, her grandma is still alive in her mid 90s, 3/4 of her grandparents lived past 90. The only person in my family to make it past 80 is my mom.

 

[steelerfan1]

I spent last week with mom, as dad died on Saturday. I’m far more concerned about her than I’m sad about dad. He’ll be missed of course but he died painlessly in his sleep.
I was worried about her finances but thankfully it turns out she’s done a lot better than I had expected, not wealthy but she’ll be fine with dad’s teacher pension, SS and her investments. He was 78, she’s 81 blind and basically deaf. Her facility is great, which certainly helps. The pension and SS covers her expenses, her investments probably wouldn’t without the pension. Which just really hits the point about long term care insurance if you don’t have a pension or if your pension won’t transfer to your spouse.

On a brighter note, I took the opportunity to check our long term plans. It looks like SS for both of us will basically equal my military pension plus VA, my civilian pension will add about half as much as either of those, altogether these add up to about $15k in today’s money, so tax planning will be even more important for years 60-70 (retirement to when we take SS) than I thought. OTOH, when I die she’ll only get $6k of that (we passed on SBP), so maybe leaving a couple million in the traditional accounts for her after I die will be the prudent move. Fwiw, her grandma is still alive in her mid 90s, 3/4 of her grandparents lived past 90. The only person in my family to make it past 80 is my mom.

Very sorry for your loss Oz.

 

[The Z Machine]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?

Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

 

[SFBayDuck]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?

Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

Exactly right, they’re going to default to their own higher cost funds whenever they can so the corporation can double dip a bit.

Fidelity has low cost ETFs just like Vanguard, just use the fund finder and screen for the asset class you want and filter on the lowest fee range and go from there. With ETFs it doesn’t matter if it’s Fidelity, Schwab, Vanguard, whatever. Pick the one you want.

As for the funds they had you in, makes me chuckle a bit. All the “Strategic Advisor” funds look like a way to charge more fees for the same thing. I looked at FSAKX, it's a Large Cap Growth Fund charging you .24% in fees. I'd bet VUG (the one I use for LCG) will deliver you the same returns and volatility for .04%.

Also, .36% of your account in a commodities fund? What's even the point, other than to make this all seem more complicated than it really is.

 

[matttyl]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?

Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

Conservative, yes - but you mentioned she’s 80? Sounds about right for an 80 year old.

 

[The Z Machine]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?

Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

Exactly right, they’re going to default to their own higher cost funds whenever they can so the corporation can double dip a bit.

Fidelity has low cost ETFs just like Vanguard, just use the fund finder and screen for the asset class you want and filter on the lowest fee range and go from there. With ETFs it doesn’t matter if it’s Fidelity, Schwab, Vanguard, whatever. Pick the one you want.

As for the funds they had you in, makes me chuckle a bit. All the “Strategic Advisor” funds look like a way to charge more fees for the same thing. I looked at FSAKX, it's a Large Cap Growth Fund charging you .24% in fees. I'd bet VUG (the one I use for LCG) will deliver you the same returns and volatility for .04%.

Also, .36% of your account in a commodities fund? What's even the point, other than to make this all seem more complicated than it really is.

Hello! Exactly!

Soooooo scammy

 

[SFBayDuck]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?

Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

Exactly right, they’re going to default to their own higher cost funds whenever they can so the corporation can double dip a bit.

Fidelity has low cost ETFs just like Vanguard, just use the fund finder and screen for the asset class you want and filter on the lowest fee range and go from there. With ETFs it doesn’t matter if it’s Fidelity, Schwab, Vanguard, whatever. Pick the one you want.

As for the funds they had you in, makes me chuckle a bit. All the “Strategic Advisor” funds look like a way to charge more fees for the same thing. I looked at FSAKX, it's a Large Cap Growth Fund charging you .24% in fees. I'd bet VUG (the one I use for LCG) will deliver you the same returns and volatility for .04%.

Also, .36% of your account in a commodities fund? What's even the point, other than to make this all seem more complicated than it really is.

Hello! Exactly!

Soooooo scammy

So ignoring all of those allocations under 2%, if you wanted to essentially duplicate this you'd be looking at:

47% Intermediate Bonds
15% Short Term Bonds/cash equivalent
10% International Equities
21% LCG
And FSLTX is currently at almost 70% cash, so how diversified is a 5% sleeve of that?

So you would likely get like 99% of the characteristics of the above with:
50% SPTI/IEF/VIGT (Intermediate Bonds)
5% Cash
10% SHY/VGSH (short term bonds)
10% AVIV/SCHF (Int'l)
20% VTI or VUG (LCB/LCG)
5% VNQI (REIT fund for some "alternatives")

And you could really go even simpler and not see much difference in performance:
40%-45% Intermediate bond with SPTI/IEF/VIGT
5%-10% cash
50% VTI

Point being that your macro-allocation (stocks/bonds/alts) are really what matters. The rest is optimization around the edges, which can make a difference if you're interested in it but really isn't necessary.

 

[Sand]

I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?

Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

Exactly right, they’re going to default to their own higher cost funds whenever they can so the corporation can double dip a bit.

Fidelity has low cost ETFs just like Vanguard, just use the fund finder and screen for the asset class you want and filter on the lowest fee range and go from there. With ETFs it doesn’t matter if it’s Fidelity, Schwab, Vanguard, whatever. Pick the one you want.

As for the funds they had you in, makes me chuckle a bit. All the “Strategic Advisor” funds look like a way to charge more fees for the same thing. I looked at FSAKX, it's a Large Cap Growth Fund charging you .24% in fees. I'd bet VUG (the one I use for LCG) will deliver you the same returns and volatility for .04%.

Also, .36% of your account in a commodities fund? What's even the point, other than to make this all seem more complicated than it really is.

Just to be devil's advocate, but I remember not too long ago when everything I had to choose from in mutual funds was 1.X% fee (and up). 0.25% isn't great, but man it's awesome how much better have things gotten over the last 2 decades here.

 

[SofaKings]

So our investment guy wants us to start contributing to our Roths through back door IRAs. Other than the five year rule, any other downside? We are looking to retire in the next 5 years. Currently at a 70/30 equity/cash ratio.

 

[Sand]

So our investment guy wants us to start contributing to our Roths through back door IRAs. Other than the five year rule, any other downside? We are looking to retire in the next 5 years. Currently at a 70/30 equity/cash ratio.

The pro rata rule may apply.

A Guide to the Pro-Rata Rule and Roth IRAs

The pro-rate rule dictates how withdrawals made from Roth IRAs are taxed. It focuses on the percentage of tax-free and taxable money when you withdraw.

smartasset.com

 

[Nugget]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

 

[The Z Machine]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

Sure feels like the market upside is really low right now and the market downside is really high. Like SP500 could be at max +5%, but also -15% or worse.

 

[Sand]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

Sure feels like the market upside is really low right now and the market downside is really high. Like SP500 could be at max +5%, but also -15% or worse.

Both of those are totally normal outcomes in a bull market. Just sayin'.

 

[Chadstroma]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

Sure feels like the market upside is really low right now and the market downside is really high. Like SP500 could be at max +5%, but also -15% or worse.

Why do you feel that? Just curious. I don't have a strong opinion either way right now.

 

[The Z Machine]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

Sure feels like the market upside is really low right now and the market downside is really high. Like SP500 could be at max +5%, but also -15% or worse.

Why do you feel that? Just curious. I don't have a strong opinion either way right now.

Overvalued stock market propped up by AI hype and expectations of lower regulations. Instead we have inflation bubbling up again, lots of job uncertainty, and the reality of broad based tariffs hitting all sorts of businesses.

 

[The Z Machine]

Btw, Hang Seng is up 16% this year, FTSE100 is up over 5%, and SP500 is under 2%.

 

[SFBayDuck]

Diversification sucks….until it doesn’t.

 

[Sand]

Instead we have inflation bubbling up again, lots of job uncertainty, and the reality of broad based tariffs hitting all sorts of businesses.

Inflation never went away. It's been stuck at 4% for a while now (with some noise). Jobs are doing well. Tariffs are a problem, particularly these broad based ones. If they were targeted on mirrored tariffs American businesses currently suffer (autos into China, etc.) then I'd see a lot more logic to them.

 

[The Z Machine]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

Sure feels like the market upside is really low right now and the market downside is really high. Like SP500 could be at max +5%, but also -15% or worse.

Really should have listened to my own advice here. Instead, I'm riding it doooooooown.

 

[-OZ-]

Extra savings were going into VTI in my brokerage account. Future money is going into a MMF. Not selling or changing retirement account mixes, but more liquidity will help me sleep at night. Cutting expenses for the near term as well.

Sure feels like the market upside is really low right now and the market downside is really high. Like SP500 could be at max +5%, but also -15% or worse.

Really should have listened to my own advice here. Instead, I'm riding it doooooooown.

10 years from now this will just be a blip.

I hope.

 

[Juxtatarot]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

 

[matttyl]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

 

[Juxtatarot]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

They are both defined contribution plans. The previous plan did not allow employee contributions. The new one does but there is no matching. A employer contribution would be added at the end of the plan year (currently 10%) at the discretion of the company regardless of an employee contribution. This 10% was always contributed in the past and was written into the plan. Now it’s not.

Basically, I want to ask for policies on the amount of the contribution and/or timing on when changes to the amount of the contribution must be disclosed. I’m not sure what a reasonable ask is though.

 

[thecatch]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

They are both defined contribution plans. The previous plan did not allow employee contributions. The new one does but there is no matching. A employer contribution would be added at the end of the plan year (currently 10%) at the discretion of the company regardless of an employee contribution. This 10% was always contributed in the past and was written into the plan. Now it’s not.

Basically, I want to ask for policies on the amount of the contribution and/or timing on when changes to the amount of the contribution must be disclosed. I’m not sure what a reasonable ask is though.

I don't have an answer to whether that would be reasonable or not. My spouse's former employer had this kind of system though and basically treated it as a holiday bonus. They usually announced a generous contribution at the end of the year but there was nothing guaranteed and nothing in writing guiding discretion or disclosures.

 

[matttyl]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

They are both defined contribution plans. The previous plan did not allow employee contributions. The new one does but there is no matching. A employer contribution would be added at the end of the plan year (currently 10%) at the discretion of the company regardless of an employee contribution. This 10% was always contributed in the past and was written into the plan. Now it’s not.

Basically, I want to ask for policies on the amount of the contribution and/or timing on when changes to the amount of the contribution must be disclosed. I’m not sure what a reasonable ask is though.

Hmm, never heard of a defined contribution plan where the employee couldn’t contribute. Have then given you any disclosure documents at all?

 

[Juxtatarot]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

They are both defined contribution plans. The previous plan did not allow employee contributions. The new one does but there is no matching. A employer contribution would be added at the end of the plan year (currently 10%) at the discretion of the company regardless of an employee contribution. This 10% was always contributed in the past and was written into the plan. Now it’s not.

Basically, I want to ask for policies on the amount of the contribution and/or timing on when changes to the amount of the contribution must be disclosed. I’m not sure what a reasonable ask is though.

Hmm, never heard of a defined contribution plan where the employee couldn’t contribute. Have then given you any disclosure documents at all?

Yes but the employer contribution is not mentioned. When I asked about this I was told this is standard since it is technically discretionary.

 

[Lion to myself]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

They are both defined contribution plans. The previous plan did not allow employee contributions. The new one does but there is no matching. A employer contribution would be added at the end of the plan year (currently 10%) at the discretion of the company regardless of an employee contribution. This 10% was always contributed in the past and was written into the plan. Now it’s not.

Basically, I want to ask for policies on the amount of the contribution and/or timing on when changes to the amount of the contribution must be disclosed. I’m not sure what a reasonable ask is though.

Hmm, never heard of a defined contribution plan where the employee couldn’t contribute. Have then given you any disclosure documents at all?

While not as common today because of the popularity of the 401k, Defined Contribution pension plans are a thing. Instead of defining the “benefit” like a Defined Benefit plan would, the contribution is defined and contributed only by the employer. Money Purchase plans are a common type of Defined Contribution Pension Plan. 401ks are considered profit sharing Defined Contribution plans which can be misleading as there doesn’t necessarily need to be a profit by the company to contribute to the plan. Many companies use what’s called a Safe Harbor 401k which has guaranteed matching contributions by the employer and less administrative costs. The plan being described by Jux is not a Safe Harbor 401k but rather most likely a Traditional 401k which gives the employer flexibility on how much they contribute. They would be under no obligation to announce how much they are going to contribute but it doesn’t mean they can’t or that you cannot ask. 10% is an awesome contribution amount though, so congrats to you Jux!

 

[Juxtatarot]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

To confirm, your employer is replacing a pension (defined benefit) with a 401k (defined contribution) plan?

I’d think that whatever the employer portion is, it would be in writing, and is think it would be some type of “match” contribution - you put in X percent, they put in Y percent.

So in these past years, ya r you been able to put in any contributions of your own over their 10%?

They are both defined contribution plans. The previous plan did not allow employee contributions. The new one does but there is no matching. A employer contribution would be added at the end of the plan year (currently 10%) at the discretion of the company regardless of an employee contribution. This 10% was always contributed in the past and was written into the plan. Now it’s not.

Basically, I want to ask for policies on the amount of the contribution and/or timing on when changes to the amount of the contribution must be disclosed. I’m not sure what a reasonable ask is though.

Hmm, never heard of a defined contribution plan where the employee couldn’t contribute. Have then given you any disclosure documents at all?

While not as common today because of the popularity of the 401k, Defined Contribution pension plans are a thing. Instead of defining the “benefit” like a Defined Benefit plan would, the contribution is defined and contributed only by the employer. Money Purchase plans are a common type of Defined Contribution Pension Plan. 401ks are considered profit sharing Defined Contribution plans which can be misleading as there doesn’t necessarily need to be a profit by the company to contribute to the plan. Many companies use what’s called a Safe Harbor 401k which has guaranteed matching contributions by the employer and less administrative costs. The plan being described by Jux is not a Safe Harbor 401k but rather most likely a Traditional 401k which gives the employer flexibility on how much they contribute. They would be under no obligation to announce how much they are going to contribute but it doesn’t mean they can’t or that you cannot ask. 10% is an awesome contribution amount though, so congrats to you Jux!

Yes, the old plan was a Money Purchase plan. This is a not-for-profit company and, back in the day, 401K plans were only for for-profit companies. The new plan is a 401K plan though.

 

[The Z Machine]

This is a not-for-profit company

Isn't that what a 403b is for?

 

[Lion to myself]

This is a not-for-profit company

Isn't that what a 403b is for?

Non profits can chose to offer a 403b or 401k (or both sometimes) nowadays. If starting a new plan many nonprofits would chose to go with the 401k plan due to flexibility and costs. Back in the day non profits could only offer a plan through the 403b tax code but that’s no longer the case. Many non profits still use the 403b because that is what they started with when it was the only option.

 

[The Z Machine]

OK, all the positions in the Managed IRA were liquidated and moved to a Self-Directed IRA. It wasn't as simple as handing over control and removing fees. A new account needed to be created. Which means new RMD management, new beneficiaries, etc.

Here's the positions that were liquidated:

Asset Name	Asset Type	As % of Total
VANGUARD COMMODITY STRATEGY FD ADMIRAL (VCMDX)	Commodities Broad Basket	0.36%
ISHARES 0-5 YEAR TIPS BOND ETF (STIP)	Short Term Gov. Bonds	2.00%
FID SAI INFLATION PROTECTED BOND INDEX (FSPWX)	Inflation Protected Bonds	1.87%
STRATEGIC ADVISERS CORE INCOME FUND (FPCIX)	Intermediate Core-Plus Bond	47.14%
STRATEGIC ADVISERS INCOME OPPORTUNITIES (FPIOX)	High Yield Bonds	0.54%
STRATEGIC ADVISERS INTERNATIONAL FUND (FILFX)	Foreign Large Blend Stock	6.55%
STRATEGIC ADVISERS EMERGING MARKETS (FSAMX)	Diversified Emerging Mkts Equities	2.98%
STRATEGIC ADVISERS SHORT DURATION FUND (FAUDX)	Ultrashort Bonds	11.24%
STRATEGIC ADVISERS ALTERNATIVES FUND (FSLTX)	Alternative Fund?	5.47%
STRATEGIC ADVISORS U.S. TOTAL STOCK FD (FSAKX)	Large Blend Stock	21.37%
FIDELITY SAI CANADA EQUITY INDEX FUND (FSCJX)	Canadian Stock	0.27%
COHEN & STEERS REALTY SHARES (CSRSX)	Real Estate	0.20%
Total		100.00%

Looks like it was about 63% Bonds, 10% Foreign Stock, and 21% Domestic Stock, 6% "other". As I suspected, this is too conservative IMO and really missed out on some of the stock run-up in the last 3 years.

Also, I note that the majority of the money (97%) was in Fidelity funds. I'm a big Vanguard guy and I bet that the Expense Ratios on the Fidelity funds were not small. Take FSAKX, whish is broad US stock fund at 0.24% Expense Ratio, which tracks the broad US stock market. Compare that to SPY, which has an expense ratio of 0.09%. For a broad market tracker fund, why wouldn't you want the lowest Expense Ratio? Maybe the Fidelity advisors were directed to use Fidelity funds?? Feels like self-dealing to me.

Since taking control of her IRA on Feb 18, her portfolio is down *only* -1.28%. I haven't run the numbers vs. the portfolio above, but I feel OK about not being down even more. SP500 is down 8.2% since that date.

Went with a "Golden Butterfly" type portfolio, but when the stock market started tanking about 10 days ago, I sold half of her stake in SP500 tracker (SPLG) and Small Cap Value (VBR) and put half of that into International Equity (VPL) and left the other half in cash. Biggest saving grace here is 20% in Gold ETF (GLDM), which has increased 1.72% since Feb 18.

 

[Sand]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

10% and the compounding effect over the time that has happened is so huge that it going to discretionary isn't a major blow. You've probably really done well with that contribution. Even if it drops in half it's a great match.

 

[Juxtatarot]

I have a question about employer contributions to a 401K plan.

For many decades my employer has contributed 10% of compensation for employees. This contribution was made annually. The 10% was written into the plan.

The old pension plan is now being converted to a 401K plan. There are good things about this - employee contributions are now allowed (they weren't before) and the expense ratios of the funds are lower. However, the 10% that has been provided is no longer in writing. As I understand it, it is technically discretionary now.

Although I am told there are no immediate plans to change the 10%, it makes me uncomfortable that, presumably, the powers that be could decide to reduce this at any time. I think it might be reasonable to request e a policy that requires the declaration of what the contribution will be well before the plan the year end -- maybe 6 months or so.

Do you think this is reasonable? If your employer contributes on an infrequent basis like mine does, how does this work at your company?

10% and the compounding effect over the time that has happened is so huge that it going to discretionary isn't a major blow. You've probably really done well with that contribution. Even if it drops in half it's a great match.

Yes, that’s true. My primary concern is for the younger workers. These aren’t highly paid positions so that benefit has helped make up for that.

 

[The Z Machine]

I'm getting to learn all about European pensions these days... and the restrictions on investment accounts as a US citizen. Glad I opened up an IRA and. Roth like 20 years ago. Likely gonna have to make contributions there since I won't have access to a 401k anymore. Switzerland has a 3 pillar pension scheme but I don't think the 3rd pillar (which is the voluntarily part and stays with you) is better than an IRA. Might have to investigate the backdoor Roth thing, but I'm a little confused since I already have an IRA so maybe the pro rata rule will apply?

 

[Sand]

I'm getting to learn all about European pensions these days... and the restrictions on investment accounts as a US citizen. Glad I opened up an IRA and. Roth like 20 years ago. Likely gonna have to make contributions there since I won't have access to a 401k anymore. Switzerland has a 3 pillar pension scheme but I don't think the 3rd pillar (which is the voluntarily part and stays with you) is better than an IRA. Might have to investigate the backdoor Roth thing, but I'm a little confused since I already have an IRA so maybe the pro rata rule will apply?

A good article on the pro rata rule:

Don't Avoid the Pro Rata Rule - Go Curry Cracker!

In retirement, we want 100% of our Roth conversions to be taxable income. The goal is to pay tax now at a lower rate rather than we would pay later.

www.gocurrycracker.com

 

[Nugget]

I have enough money in the markets, may look at reloading some i-bonds. Fixed rate is currently 1.2% I don't see it going up on May 1, so now may be a good time if you are looking for some safety and potential inflation insurance.

I Bonds rates for May reset

 

[Ridgeback]

I have enough money in the markets, may look at reloading some i-bonds. Fixed rate is currently 1.2% I don't see it going up on May 1, so now may be a good time if you are looking for some safety and potential inflation insurance.

I Bonds rates for May reset

Yeah, the I-Bonds are only yielding 3.11%. 1 and 2 year treasuries are still about 4%.

 

[-OZ-]

I have enough money in the markets, may look at reloading some i-bonds. Fixed rate is currently 1.2% I don't see it going up on May 1, so now may be a good time if you are looking for some safety and potential inflation insurance.

I Bonds rates for May reset

Yeah, the I-Bonds are only yielding 3.11%. 1 and 2 year treasuries are still about 4%.

It’s just a question of when you want the money and whether you want to lock in better than inflation. I’m considering another $5-10k of I bonds in April. Fwiw, many savings accounts pay 4%, so buying 1 or 2 year treasuries is just a bet against the rates staying, vs locking the money up for 1-2 years. Always try to fund planned expenses.

 

[Nugget]

I have enough money in the markets, may look at reloading some i-bonds. Fixed rate is currently 1.2% I don't see it going up on May 1, so now may be a good time if you are looking for some safety and potential inflation insurance.

I Bonds rates for May reset

Yeah, the I-Bonds are only yielding 3.11%. 1 and 2 year treasuries are still about 4%.

Yes - the majority of my emergency fund and short term savings are at Schwab in the money market fund earning ~4.2. I look at ibonds more as an optional ladder from retirement to RMDs where I can control my taxable income timing. Max is 10k per year - if inflation gets hot I'd rather have my money in. If inflation stays low, my stocks should cook and I'll be good.

 

[Desert_Power]

I have enough money in the markets, may look at reloading some i-bonds. Fixed rate is currently 1.2% I don't see it going up on May 1, so now may be a good time if you are looking for some safety and potential inflation insurance.

I Bonds rates for May reset

Seems like you'd rather stay liquid in this backdrop IMO