Talking stocks, trading, and investing in general

[venividivicibj]

I think the people pushing hardest on crypto haven't admitted that the gains have been illogical and are due for a correction. There were some generic "well, sure it could drop, but it is going to keep going up in the long term."

: ( I’ve been saying we were due for a correction for a while

 

[brokencycle]

: ( I’ve been saying we were due for a correction for a while

You're not "people pushing the hardest"

@otc If I put in money into an IRA now, then, immediately exercise a Roth conversion (money is just in cash), the 1099-R will essentially be "zero"?

I believe if you have a regular IRA with any assets, that won't be true.

 

[Piobaire]

I feel like I need to reconfirm the Roth conversion thing every year.

 

[brokencycle]

I feel like I need to reconfirm the Roth conversion thing every year.

If you reconfirm it here, then we all get the knowledge, plus you don't have to keep asking your accountant.

 

[Piobaire]

If you reconfirm it here, then we all get the knowledge, plus you don't have to keep asking your accountant.

I remember enough to know:

1) I won't be converting my prior traditional balance.
2) It's not worth the bookkeeping hassle to do it on a go forward basis.

 

[otc]

@otc If I put in money into an IRA now, then, immediately exercise a Roth conversion (money is just in cash), the 1099-R will essentially be "zero"?

Correct, that's what I do. I have a Trad IRA and a Roth IRA with TD Ameritrade. The trad IRA is always a zero balance except for the few days of the year where it holds $5500 in cash before they convert it over to the Roth.

As piob always notes...that doesn't work if you have other traditional IRA balances elsewhere.

The trick Piob needs to figure out is how to use his boss powers to get his 401k plan to allow him to roll his Trad IRA into it. If you can roll your Trad IRA into a 401k plan (which doesn't provoke any taxes), then you are free to go about the backdoor roth without any tax liability.

 

[brokencycle]

Dang. I need boss powers.

 

[gettoasty]

Good to know, I can do the R/O but not sure if I want to leave Vanguard for American Funds. Decisions probably to revisit at end of this year, going to probably file my tax return soon and just deposit into IRA for 2017. Although, do you know know if I conduct the R/O this month, then, contribute to IRA next month will that be the same as not having any other IRA to begin with? @otc

 

[otc]

If you have super boss powers, then you can make sure HR sets up a 401k that also enables you to do the Mega Backdoor Roth...

To do that, your 401k plan needs to allow you to make after-tax contributions (not Roth 401k, just excess contributions to a normal 401k in excess of the $18k limit) and your plan needs to allow you to make non-hardship withdrawls of some sort. Then you stick a bunch of extra cash in there, withdraw it to a trad IRA, and then backdoor it all into a Roth. Between that and the regular IRA contribution, you can stuff something like $40k/yr into a Roth despite being over the income limit (and the contribution limit being only $5.5k).

 

[Piobaire]

Correct, that's what I do. I have a Trad IRA and a Roth IRA with TD Ameritrade. The trad IRA is always a zero balance except for the few days of the year where it holds $5500 in cash before they convert it over to the Roth.

As piob always notes...that doesn't work if you have other traditional IRA balances elsewhere.

The trick Piob needs to figure out is how to use his boss powers to get his 401k plan to allow him to roll his Trad IRA into it. If you can roll your Trad IRA into a 401k plan (which doesn't provoke any taxes), then you are free to go about the backdoor roth without any tax liability.

Are you sure about that? I mean, taxes need to get paid at some point. So if I roll 300k into my work plan, then roll it out into a Roth, don't I get a tax bill on that 300k?

Edit: okay, I get what you're saying. Just move the prior balance over and then backdoor the Roth on a go forward basis.

 

[otc]

Good to know, I can do the R/O but not sure if I want to leave Vanguard for American Funds. Decisions probably to revisit at end of this year, going to probably file my tax return soon and just deposit into IRA for 2017. Although, do you know know if I conduct the R/O this month, then, contribute to IRA next month will that be the same as not having any other IRA to begin with? @otc

I have no idea. I could see it going either way...once the IRA is rolled into a 401k, they might just say "cool, you don't have any other IRA assets". Or they might say "well, you had them at some point this year, so we are going to tax you". I'd probably lean towards the former, but don't trust me on it.

 

[Piobaire]

Oh, there's always the other problem too. The built up balance of a post-tax, trad IRA account. It's all so eff'ed up.

 

[otc]

Are you sure about that? I mean, taxes need to get paid at some point. So if I roll 300k into my work plan, then roll it out into a Roth, don't I get a tax bill on that 300k?

You don't get to roll the 300k into the Roth.

You roll the 300k into the 401k to wipe the slate on your Trad IRA. Then you get to make a nice little 5.5k IRA contribution and roll that over into the roth without paying taxes (or ~40k if you can do the Mega Backdoor thing).

The 300k stays in your 401k...so you should only do this if you have decent 401k fund options. If your fund options suck, then the benefit of having full control over that $300k outweighs the ability to contribute to a Roth. But...if you are flexing the boss muscles, shouldn't you also be making sure your plan has access to something like vanguard admiral shares?

 

[brokencycle]

If you have super boss powers, then you can make sure HR sets up a 401k that also enables you to do the Mega Backdoor Roth...

To do that, your 401k plan needs to allow you to make after-tax contributions (not Roth 401k, just excess contributions to a normal 401k in excess of the $18k limit) and your plan needs to allow you to make non-hardship withdrawls of some sort. Then you stick a bunch of extra cash in there, withdraw it to a trad IRA, and then backdoor it all into a Roth. Between that and the regular IRA contribution, you can stuff something like $40k/yr into a Roth despite being over the income limit (and the contribution limit being only $5.5k).

I need boss powers and an income to support adding $40k/yr to a roth.

 

[Piobaire]

So here's a little sweet thing we're doing. Mrs. Piob can "buy" years of service into her government, defined benefit (yes, a DB!) plan based on her prior years working for the State of Hawaii. Ran the numbers, and for what it will cost to buy her seven years of service, it will pay back 4.5 years into retirement. The "purchase" comes off at the W2 level, and once we commit, the cost is set and based on her current salary. The best thing is she was just promoted to head her department and we're getting this done before her raise takes effect.

Did I also mention, besides the DB, she has a government 457? 18.5k a year now and 24.5k in a few years.