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I used TT to figure everything out, then switch to a cheaper company to do the actual filings. TT does better and asking questions to get to a better end result. The one that gets me is the "is your prior year state tax refund taxable by the feds"Luckily I was nowhere near this line. So much for the goal of "taxes on an index card". It just keeps getting worse.
Turbotax may be the next 2T company.
I'm a pretty frugal guy (I saved 50%+ of salary last year), but I honestly don't care how much TT costs. I'm buying it every year. It just works.
I've been using the free (to us) H&R block every year. Maybe our filing is just easy. We use the standard deduction, while we have some capital gains they're not complicated or significant (most of our investments are in retirement accounts), I just haven't felt the need to use an expensive service.Sand said:
Inside TurboTax’s 20-Year Fight to Stop Americans From Filing Their Taxes for FreeLuckily I was nowhere near this line. So much for the goal of "taxes on an index card". It just keeps getting worse.
Turbotax may be the next 2T company.
Never used the others. Why do I use it? I have a long history with the TT files (that have all my cap gain losses stored down in there for future years) and the program is pretty logical. There likely isn't a massive difference between that and H&R on an objective basis.
In my experience those programs are basically identical. I used H&R Block for a long time, until one year I had a weird, one-off tax situation that H&R Block's software couldn't handle and TurboTax's could. Functionally they are very similar. If H&R Block's program is cheaper and covering your needs, there's no reason to switch.
There are pros and cons of rolling over an employer plan to an IRA. Biggest pro is that she would probably have better/lower cost investment choices compared to the new employer plan. Some cons are that she would not be eligible for a backdoor Roth contribution if she has a rollover IRA and employer plans allow you to access money penalty free at 55 if separated from service.
I think you can always do a backdoor roth. If you keep the money in the traditional IRA, then your roth conversions would be subject to the pro-rata rule and the taxes will wipe out the benefit of the roth accounts.
You are right, I should have been more clear and said she couldn't do a tax free backdoor Roth.
I did mine a while ago (early April, I think) and it came back in the normal amount of time.
A little late here but if still on the fence, you might consider doing the rollover for a brokerage bonus depending on the size of the balance. A few extra hundred bucks for free is always nice.
Absolutely move it to an IRA and not her new 401k. You can definitely leave it but an IRA is easy to duplicate the exact same investments with much lower fees. Heck, I’m pretty sure Fidelity and others have zero cost funds. You also then have the ability to invest in different things if you want. 401ks have higher fees and limited options and honestly, I don’t think you can even do a loan as a non-employee if that’s a concern. I’ve parked everything I have at Fidelity and luckily both of our 401ks are there as well so it’s so easy.
Yup, roll it over to an IRA for the most flexibility in investment options. Then you can buy all the CYDY you want, pretty sure her new 401K won't have that as an option.
Typically you do not need to move an old 401k. Sometimes the company or its retirement provider may “kick” you out if its a small balance ($2500 or less). With that said it probably makes sense to move it to the new 401k or an IRA. Stbugs gave great advice on why to chose an IRA (unlimited investment options and lower costs most likely). The negatives of an IRA are no loan provisions and you lose the ability to withdrawal at 55 if your wife retires early (though there are ways to avoid penalties in IRAs for early w/d). It’s a good idea to explore the plan rules (loan provisions for example), costs and investment options of the previous and current plan before you make a move.
This more or less closes off your backdoor Roth option. Because you have to move all IRA funds "pro rata" so you'll start to incur taxes on the backdoor conversion.
In some states 401k accounts have more legal protections from lawsuits and such. Some put 401k and IRAs in the same tier as far as legal protections. I'd assume OP has to check Kansas law on that, but it's worth looking into.
This is where I am.
Right. If you want to do backdoor at some point and they have low cost fees, you should just leave it be.
Great point. I've kept my last 401k in their plan for now because it had cheap Vanguard index funds and if I want to do a backdoor Roth in the next few years, that's less money in IRAs for pro rata.
Correct me if I’m wrong but doesn’t that only matter if you have after tax funds in the IRA as well? In this case this would be a rollover from a 401k and most likely pre-tax money before and after. Sure there are exceptions but if you have only pre-tax money in a 401k (pretty much 99.9% of the cases) and you roll it over to a new IRA then there are no back door Roth issues. If you want to contribute after tax money to that IRA, just open a normal IRA alongside the rollover IRA.
I think that's right. I haven't looked into the backdoor too deeply. The last time I did it seemed like any IRA was going to make it a PITA, but I'm not the CPA in my house.
Never mind, I read a different article and it mentioned all IRAs count. I am interested in the back door at some point when our taxes aren’t so high as dual income, but we do have two rollover IRAs that are the bulk of our savings and it’s all pre-tax anyway ask it wouldn’t matter anyway. Also, hopefully it will continue but I’ve done a lot better in the IRA in stocks than I would have if I stayed in the 401k (about 60% better since 2018 even with a bad 2021) so I’ve already “paid” the taxes plus by rolling it over.
No worries, I read another thing as well and I get the examples for concern but I’d think it’s definitely a more rare case where you have a lot of non-deductible contributions to traditional 401ks and traditional IRAs where you want to rollover that non-deductible first and honestly if it’s years of waiting the extra 401k fees could easily eat into whatever tax savings you think you might get.I think that's right. I haven't looked into the backdoor too deeply. The last time I did it seemed like any IRA was going to make it a PITA, but I'm not the CPA in my house.
Yeah. We have pretty much maxed out the 401k for about 9 years and have about 5 years worth of Roth IRA until we hit the limit. Figure we will have plenty of money at 59 1/2 should we get there. I plan to retire much sooner so have just been focusing on after-tax investing (still maxing 401ks of course).
I did mine in February, it was a paper return. No refund received yet. When I look for info online, I get nothing. Called the IRS this past week and never got through to a person. I assume the worst (stolen identity, I’m getting audited, I made a major mistake) but holding out hope that is is just the ineptitude of the IRS. Probably an Occam’s Razor situation, most likely they are swamped and my return is massively delayed.
As a group, as long as there are companies making money there will most likely be stocks. As long as there is inflation, prices and values will rise (over time, not every year). So, if we ever see a time where the general markets no longer rise, the equities market will be the least of our concerns.
This is the best advice.
Not only will this happen, but we can predict the year. Assuming the DJIA grows at an average rate of 7% per year (I see different estimates but this feels safe), that means it doubles roughly every decade. It is near 35K now. To get to 3 million, it would take between six and seven doublings to get there, so my five year old daughter (whom I hope will live to see the year 2112) would also see the Dow hit 3 million right around her retirement age.
It does seem crazy to think it should hit 1 million in our potential lifetimes (50 years from now, give or take) assuming the robots haven't taken over. Heck, maybe faster if they do.
No, it doesn’t prevent you. You can do a back door Roth from both a rollover IRA and a 401k and it’s no different unless you have non-deductible contributions. Even if you have, it’s still doesn’t prevent you, you just have to follow the pro-rata percentages rather than just picking only non-deductible amounts to rollover. It’s not a blanket statement for everyone but for someone like me whose IRAs are all deductible (rollovers), I can still do a back door Roth conversion and I’ll just have to pay taxes, but my thought was to do some conversions when I hopefully have retired and my tax bracket is much lower.
This is one of those things where you're technically correct (as I stated in my post), but you don't understand the impact or spirit of the post. It wipes out your benefit to do pro rata conversions and pay the taxes. The literal point of IRAs is to eliminate tax drag on your growth. If you're stuck converting pro rata, you:
I could be missing something on the front end I guess, but yeah.
So the reason for clarifying is what matters. It seems like knit picking to be playing the ol' "I gotcha" game. But it's not.wilked said:
Just curious, what's significant about $250k? Or are you just using that to mean a somewhat significant amount?firstseason1987 said:
