Personal Finance Advice and Education! (7 Viewers)

[PinkydaPimp]

Interested in folks take on the right play here.

My 16 year-old son (HS sophomore) just inherited $100K from his grandmother to be held in trust until he is 30 (unless the money is used for school, housing, or medical expenses).   We already are fortunate to have enough saved in a 529 to cover at least four years of any college (and possibly grad school/prof school as well, if necessary), so hopefully the money can remain untouched for at least 7-10 years.  

My son is very interested in finance and investments so I told him I would post here to get the FBG-expert take on where the trust should stash his money.  The kicker to make this more complicated - his mother and I both work in Federal oversight positions and our ability to invest in specific stocks or some sector funds is extremely limited.  We also would not be allowed to make frequent trades - all transactions need to be approved and any purchase has to be held for at least 30 days.  

So, based on these limitations and initial research, he proposed to put most of the money in a standard index fund, another portion in one or two sector funds, and a small amount (maybe 5-10 percent) as a "gamble" in a potential growth stock of his choosing (obviously only one that we would be permitted to hold).

Thoughts?

Honestly i think you have the right idea.  Low cost index and a small gamble amount because it’s a pain to have to get permission every time you make a change and many indexes are pre approved.  Now if you really wanted to make trades you could get around it by having it “managed.”  I believe then your advisor would not need to get trades cleared.  But obviously they would take a cut and 100k isn’t all that much.  Honestly i think long term in a low cost index would be best.  20 years at ~6% and that will be like 320k.  That’s a nice start on retirement or in some places enough to buy a home in cash.

 

[scorchy]

Any particular sector funds you're looking at? Tech is already expensive, and I don't know what else you would want to hold that long without rotation. Would be my biggest concern with that approach. 

Alternatively, @tdoss would like to suggest an investment in tulips.

Have to avoid healthcare and pharma.  He started researching clean energy.  We likely could change up every now and again, but the approval process is annoying enough that I wouldn't want to buy or sell more than once per year.  

I thought @tdoss was even a bigger fan of rakes.

 

[scorchy]

does he work?  If so, can open a Roth and start that as well.  (Well...now that I read it again, not sure how a trust would come into play there....but it's something to look into at least)

From what I understand, the trust holds the money and can invest it in most ways the trustee (his mom) sees fit.  However, the trust can't open an IRA on someone's behalf.  Despite my son being pretty tight with money, I can't see a teenager going for an IRA anyway (no matter how good of an idea it is).  I think having money for a house down the road might be as far into the future as he can see right now.

 

[FUBAR]

Interested in folks take on the right play here.

My 16 year-old son (HS sophomore) just inherited $100K from his grandmother to be held in trust until he is 30 (unless the money is used for school, housing, or medical expenses).   We already are fortunate to have enough saved in a 529 to cover at least four years of any college (and possibly grad school/prof school as well, if necessary), so hopefully the money can remain untouched for at least 7-10 years.  

My son is very interested in finance and investments so I told him I would post here to get the FBG-expert take on where the trust should stash his money.  The kicker to make this more complicated - his mother and I both work in Federal oversight positions and our ability to invest in specific stocks or some sector funds is extremely limited.  We also would not be allowed to make frequent trades - all transactions need to be approved and any purchase has to be held for at least 30 days.  

So, based on these limitations and initial research, he proposed to put most of the money in a standard index fund, another portion in one or two sector funds, and a small amount (maybe 5-10 percent) as a "gamble" in a potential growth stock of his choosing (obviously only one that we would be permitted to hold).

Thoughts?

As someone who reviews these, please just go with a simple fund. 

Maybe like 15-20% in ARK funds. 

 

[FUBAR]

I feel like we had this discussion several months back, or at least stbugs and I did. I agree with you. His point about the same amount of money does make sense. However the diversity of having already taxed monies and the possibility that rates do go up makes it wise to have a portion in Roths. I'd say 20-30%. 

Also, I believe the latest tax laws did away with the stretch IRAs. So now your kids need to take the money out within 10 years. In the past, they could keep the accounts forever without paying any tax and just pass on the account to their kids. 

I'm aiming for 50% Roth total. But either way, having some in both seems prudent.

 

[Kao-Lin]

So, based on these limitations and initial research, he proposed to put most of the money in a standard index fund, another portion in one or two sector funds, and a small amount (maybe 5-10 percent) as a "gamble" in a potential growth stock of his choosing (obviously only one that we would be permitted to hold).

Thoughts?

"Hey dad, my growth stocks are CGC, ACB, and TLRY.  Love those guys."

 

[BassNBrew]

Interested in folks take on the right play here.

My 16 year-old son (HS sophomore) just inherited $100K from his grandmother to be held in trust until he is 30 (unless the money is used for school, housing, or medical expenses).   We already are fortunate to have enough saved in a 529 to cover at least four years of any college (and possibly grad school/prof school as well, if necessary), so hopefully the money can remain untouched for at least 7-10 years.  

My son is very interested in finance and investments so I told him I would post here to get the FBG-expert take on where the trust should stash his money.  The kicker to make this more complicated - his mother and I both work in Federal oversight positions and our ability to invest in specific stocks or some sector funds is extremely limited.  We also would not be allowed to make frequent trades - all transactions need to be approved and any purchase has to be held for at least 30 days.  

So, based on these limitations and initial research, he proposed to put most of the money in a standard index fund, another portion in one or two sector funds, and a small amount (maybe 5-10 percent) as a "gamble" in a potential growth stock of his choosing (obviously only one that we would be permitted to hold).

Thoughts?

If you live in GA, talk to your Senator.

 

[ConstruxBoy]

I was thinking land in the outskirts of a growing region such Jacksonville. You'd have to do a lot of research. But about a 1,000 people were moving to Florida per day, before the pandemic. It's picked up again.   

Are they coming from north of the state or from south?

 

[ConstruxBoy]

Have to avoid healthcare and pharma.  He started researching clean energy.  We likely could change up every now and again, but the approval process is annoying enough that I wouldn't want to buy or sell more than once per year.  

I thought @tdoss was even a bigger fan of rakes.

He's basically Sideshow Bob. 

 

[ConstruxBoy]

Have to avoid healthcare and pharma.  He started researching clean energy.  We likely could change up every now and again, but the approval process is annoying enough that I wouldn't want to buy or sell more than once per year.  

I thought @tdoss was even a bigger fan of rakes.

Your suggestions were good. I would have advocated Healthcare actually but it sounds like that's what you and his mom are in. Some other "sector" thoughts: Emerging Mkts, future tech (like ARKK or XT) or some REITs to get a little of the Real estate side. 

 

[BassNBrew]

Have to avoid healthcare and pharma.  He started researching clean energy.  We likely could change up every now and again, but the approval process is annoying enough that I wouldn't want to buy or sell more than once per year.  

I thought @tdoss was even a bigger fan of rakes.

Dang, @Cavalier made enough to buy a house on chet's biotech suggestion...so are you the guy holding up the CYDY approval?

 

[SoBeDad]

Are they coming from north of the state or from south?

Most are coming from the north to escape the cold and high taxes, and for and affordable real estate.  A minority are going to north and central Florida from south Florida for  affordable real estate. At the current rate, by the time Scorchy's 16 year old son turns 26, there will be over 3 million new residents in Florida. That's a lot of real estate opportunities.  

 

[Lomez]

Have to avoid healthcare and pharma.  He started researching clean energy.  We likely could change up every now and again, but the approval process is annoying enough that I wouldn't want to buy or sell more than once per year.  

I thought @tdoss was even a bigger fan of rakes.

Pretty sure Cruiser put them all in holes. 

 

[Lomez]

He's basically Sideshow Bob. 

 

[Instinctive]

Where are you at on this journey and what is your target net worth at retirement?

We're ~$750k NW, aiming for ~$3M. So far we have never had my wife and I both working at once, and we will next year, which I am super excited for. 

 

[Instinctive]

From what I understand, the trust holds the money and can invest it in most ways the trustee (his mom) sees fit.  However, the trust can't open an IRA on someone's behalf.  Despite my son being pretty tight with money, I can't see a teenager going for an IRA anyway (no matter how good of an idea it is).  I think having money for a house down the road might be as far into the future as he can see right now.

My parents helped me start mine when I was 13 with YMCA refereeing money. 

 

[FUBAR]

As 2021 draws near, I'm considering tinkering a little with the monthly plan. 

Right now we contribute the maximum to the tsp ($450 traditional, $300 Roth), balanced throughout the year. I'll keep doing that to ensure we get the match.

We contribute $800 monthly to the house fund, which is just the difference between the 15 and 30 year mortgage. I don't count this as savings, but as mortgage payments. Eventually we'll either pay off the house or buy a cottage with it. Either way, it's house money. 

The Roth IRAs get funded as early as possible in the year. Last year my wife's was maxed the first day (we did some loss harvesting in December in our regular account, not the house account). This year we don't have losses left to harvest and I don't want to sell and pay short term gains taxes. I'm trying to decide whether to pause the house fund until both IRAs are maxed. Funding early ended up being a mistake last year (obviously) but most years funding early works out. Or we might just put in $500 monthly, and continue to put the extra in our non house regular brokerage. 

Just not sure whether to stop the other parts of the plan to max the IRAs as early as possible. 

 

[Instinctive]

As 2021 draws near, I'm considering tinkering a little with the monthly plan. 

Right now we contribute the maximum to the tsp ($450 traditional, $300 Roth), balanced throughout the year. I'll keep doing that to ensure we get the match.

We contribute $800 monthly to the house fund, which is just the difference between the 15 and 30 year mortgage. I don't count this as savings, but as mortgage payments. Eventually we'll either pay off the house or buy a cottage with it. Either way, it's house money. 

The Roth IRAs get funded as early as possible in the year. Last year my wife's was maxed the first day (we did some loss harvesting in December in our regular account, not the house account). This year we don't have losses left to harvest and I don't want to sell and pay short term gains taxes. I'm trying to decide whether to pause the house fund until both IRAs are maxed. Funding early ended up being a mistake last year (obviously) but most years funding early works out. Or we might just put in $500 monthly, and continue to put the extra in our non house regular brokerage. 

Just not sure whether to stop the other parts of the plan to max the IRAs as early as possible. 

If you're worried about funding timing from a market perspective, you could always fund it and then leave the funds in money market and DCA them over the year. 

 

[Desert_Power]

We're ~$750k NW, aiming for ~$3M. So far we have never had my wife and I both working at once, and we will next year, which I am super excited for. 

Nice work. We are at $1.1mm at 32 over here. We haven't really decided what we would do with a post-retirement life so cannot focus on a single number. Each day the potential optionality grows because we are both at new highs in earnings and in savings rate with the pandemic.  Can't imagine we'd work full time too many more years. 

 

[FUBAR]

If you're worried about funding timing from a market perspective, you could always fund it and then leave the funds in money market and DCA them over the year. 

Not really. I'll invest either way, the only real question is whether to front load the Roth IRAs (and then the house fund later) or balance everything out throughout the year. 

My wife's Roth IRA and the house fund are fairly close in allocation (broad markets). My IRA is single stocks and sector funds.

 

[Instinctive]

Nice work. We are at $1.1mm at 32 over here. We haven't really decided what we would do with a post-retirement life so cannot focus on a single number. Each day the potential optionality grows because we are both at new highs in earnings and in savings rate with the pandemic.  Can't imagine we'd work full time too many more years. 

Way to go! Yeah we've kind of built out, and then keep continually updating 1-2x a year, a budget of "what would we lavishly spend on ourselves every year forever?" and include our best researched costs for kids, our travel (we travel a lot and in a typically bougie way), and similar on top of the standard like food/housing/healthcare/etc stuff. Right now we're really struggling to find reasons why we would need to spend more than $100k in a given year but things can always change. 

I've got the added benefit that my wife likes working more. So I may retire, save us a bunch on childcare by just being the stay at home parent (which means losing my income will hurt less), and then we'll see where life takes us. 

 

[ConstruxBoy]

Way to go! Yeah we've kind of built out, and then keep continually updating 1-2x a year, a budget of "what would we lavishly spend on ourselves every year forever?" and include our best researched costs for kids, our travel (we travel a lot and in a typically bougie way), and similar on top of the standard like food/housing/healthcare/etc stuff. Right now we're really struggling to find reasons why we would need to spend more than $100k in a given year but things can always change. 

I've got the added benefit that my wife likes working more. So I may retire, save us a bunch on childcare by just being the stay at home parent (which means losing my income will hurt less), and then we'll see where life takes us. 

Great job to both of you. Definitely find a fun hobby to keep you busy. Maybe trading/investing?

 

[Gawain]

Way to go! Yeah we've kind of built out, and then keep continually updating 1-2x a year, a budget of "what would we lavishly spend on ourselves every year forever?" and include our best researched costs for kids, our travel (we travel a lot and in a typically bougie way), and similar on top of the standard like food/housing/healthcare/etc stuff. Right now we're really struggling to find reasons why we would need to spend more than $100k in a given year but things can always change. 

I've got the added benefit that my wife likes working more. So I may retire, save us a bunch on childcare by just being the stay at home parent (which means losing my income will hurt less), and then we'll see where life takes us. 

I would wait until your family is complete before reducing your earning power. My wife and were on the 40-45 track and then one kid turned into three. It’s really important for me to be able to pay for their college which I think will be a million bucks before it’s all said and done.

 

[Desert_Power]

I would wait until your family is complete before reducing your earning power. My wife and were on the 40-45 track and then one kid turned into three. It’s really important for me to be able to pay for their college which I think will be a million bucks before it’s all said and done.

That's the sticking point for us too. Apparently having a kid isn't an immediate thing when you start trying, so that makes it a lot harder to plan for a date of retirement. Such a big factor in location/housing choices too.

 

[Gawain]

That's the sticking point for us too. Apparently having a kid isn't an immediate thing when you start trying, so that makes it a lot harder to plan for a date of retirement. Such a big factor in location/housing choices too.

Heh, when my kids ask where babies come from, I’ll get to tell them that the daddy goes in a dingy room with a 15” cathode ray tv and then his boys are cyclotroned before a slightly bored looking dr gives mommy a good basting.

For us, insurance covered it, but we have friends that dropped almost 100k in fertility treatments.

 

[matuski]

Anyone here have experience with checkbook control self-directed IRA's?

 

[Judge Smails]

I would wait until your family is complete before reducing your earning power. My wife and were on the 40-45 track and then one kid turned into three. It’s really important for me to be able to pay for their college which I think will be a million bucks before it’s all said and done.

Million bucks? Wow. Glad my kids did 2 years at Santa Barbara City College before transferring to UC Santa Barbara. In state. I got off relatively cheap. 

 

[Instinctive]

Heh, when my kids ask where babies come from, I’ll get to tell them that the daddy goes in a dingy room with a 15” cathode ray tv and then his boys are cyclotroned before a slightly bored looking dr gives mommy a good basting.

For us, insurance covered it, but we have friends that dropped almost 100k in fertility treatments.

Yeah - one for sure thing we'll take care of is our two kids (planned) before we both leave - my wife and I will be at the same place (she's accepted an offer to join us) so it's less a problem for me to quit if she's still there. 

Our sticking point will be that we'll be trying for surrogacy, and we think twins so we only have to do it once. I'll make a thread of its own about that journey. 

 

[The Man With No Name]

I've put 5k into my traditional IRA this year and last week opened a Roth IRA and put 2k into it.  Friday I withdrew 2k from the one and am wondering if I can put that into the Roth now or do I have to wait until January to put more into it? 55, single, in work Thrift Savings Plan @ USPS.

 

[BigJim®]

My wife and I have significant $ in 401Ks. A few years ago, my dad passed with an IRA which allowed us (his beneficiaries) to do roll over IRAs where the inherited shares converted to new IRA accounts in our names. There is mandatory distribution schedule based on age, but it gives freedom to leave it in the market or withdraw at any time (standard income taxation would apply). I remember doing the initial math before our advisor suggested roll-over, and the taxation of liquidation inheritance was going to be gutting (like 30-35%), and we've greatly benefitted from the roll over capability due to market gains. Thinking about my own estate planning, is that something unique to an IRA, and if so, is there a way to restructure existing 401Ks? 

 

[Gawain]

My wife and I have significant $ in 401Ks. A few years ago, my dad passed with an IRA which allowed us (his beneficiaries) to do roll over IRAs where the inherited shares converted to new IRA accounts in our names. There is mandatory distribution schedule based on age, but it gives freedom to leave it in the market or withdraw at any time (standard income taxation would apply). I remember doing the initial math before our advisor suggested roll-over, and the taxation of liquidation inheritance was going to be gutting (like 30-35%), and we've greatly benefitted from the roll over capability due to market gains. Thinking about my own estate planning, is that something unique to an IRA, and if so, is there a way to restructure existing 401Ks? 

The stretch IRA was eliminated recently and now there's a ten year max period where non-spousal inherited IRAs have to be drawn down to zero.

You can't inherit a 401K plan, so inheriting a 401K and an IRA are functionally the same. The account is split per beneficiaries and rolled into a new IRA.

If you want to give cash to your kids free and clear, start converting to Roth vehicles. The presence of an inherited pre-Tax IRA will complicate the conversion. Ed Slott is a big proponent of converting ASAP.

 

[BigJim®]

The stretch IRA was eliminated recently and now there's a ten year max period where non-spousal inherited IRAs have to be drawn down to zero.

You can't inherit a 401K plan, so inheriting a 401K and an IRA are functionally the same. The account is split per beneficiaries and rolled into a new IRA.

If you want to give cash to your kids free and clear, start converting to Roth vehicles. The presence of an inherited pre-Tax IRA will complicate the conversion. Ed Slott is a big proponent of converting ASAP.

Sounds like I can't do that the same way under recent change... at least not now as I don't use Roth. However, even 10 year repayment roll over is better than taxing the heck out of a lump inheritance, and allows the fund is grow with the market to a degrading extent. Are you saying the new 10-year distribution rule applies to 401K accounts the same as IRA?

 

[Gawain]

 Are you saying the new 10-year distribution rule applies to 401K accounts the same as IRA?

I was wrong about not being able to inherit a 401K, but prior to the change in the law folks rolled over to a new account because leaving in the plan meant you had to follow the distribution schedule for the original account owner. The 10 year distribution rule:
 

You can take the entire (balance) at once in a lump sum, spread withdrawals out over a decade, or withdraw it all at the end of year 10. Regardless of which option you choose, there can't be any remaining balance within 10 years of the original owner's death.

 

[BigJim®]

I was wrong about not being able to inherit a 401K, but prior to the change in the law folks rolled over to a new account because leaving in the plan meant you had to follow the distribution schedule for the original account owner. The 10 year distribution rule:
 

 

[Chemical X]

Here's a question for the smart FBGs here.  Me and Mrs. X have the goal of retiring in Italy, which I think many of you know.  The visa I need to get is called an elective residency visa, which is one of the hardest to get, as it means you can not work (legally) in Italy and you have to show significant means to support yourself.  There is no guideline for who qualifies, so having as much in assets and income as possible will go along way.  To that end, if I have investible assets, what % can I conservatively say I will earn annually on these assets?  Obviously I know they might be in mutual funds that will have principal fluctuations, etc. and nothing is guaranteed.  But if I wanted to be confident, what could I confidently state as a forward looking projection?  Just curious...…..

i.e. - Hi Mr. Italian consulate worker, on my $1million I expect to earn 3% annually, which will bring me $30k in income.  

 

[Desert_Power]

Here's a question for the smart FBGs here.  Me and Mrs. X have the goal of retiring in Italy, which I think many of you know.  The visa I need to get is called an elective residency visa, which is one of the hardest to get, as it means you can not work (legally) in Italy and you have to show significant means to support yourself.  There is no guideline for who qualifies, so having as much in assets and income as possible will go along way.  To that end, if I have investible assets, what % can I conservatively say I will earn annually on these assets?  Obviously I know they might be in mutual funds that will have principal fluctuations, etc. and nothing is guaranteed.  But if I wanted to be confident, what could I confidently state as a forward looking projection?  Just curious...…..

i.e. - Hi Mr. Italian consulate worker, on my $1million I expect to earn 3% annually, which will bring me $30k in income.  

You could always actually buy an annuity for this 

 

[D_House]

Here's a question for the smart FBGs here.  Me and Mrs. X have the goal of retiring in Italy, which I think many of you know.  The visa I need to get is called an elective residency visa, which is one of the hardest to get, as it means you can not work (legally) in Italy and you have to show significant means to support yourself.  There is no guideline for who qualifies, so having as much in assets and income as possible will go along way.  To that end, if I have investible assets, what % can I conservatively say I will earn annually on these assets?  Obviously I know they might be in mutual funds that will have principal fluctuations, etc. and nothing is guaranteed.  But if I wanted to be confident, what could I confidently state as a forward looking projection?  Just curious...…..

i.e. - Hi Mr. Italian consulate worker, on my $1million I expect to earn 3% annually, which will bring me $30k in income.  

I might be missing something, but isn’t your income going to be dictated by your withdrawal rate?

If that’s what you’re asking, then 3% is within the safe range for withdrawals but you could definitely say 4% and have academic research supporting it as a safe rate.

 

[Chemical X]

You could always actually buy an annuity for this 

isn’t an annuity like the worst thing one could ever buy?

 

[wilked]

isn’t an annuity like the worst thing one could ever buy?

Nope. SPIAs are priced well and are a fair deal 

To your earlier question, use 4%
 

so if you have $1MM in investment accounts, $40k in annual income/withdrawals from it

 

[NutterButter]

Million bucks? Wow. Glad my kids did 2 years at Santa Barbara City College before transferring to UC Santa Barbara. In state. I got off relatively cheap. 

You pay out the nose for everything else, but you do make out with the handful of fairly cheap, highly rated public universities you have access to.   

 

[Judge Smails]

You pay out the nose for everything else, but you do make out with the handful of fairly cheap, highly rated public universities you have access to.   

Absolutely.  To me the top UC's are one of the best bargains in the country.  Cal, UCLA, UC Santa Barbara, UC San Diego, etc.  UC Santa Barbara is less than 15k a year in state.  Like everywhere else, it's 3X that out of state.  On the flip side, USC, Chapman, Pepperdine, Loyola Marymount - all $50+K a year.  Then add dorms, apartments/houses, food, etc and the #'s get big quick.  $75K+.  And when they don't finish in 4 years it stings.  Have some friends in that boat.

 

[SFBayDuck]

Absolutely.  To me the top UC's are one of the best bargains in the country.  Cal, UCLA, UC Santa Barbara, UC San Diego, etc.  UC Santa Barbara is less than 15k a year in state.  Like everywhere else, it's 3X that out of state.  On the flip side, USC, Chapman, Pepperdine, Loyola Marymount - all $50+K a year.  Then add dorms, apartments/houses, food, etc and the #'s get big quick.  $75K+.  And when they don't finish in 4 years it stings.  Have some friends in that boat.

All three are on my daughter's list as she is going through the process right now, along with a few other CA private schools, U of O, and UCs Davis, SC, and Irvine.  

I really hope she gets into Davis as it's currently #1 on her list and would greatly ease the financial burden on her and us.

 

[NutterButter]

Absolutely.  To me the top UC's are one of the best bargains in the country.  Cal, UCLA, UC Santa Barbara, UC San Diego, etc.  UC Santa Barbara is less than 15k a year in state.  Like everywhere else, it's 3X that out of state.  On the flip side, USC, Chapman, Pepperdine, Loyola Marymount - all $50+K a year.  Then add dorms, apartments/houses, food, etc and the #'s get big quick.  $75K+.  And when they don't finish in 4 years it stings.  Have some friends in that boat.

Hell no.  Hell no.  Hell no.   Good luck child.  This is gonna be one painful life lesson, but you'll figure something out.   

 

[Brunell4MVP]

Absolutely.  To me the top UC's are one of the best bargains in the country.  Cal, UCLA, UC Santa Barbara, UC San Diego, etc.  UC Santa Barbara is less than 15k a year in state.  Like everywhere else, it's 3X that out of state.  On the flip side, USC, Chapman, Pepperdine, Loyola Marymount - all $50+K a year.  Then add dorms, apartments/houses, food, etc and the #'s get big quick.  $75K+.  And when they don't finish in 4 years it stings.  Have some friends in that boat.

In state tuition is where it is at.   Both my kids both choose UVA in-state over accepted spots at USC, UCLA, Michigan, NYU,  and ND.   If one had gotten into Duke he would have gone, but was waitlisted and didn't get the call.  UVA is like $32K all in per year.  USC , NYU, and Duke were like $77K all in.  So saving $45K per year for 4 years times two kids = $360K.   That's a serious chunk of coin.   The missus and I can make a nice downpayment on a FL winter house for that.   And the oldest already has a job in NYC lined up as a junior, mainly cause of the UVA alumni in NYC.  I was worried about that originally.  But it worked out way better than I expected.  I'm sure UCLA and the Cal public schools have the same connections in Palo Alto, San Fran, etc.

 

[Tom Hagen]

I've put 5k into my traditional IRA this year and last week opened a Roth IRA and put 2k into it.  Friday I withdrew 2k from the one and am wondering if I can put that into the Roth now or do I have to wait until January to put more into it? 55, single, in work Thrift Savings Plan @ USPS.

Maybe I am not understanding but it sounds like you would have been better off recharacterizing or even converting $2k from the traditional instead of withdrawing.  If you took a traditional IRA distribution you are going to be looking at a 10% penalty and you won't be able to contribute to the Roth until 2021 because you maxed out your 2020 contribution.

Maybe you can provide a little more detail.

 

[hooter311]

Here's a question for the smart FBGs here.  Me and Mrs. X have the goal of retiring in Italy, which I think many of you know.  The visa I need to get is called an elective residency visa, which is one of the hardest to get, as it means you can not work (legally) in Italy and you have to show significant means to support yourself.  There is no guideline for who qualifies, so having as much in assets and income as possible will go along way.  To that end, if I have investible assets, what % can I conservatively say I will earn annually on these assets?  Obviously I know they might be in mutual funds that will have principal fluctuations, etc. and nothing is guaranteed.  But if I wanted to be confident, what could I confidently state as a forward looking projection?  Just curious...…..

i.e. - Hi Mr. Italian consulate worker, on my $1million I expect to earn 3% annually, which will bring me $30k in income.  

Who wouldn't let a millionaire in?

 

[hooter311]

Maybe I am not understanding but it sounds like you would have been better off recharacterizing or even converting $2k from the traditional instead of withdrawing.  If you took a traditional IRA distribution you are going to be looking at a 10% penalty and you won't be able to contribute to the Roth until 2021 because you maxed out your 2020 contribution.

Maybe you can provide a little more detail.

There's no 10% penalty right now.  And you can claim either the lump sum this year or spread it out over next three years as income.  You can also pay it back into the account during that time and amend your returns.

 

[Tom Hagen]

There's no 10% penalty right now.  And you can claim either the lump sum this year or spread it out over next three years as income.  You can also pay it back into the account during that time and amend your returns.

Technically you need to be able to prove it was a COVID related distribution to qualify for that treatment.  I still think converting or recharacterizing is the better option.

 

[FUBAR]

I would wait until your family is complete before reducing your earning power. My wife and were on the 40-45 track and then one kid turned into three. It’s really important for me to be able to pay for their college which I think will be a million bucks before it’s all said and done.

Possible for private schools. 

Thankfully my oldest is going to community college next year. 2nd oldest (with a 4.5 GPA) wants to attend a private school but understands we're only covering in state tuition, so he'll probably go to Auburn. Next 3 are anyone's guess but I'm only covering in state tuition. They can go ROTC or to an academy if needed. 

 

[matuski]

Anyone here have experience with checkbook control self-directed IRA's?

Bump.

Buddy did this and was able to buy a few houses cash out of his 401k rollover to the IRA.  He is renting them out and really doing well.  

Trying to get a larger sample size than just my one friend... seems like taking part of my 401k out and buying a couple rental homes is a fairly no brainer kind of deal?