Personal Finance Advice and Education! (7 Viewers)

[stbugs]

Looking at the draw down rate, it seems very reasonable meaning about in line with what I'd be doing anyway.   Looks like at 72, if you have 2M, you're required to deduct about 78k..   Maybe this more adversely affects those that have a lot more than that saved and are forced to deduct more than they want/need?  I get having the money in a roth gives you more options, but need to still figure out a way to go about doing it that leaves you better off tax wise.   

I think it’s pretty simple. Aside from the save as much as possible so it’s all good decisions, if your peak tax rate* is high then it’s probably best to max pre-tax accounts first and if your peak rate is low then it’s probably best to use Roth first. If you are in the middle, a mix of both is probably best for flexibility.

Do not forget about building up taxable accounts as well. If you have some years before SS and withdrawals from pre-tax vehicles or even Roth’s (in your 50s), taxable accounts can been great. First, if your married, you could have 0% capital gains taxes up to $80k so maybe you can get some tax free capital gains. Heck, you’d have to make a #### ton in retirement to pay more than 15% capital gains taxes ($441k single and $496 married to get to 20%).

* This is a very important note. Ignore your effective tax rate which includes all tax bracket and is the overall tax rate. Every dollar you move into a pre-tax vehicle would have been hit at your peak rate (or higher) if taxable.

 

[-OZ-]

Whats so bad about RMDs again?

They can be a significant taxable event and they're mandatory.  This is particularly true for those older folks that become widowed and then really get thrown into high tax territory.  Controlling that income is desirable and Roth conversions are the best way to do that.  

Looking at the draw down rate, it seems very reasonable meaning about in line with what I'd be doing anyway.   Looks like at 72, if you have 2M, you're required to deduct about 78k..   Maybe this more adversely affects those that have a lot more than that saved and are forced to deduct more than they want/need?  I get having the money in a roth gives you more options, but need to still figure out a way to go about doing it that leaves you better off tax wise.   

they’re mandatory. Many of us don’t like being told what we have to do with our money. We accept taxes to a degree but we’ll continue to complain about any way the government tells us what to do. 

For most people, RMDs aren’t really a problem as they need the funds anyway. for others, including those with pensions and SS, we won’t necessarily need the withdrawals and having to do so in a down  year is an extra pain. Which can be alleviated by simply putting the money into a  regular brokerage but there’s still the taxes. 
i don’t care all that much about RMDs, partly because almost half our investments are in Roth IRAs. That will change in the next decade as I put more into the traditional TSP but assuming my math works out, the RMD will be less than our chosen overall withdrawal rate until we’re between 86-90. We just won’t touch the Roth IRAs for a while. 

 

[-OZ-]

They can be a significant taxable event and they're mandatory.  This is particularly true for those older folks that become widowed and then really get thrown into high tax territory.  Controlling that income is desirable and Roth conversions are the best way to do that.  

I need to look closer at the conversions. Figure if I retire at 55, defer the civilian pension until 62 and SS at 70, that should give me 7 years at the current 12% tax rate with space to make some conversions. 

 

[NutterButter]

they’re mandatory. Many of us don’t like being told what we have to do with our money. We accept taxes to a degree but we’ll continue to complain about any way the government tells us what to do. 

For most people, RMDs aren’t really a problem as they need the funds anyway. for others, including those with pensions and SS, we won’t necessarily need the withdrawals and having to do so in a down  year is an extra pain. Which can be alleviated by simply putting the money into a  regular brokerage but there’s still the taxes. 
i don’t care all that much about RMDs, partly because almost half our investments are in Roth IRAs. That will change in the next decade as I put more into the traditional TSP but assuming my math works out, the RMD will be less than our chosen overall withdrawal rate until we’re between 86-90. We just won’t touch the Roth IRAs for a while. 

Ah, so that's actually a good point.  Having to be forced to withdraw instead of just being able to rely on cash reserves for instance.  I guess not that huge of a deal like you said aside from getting hit with the taxes earlier then you'd want.   In my case, the numbers line up ok.   I'm going to mostly likely be withdrawing more than the rmd if i'm going to exhaust my accounts by 100 which is the age I intend to plan to die (obviously most likely before that age).  

 

[jm192]

Finally in a spot to open a taxable account.  Just opened a  joint account for the wife and I on Vanguard.  Good day.

 

[Sand]

Finally in a spot to open a taxable account.  Just opened a  joint account for the wife and I on Vanguard.  Good day.

100% GME.  It's the only responsible thing to do.

 

[-OZ-]

100% GME.  It's the only responsible thing to do.

What, no AMC or GBTC? 

 

[ConstruxBoy]

I'm generally against voluntarily paying taxes now on the threat of future, unknown taxes.

Maybe not the popular opinion, but I'd pile into tax deferred vehicles as you can and then convert to Roth after retirement, but before RMDs, at a tax rate that at the least it would be very hard to lose on tax rates.  If you have free money with nothing else to do with it (or are in the income hole were you can't do traditional but can do Roth) then absolutely throw it into a Roth.

I'm at 3% of my total in Roth and HSA.  Aggressively maxing out HSA and have been since I had it available.  Roth gets utilized here and there where possible.

Good point although I do wonder if the Traditional to Roth conversion will be closed in the future. It's been discussed. But as you say, just another unknown future threat. 

 

[ConstruxBoy]

Good point although I do wonder if the Traditional to Roth conversion will be closed in the future. It's been discussed. But as you say, just another unknown future threat. 

As I was saying...

yikes

 

[stbugs]

As I was saying...

yikes

Not sure if it would hit us non wealthy folks that won’t have much income when we try the back door. That said, did you see that part about the Roth IRA worth $5B? I mentioned this before, but I truly won’t be shocked at all to see some taxes levied on Roth withdrawals at some point. Seems like large accounts may have RMDs as well.

Right now, with both of us working, I am only traditional, especially since I can’t contribute to Roth anyway. I’d like to do some back door stuff if we have a period between income and before SS/withdrawals, but there’s no way to know what the hell it’s going to be like now. I think us minions who aren’t sitting on billions in our IRAs will probably be fine but who knows where the “wealthy” lines will be drawn.

 

[ConstruxBoy]

I like to pretend I’m going to be wealthy when I have to make retirement withdrawals. 

 

[Buckna]

Not sure if it would hit us non wealthy folks that won’t have much income when we try the back door. That said, did you see that part about the Roth IRA worth $5B? I mentioned this before, but I truly won’t be shocked at all to see some taxes levied on Roth withdrawals at some point. Seems like large accounts may have RMDs as well.

Right now, with both of us working, I am only traditional, especially since I can’t contribute to Roth anyway. I’d like to do some back door stuff if we have a period between income and before SS/withdrawals, but there’s no way to know what the hell it’s going to be like now. I think us minions who aren’t sitting on billions in our IRAs will probably be fine but who knows where the “wealthy” lines will be drawn.

Ever since it came out in the 2012 election that Romney had over $100MM in assets in his Roth IRA it was only a matter of time before restrictions and taxes on fat cat IRA’s came along. Some of the ultra-wealthy have been taking advantage of the loop-holes for a long while to get rich while avoiding taxes. Romney and the PayPal guy were able to invest their self-directed Roth’s in private equity stocks before the companies went public like Facebook for example, hence the proposed ban on allowing accredited investor type assets be allowed in IRA’s.

Supposedly the proposed bans/changes are only for those that make over $400k a year. Biden and the Dem’s have a lot of proposed tax law changes coming for real estate investors too such as killing the 1031 exchange.

 

[Sand]

Not sure if it would hit us non wealthy folks that won’t have much income when we try the back door. That said, did you see that part about the Roth IRA worth $5B? I mentioned this before, but I truly won’t be shocked at all to see some taxes levied on Roth withdrawals at some point. Seems like large accounts may have RMDs as well.

Seems like everything in there is tested against that retirement account limit (10M).  Honestly I can't argue too much against that kind of limit for tax advantaged monies.  10M is a healthy limit - let's just hope they tag it to the CPI like SS instead of the stupid stunt they pull with everything else and never account for inflation.

 

[Bob Sacamano]

Apparently when my former employer moved their retirement accounts from Schwab to Fidelity, our ESOP balances got rolled into the 401k. 

I'm not saying I definitively received nothing indicating this, but I certainly don't recall it. And I feel like I'm more diligent than most about paying attention to all the paperwork that comes through for these things. 

 

[stbugs]

Apparently when my former employer moved their retirement accounts from Schwab to Fidelity, our ESOP balances got rolled into the 401k. 

I'm not saying I definitively received nothing indicating this, but I certainly don't recall it. And I feel like I'm more diligent than most about paying attention to all the paperwork that comes through for these things. 

Wine?

 

[Bob Sacamano]

Apparently when my former employer moved their retirement accounts from Schwab to Fidelity, our ESOP balances got rolled into the 401k. 

I'm not saying I definitively received nothing indicating this, but I certainly don't recall it. And I feel like I'm more diligent than most about paying attention to all the paperwork that comes through for these things. 

I suppose I missed the thing that caused me to post this in the first place. Does it really matter?

Probably not, except that I never reinvested the dividend. I got a check for it every year, and now if I take it I'll get penalized 10% for something that was never truly retirement money. And the only alternative is having it reinvest in the company's stock, which I already have too much of (which is why I always wanted to just receive those funds in the first place. It helped fund my initial brokerage account). Just frustratingly unnecessary. 

 

[stbugs]

I suppose I missed the thing that caused me to post this in the first place. Does it really matter?

Probably not, except that I never reinvested the dividend. I got a check for it every year, and now if I take it I'll get penalized 10% for something that was never truly retirement money. And the only alternative is having it reinvest in the company's stock, which I already have too much of (which is why I always wanted to just receive those funds in the first place. It helped fund my initial brokerage account). Just frustratingly unnecessary. 

Wait. They actually took non-retirement money and out it into a retirement vehicle? Are you sure the stock plan isn’t just now with Fidelity but not in a 401k. I am lucky right now in that every account we have (aside from checking) at Fidelity including a stock plan and it’s not a 401k or retirement account and we’ve got both our 401ks and a couple IRAs and brokerage accounts as well. The stock plan actually moved to Fidelity when the 401k moved as well. 

 

[Bob Sacamano]

Wait. They actually took non-retirement money and out it into a retirement vehicle? Are you sure the stock plan isn’t just now with Fidelity but not in a 401k. I am lucky right now in that every account we have (aside from checking) at Fidelity including a stock plan and it’s not a 401k or retirement account and we’ve got both our 401ks and a couple IRAs and brokerage accounts as well. The stock plan actually moved to Fidelity when the 401k moved as well. 

Yep. They put it into a fund and rolled it into the 401k.

 

[-OZ-]

Not sure if it would hit us non wealthy folks that won’t have much income when we try the back door. That said, did you see that part about the Roth IRA worth $5B? I mentioned this before, but I truly won’t be shocked at all to see some taxes levied on Roth withdrawals at some point. Seems like large accounts may have RMDs as well.

Right now, with both of us working, I am only traditional, especially since I can’t contribute to Roth anyway. I’d like to do some back door stuff if we have a period between income and before SS/withdrawals, but there’s no way to know what the hell it’s going to be like now. I think us minions who aren’t sitting on billions in our IRAs will probably be fine but who knows where the “wealthy” lines will be drawn.

honestly, I have no problem limiting Roth IRAs to $10 or $20 million.  Or ending the back door provisions. It makes sense for individuals to do it, but as a rule it’s rather dumb to make people do it that way or allow it. 
maybe my political leanings are changing but I don’t disagree with much of what has been proposed. 

 

[stbugs]

honestly, I have no problem limiting Roth IRAs to $10 or $20 million.  Or ending the back door provisions. It makes sense for individuals to do it, but as a rule it’s rather dumb to make people do it that way or allow it. 
maybe my political leanings are changing but I don’t disagree with much of what has been proposed. 

Here’s to our investments doing well enough that in 10 years we are in here #####ing about our RMDs on our $10M IRA accounts.  

 

[stbugs]

Yep. They put it into a fund and rolled it into the 401k.

That’s beyond strange. I just don’t get how they can switch a taxable account where you’ve obviously gotten dividends and maybe sold stock into a retirement account. That’s like a magic back door.

 

[Runkle]

I guess get your conversions in by the end of the year, I hear the new tax bill kills the backdoor Roth option?

 

[Sand]

I guess get your conversions in by the end of the year, I hear the new tax bill kills the backdoor Roth option?

Generally true, at least the current proposals.  The mega backdoor Roth is completely out.  The regular backdoor - put money into a traditional IRA, then convert it to a Roth, is out if those contributions are after tax.  Regular conversions are fine (IRA to Roth) if you make less than 400k.  

Not telling if these will hold up. 

ETA:  Good rundown of all the stuff that's being discussed.

 

[Desert_Power]

Generally true, at least the current proposals.  The mega backdoor Roth is completely out.  The regular backdoor - put money into a traditional IRA, then convert it to a Roth, is out if those contributions are after tax.  Regular conversions are fine (IRA to Roth) if you make less than 400k.  

Not telling if these will hold up. 

ETA:  Good rundown of all the stuff that's being discussed.

This is the piece I'm focused on

 

[Sand]

This is the piece I'm focused on

Same here.  As long as I can do conversions (and I want to do them when income is low) I'm good.  I don't anticipate having many (or, you know, any) 400k income years.

Relevant parts:

Death of the Backdoor Roth IRA and Mega Backdoor Roth IRA

One of the proposals would eliminate the ability to do a Roth conversion on after-tax money in retirement accounts like IRAs and 401(k)s. In effect, that means no more Backdoor Roth IRAs or Mega Backdoor Roth IRAs starting in 2022. What to do? Make sure you convert all after-tax money to Roth before the end of 2021. Then your additional savings after maxing out your other retirement accounts will probably go into taxable as non-deductible IRAs without the conversion. That's usually not an awesome deal.

Elimination of Roth Conversion for High Earners

In fact, high earners will not even be allowed to do any Roth Conversions at all under the proposed legislation, similar to how it was prior to 2010. Luckily, this provision would not go into effect until 2032. Again, the cut-off for defining high earner is a taxable income of $400,000 ($450,000 married).

Elimination of Accredited Investor Investments in Retirement Accounts

No more putting real estate syndications and private funds in your self-directed IRAs and 401(k)s. In fact, this will be a huge hit on the self-directed IRA and 401(k) industry.

 

[jm192]

Same here.  As long as I can do conversions (and I want to do them when income is low) I'm good.  I don't anticipate having many (or, you know, any) 400k income years.

Relevant parts:

Death of the Backdoor Roth IRA and Mega Backdoor Roth IRA

One of the proposals would eliminate the ability to do a Roth conversion on after-tax money in retirement accounts like IRAs and 401(k)s. In effect, that means no more Backdoor Roth IRAs or Mega Backdoor Roth IRAs starting in 2022. What to do? Make sure you convert all after-tax money to Roth before the end of 2021. Then your additional savings after maxing out your other retirement accounts will probably go into taxable as non-deductible IRAs without the conversion. That's usually not an awesome deal.

Elimination of Roth Conversion for High Earners

In fact, high earners will not even be allowed to do any Roth Conversions at all under the proposed legislation, similar to how it was prior to 2010. Luckily, this provision would not go into effect until 2032. Again, the cut-off for defining high earner is a taxable income of $400,000 ($450,000 married).

Elimination of Accredited Investor Investments in Retirement Accounts

No more putting real estate syndications and private funds in your self-directed IRAs and 401(k)s. In fact, this will be a huge hit on the self-directed IRA and 401(k) industry.

Good news for us.  We're under the 400K.  And just started doing roth conversions in 2020.  Was going to suck to lose that tool.

 

[SFBayDuck]

No more putting real estate syndications and private funds in your self-directed IRAs and 401(k)s. In fact, this will be a huge hit on the self-directed IRA and 401(k) industry.

Will this impact the ability to hold crypto in IRAs?  I don't understand it that way, but haven't looked into it much as I'm not currently doing so anyway - was just considering it.

 

[Sand]

Will this impact the ability to hold crypto in IRAs?  I don't understand it that way, but haven't looked into it much as I'm not currently doing so anyway - was just considering it.

Man, don't know that one.  I think it just restricts the ability to hold issues in an IRA that you have to be an accredited investor for.  Crypto isn't in that category.  But it could be somewhere else in there.

The one things I saw that affects crypto is the application of wash sale rules there.

 

[Juxtatarot]

We discussed I Bonds about 6 months ago when it was announced the rate would be 3.43%. With inflation where it is, it looks like the new rate will be above 5%. We should know the precise rate soon since they use numbers as of September 30. We’ll certainly see tremendous interest in I Bonds.

I thought this was a good overview for those who haven’t looked into this: I Bond Manifesto: Why inflation-linked savings bonds can work as part of your emergency fund

 

[Desert_Power]

We discussed I Bonds about 6 months ago when it was announced the rate would be 3.43%. With inflation where it is, it looks like the new rate will be above 5%. We should know the precise rate soon since they use numbers as of September 30. We’ll certainly see tremendous interest in I Bonds.

I thought this was a good overview for those who haven’t looked into this: I Bond Manifesto: Why inflation-linked savings bonds can work as part of your emergency fund

A no-brainer right now

 

[Runkle]

We discussed I Bonds about 6 months ago when it was announced the rate would be 3.43%. With inflation where it is, it looks like the new rate will be above 5%. We should know the precise rate soon since they use numbers as of September 30. We’ll certainly see tremendous interest in I Bonds.

I thought this was a good overview for those who haven’t looked into this: I Bond Manifesto: Why inflation-linked savings bonds can work as part of your emergency fund

Remind me, what's the buy deadline for the next release? (to get the full first month) 

 

[Juxtatarot]

Remind me, what's the buy deadline for the next release? (to get the full first month) 

Timing your purchases. Interest is earned on the last day of each month and is posted to your account on the first day of the following month. So, if you own your I Bonds on the last day of any month, you’ll earn that full month’s interest. Therefore, it’s best to buy your I Bonds near the end of the month, since you can earn a full month’s interest while only owning the I Bonds for perhaps a day or two. On the other hand, when redeeming I Bonds, you’ll want to do so on or near the first business day of the month, since redeeming them later in the month won’t earn you any additional interest

New rate starts for purchases November 1.  I would recommend someone buying at end of October so they can lock in the 3.43% for six months then the new, higher rate for the subsequent  6 month period.

 

[jm192]

Apparently no post-tax dollars can be used for Roth IRA conversions regardless of income level.  Hoping this doesn't make it through

 

[pecorino]

The reason the 65 is the obvious next step for me is that it specifically does NOT require sponsorship. Most others do (like the Series 7). I also like that the Series 65 is tailored for those that want to give financial advice to others, qualifies you to serve as an Investment Advisor Representative and also carries with it a fiduciary expectation. All of those things are aligned with what I want to do. I actually started studying for this over Covid but then was told to do the SIE first. Now I am back to the big book. The SIE is much shorter and easier. I won't be ready for the 65 for a month at least. Then I'll rewrite my resume (to steer towards finance and away from education) and see if there is any interest from employers. Happy to answer questions you might have about the SIE but the exam administration was clear that I am not allowed to share specific questions that appeared on it.

So I passed the Series 65 this summer. Again, happy to answer questions you have about it. With those two exams down, I can register as an Investment Advisor Representative. The natural thing to do would be to switch careers (which I am thinking about) but as a current educator, I'm locked into my contract until July 2022.  In the meantime, I may just put up a shingle and see if I can generate some interest locally and maybe net a few bucks. Once my webpage is up and running, I'll let you know. Tell all your enemies.

 

[ConstruxBoy]

So I passed the Series 65 this summer. Again, happy to answer questions you have about it. With those two exams down, I can register as an Investment Advisor Representative. The natural thing to do would be to switch careers (which I am thinking about) but as a current educator, I'm locked into my contract until July 2022.  In the meantime, I may just put up a shingle and see if I can generate some interest locally and maybe net a few bucks. Once my webpage is up and running, I'll let you know. Tell all your enemies.

Congrats man, that's awesome! I'm jealous!

 

[SFBayDuck]

Posted this in the stock thread but no replies yet.....

Anybody have an auto-investing setup in an after-tax account?  I'd like to find something I can set up that allows fractional shares of ETFs/MFs so that I can dollar cost average in.  I've poked around Etrade (didn't seem to allow fractional, so it kind of defeats the purpose of DCA) and Fidelity (so far all I've found is a pdf form to complete).

 

[Lion to myself]

Posted this in the stock thread but no replies yet.....

Anybody have an auto-investing setup in an after-tax account?  I'd like to find something I can set up that allows fractional shares of ETFs/MFs so that I can dollar cost average in.  I've poked around Etrade (didn't seem to allow fractional, so it kind of defeats the purpose of DCA) and Fidelity (so far all I've found is a pdf form to complete).

Check out this article on fractional share purchases and who offers that service.  Robin Hood and Fidelity do ETFs according to the article.  

https://www.nerdwallet.com/article/investing/fractional-shares

 

[jm192]

Posted this in the stock thread but no replies yet.....

Anybody have an auto-investing setup in an after-tax account?  I'd like to find something I can set up that allows fractional shares of ETFs/MFs so that I can dollar cost average in.  I've poked around Etrade (didn't seem to allow fractional, so it kind of defeats the purpose of DCA) and Fidelity (so far all I've found is a pdf form to complete).

Most services have a "DRIP" program that automatically does what you're asking.  

This should have info you need:

https://us.etrade.com/e/t/estation/esdivenroll

 

[SFBayDuck]

Most services have a "DRIP" program that automatically does what you're asking.  

This should have info you need:

https://us.etrade.com/e/t/estation/esdivenroll

Isn't DRIP just dividend reinvestment?  I'm looking to invest new money on an automatic basis, and to get true DCA it would seem you need the ability to buy fractional shares since I'm probably looking at <$1000 invested per period.

 

[jm192]

Isn't DRIP just dividend reinvestment?  I'm looking to invest new money on an automatic basis, and to get true DCA it would seem you need the ability to buy fractional shares since I'm probably looking at <$1000 invested per period.

Sorry, I read fractional shares and ETF's/MF's and jumped to the conclusion you were looking to do DRIP.  

I don't know how to do that.  If you're talking hundreds of dollars per period, you can still invest in full shares of ETF's.  Mutual funds have the gawdy requirements. 

 

[SFBayDuck]

Sorry, I read fractional shares and ETF's/MF's and jumped to the conclusion you were looking to do DRIP.  

I don't know how to do that.  If you're talking hundreds of dollars per period, you can still invest in full shares of ETF's.  Mutual funds have the gawdy requirements. 

No worries, appreciate you chiming in.  

Maybe I'm overthinking it, but at just hundreds of dollars it seems fractional is important for DCA.  For example, let's say I want to invest in SPY, currently at $441 and change.  So if I want to invest $750 every paycheck, I'm only getting one share.  It can go up to $500, I'm still getting one share, or drop to $400, still one share.  Whereas if I can buy fractional I'm getting the full $750 worth every time, and getting more shares on dips and buying fewer as it goes up.

I guess the other way to do it would be to target ETFs with lower prices, like SPLG which is a similar ETF that's currently trading at $51 and change.  Not as ideal as fractional shares, but at least it gets me closer to true DCA.

 

[Lion to myself]

No worries, appreciate you chiming in.  

Maybe I'm overthinking it, but at just hundreds of dollars it seems fractional is important for DCA.  For example, let's say I want to invest in SPY, currently at $441 and change.  So if I want to invest $750 every paycheck, I'm only getting one share.  It can go up to $500, I'm still getting one share, or drop to $400, still one share.  Whereas if I can buy fractional I'm getting the full $750 worth every time, and getting more shares on dips and buying fewer as it goes up.

I guess the other way to do it would be to target ETFs with lower prices, like SPLG which is a similar ETF that's currently trading at $51 and change.  Not as ideal as fractional shares, but at least it gets me closer to true DCA.

I really confident you can do exactly what you want to at Fidelity.  If you can’t figure it out online yourself, I’d call them. 

 

[SFBayDuck]

I really confident you can do exactly what you want to at Fidelity.  If you can’t figure it out online yourself, I’d call them. 

Thanks, I think I have found it on Fidelity and am going through the set up now.  Even found a "compare to your online brokerage" screen that showed Etrade (my current taxable account) doesn't offer it.

Appreciate it!

 

[Nugget]

Thanks, I think I have found it on Fidelity and am going through the set up now.  Even found a "compare to your online brokerage" screen that showed Etrade (my current taxable account) doesn't offer it.

Appreciate it!

Glad you found it. Should work for mutual funds, not the ETFs. 

 

[Runkle]

New rate starts for purchases November 1.  I would recommend someone buying at end of October so they can lock in the 3.43% for six months then the new, higher rate for the subsequent  6 month period.

Wait, if they buy in October, they lock in 3.43% for Oct, Nov, Dec, Jan, Feb, and Mar for the first six months. If instead they buy on Nov 30th, they get credit for the expected new higher rate for all 30 days of Nov for "free", plus the higher rate for Dec, Jan, Feb, Mar, and April... right? Wouldn't that come out ahead?

 

[Juxtatarot]

Wait, if they buy in October, they lock in 3.43% for Oct, Nov, Dec, Jan, Feb, and Mar for the first six months. If instead they buy on Nov 30th, they get credit for the expected new higher rate for all 30 days of Nov for "free", plus the higher rate for Dec, Jan, Feb, Mar, and April... right? Wouldn't that come out ahead?

It depends on what happens with inflation next year (and possibly future years if you hold long term). Buy in October and get 3.43% for October through March and then the new, higher rate for the following six months (April 2022 through September 2022). If inflation goes back to “normal”, it’s beneficial to be able to lock in both the  3.43% and the new 5%+ rate.

 

[Juxtatarot]

It depends on what happens with inflation next year (and possibly future years if you hold long term). Buy in October and get 3.43% for October through March and then the new, higher rate for the following six months (April 2022 through September 2022). If inflation goes back to “normal”, it’s beneficial to be able to lock in both the  3.43% and the new 5%+ rate.

I missed that the rate was out. New rate will be 7.12%.

 

[DallasDMac]

Apologies if this is not the right forum for this. If so, just let me know and I will remove the post.

I posted earlier in the thread (quite a while back) about recharacterization. Full story. I did my taxes and filed and realized I had screwed up and filed my IRAs as Traditional rather than Roth. Realized the error and went in to Turbo Tax to edit it and refile and the software informed me I had made to much for Roth contributions, so I recharacterized them both fully to traditional. So that part is done. What I can't figure out now is, what the heck do I need to file? Neither of my brokerages provided any forms other than the statement showing the recharacterizations. I was expecting some forms of some sort. Anyways, it is done, I just need to file whatever I need to file to acknowledge what happened. I'm just not real sure what I need to do. Plan is to find a tax professional (CPA?) Monday if need be. But thought I'd check in here first and see if it was something simple I could do myself.

Thanks.

p.s. Avoiding jail for tax fraud is my to priority here.....

 

[Sand]

p.s. Avoiding jail for tax fraud is my to priority here.....

I have no idea how to answer your question, but they're not coming after you over a recharacterization issue.

 

[Desert_Power]

I missed that the rate was out. New rate will be 7.12%.

That's really nice. Feel like I should probably do the 2022 contribution in Jan too.