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That reads like they're in the 28% bracket, or maybe barely in the 33%. Perhaps you're leaving out some income. Has he considered maxing your moms 401k? I hope they're doing that too. I personally don't see a need for a large amount of insurance when you have a solid net worth like that, and getting market returns is much more efficient than pissing money away into whole life. It's great your dad is at least looking at his options though, rather than jumping into whole life head first. SiGmA_X fucked around with this message at 16:43 on Jun 30, 2015 |
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Jun 30, 2015 15:27
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Ropes4u posted:Why would he have any life insurance? 1.5m in retirement will easily take care of your mother if your father was to kick off. Exactly. Insurance is to cover risk, what risk is he thinking he is ameliorating by carrying so much insurance? The loss of his income? It doesn't seem needed at this point in his life. There is no magic benefit to whole life insurance, many studies have shown that over time you are always better off having put your money into safe investments instead, which is mostly what the whole life company is doing anyway. The near retiree would be better off just putting those premium payments into tax-managed funds in an after tax account. He will almost certainly accumulate more wealth that way than any amount of insurance which must be compensated for the risk it's assuming.
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Jun 30, 2015 15:44
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pig slut lisa posted:
Sounds like your dad makes a shitload of money if he's worried about the top tax bracket, probably more than he lets on. Whole life might make sense for him for tax avoidance. He should probably speak with an adviser at his income. Also whining about the tax rate and going "why work", when you make a half million+ is pretty funny.
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Jun 30, 2015 15:45
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Inept posted:Also whining about the tax rate and going "why work", when you make a half million+ is pretty funny. That's pretty tongue in cheek, although it doesn't come across that way. He loves his teaching and research and will probably die at his desk. He's also a happy taxpayer. Thanks to everyone for your responses. I'm on my phone so I can't reply to everything but there's some good stuff here that largely tracks my thinking. I'll chat with him and update. Also I'm very curious about this top tax bracket business.
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Jun 30, 2015 17:07
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pig slut lisa posted:Also I'm very curious about this top tax bracket business. Depending on where you live you can get close to that rate once you add in State, Local, SS/Medicare, and AMT taxes without making $500k+
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Jun 30, 2015 17:18
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Turns out I was right, they did make about $250K last year together so he just had no idea where the top tax bracket started. I also asked him where he was getting this idea that his contributions would be tax deductible. He said he'd look into it and let me know. I'm guessing he got something turned around...either that or some salesman is just flat out lying to him. Meanwhile, he shared that his death benefit through the state retirement system would give my mom 1/2 of his base salary (would work out to ~$85K a year for her), so yeah it's not like there's a real need for additional money on that part. We'll be talking about it this weekend, I think. I'm curious to see the sales materials he's received. Meanwhile my obnoxious brother-in-law jumped all over me on facebook in defense of whole life. When I told him that it was my understanding that whole life only makes sense in certain high wealth/income situations, but that I'd be happy to read anything to the contrary (so long as it came from someone without a financial interest in selling insurance), he accused me of having "such a 'lawyer' answer". I don't even know what that means. Also he works as some kind of trader for Goldman Sachs :|
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Jul 1, 2015 02:03
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pig slut lisa posted:Meanwhile my obnoxious brother-in-law jumped all over me on facebook in defense of whole life. When I told him that it was my understanding that whole life only makes sense in certain high wealth/income situations, but that I'd be happy to read anything to the contrary (so long as it came from someone without a financial interest in selling insurance), he accused me of having "such a 'lawyer' answer". I don't even know what that means. Also he works as some kind of trader for Goldman Sachs :| Your brother-in-law gave the lawyer answer and has evaded answering the question.
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Jul 1, 2015 02:43
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If he works for a public uni, he may have access to a 457 plan. That has the same max cap as a 403 or 401k but it's totally separate! That means he can contribute twice as much in total!  I hope he's making the bonus contributions he's allowed due to his age as well. His wife is also eligible to put the max for any accounts she's eligible for as long as it doesn't go above her income. For a teacher making 30k that would mean 18k in a 403b and 5500 for an IRA...PLUS any catchup contribution she's eligible for at her age  If he is already doing that, but he's worried about the marginal tax bracket, then he needs to realize that he's playing with gravy money and he can have some flexibility with other options besides whole life insurance. His time would be better spent on setting up proper trusts, estate planning, charitable and family interests, etc. Truly an awesome problem to have. An inspiration to BFC!
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Jul 1, 2015 02:46
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balancedbias posted:If he works for a public uni, he may have access to a 457 plan. That has the same max cap as a 403 or 401k but it's totally separate! That means he can contribute twice as much in total! He definitely has this option, and I sincerely doubt he's maxing both the 457 and the 403. Thanks for the reminder about that. I learned about that when my wife was exploring working for the university but had forgotten about it. I think it would be good for me to calculate how much they're able to contribute to tax advantaged funds and then see if he's actually maxing out like he claims. I suspect he may be missing something. balancedbias posted:His time would be better spent on setting up proper trusts, estate planning, charitable and family interests, etc. Interestingly this whole thing came about because he's finally getting around to some sorely needed estate planning. "Sorely needed" as in "my parents haven't updated their will since before my 18 year old brother was conceived". I give credit to my parents for being good savers and never getting into dumb spending habits, despite not being the savviest investors. They are a good illustration of what I think is really the golden rule of personal finance: Save a Decent Amount of Your Income. Obviously there are better and worse ways to save and invest but if you're saving 20% or more you really can't go too wrong over the course of a lifetime.
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Jul 1, 2015 03:10
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pig slut lisa posted:Meanwhile, he shared that his death benefit through the state retirement system would give my mom 1/2 of his base salary (would work out to ~$85K a year for her), so yeah it's not like there's a real need for additional money on that part. Often overlooked in life insurance planning are Social Security survivors benefits. In you're mom's case it's not really needed but another 30K/yr after she retires for the rest of her life is still equivalent to yet another pretty good life insurance plan. Assuming your dad is fully vested in SS with max benefits which at his income he should be. This is particularly important when considering caring for minor children as they can each receive up to 75% (I think) of the deceased parents benefit up to a total of 150% (?) of the benefit. It can really help stretch out Life Insurance dollars and help reserve those monies for when they come of age.
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Jul 1, 2015 13:04
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Hey guys I'm talking to a prospective employer that offers a 403(b) savings program. They didn't say anything about matching contributions (do employers still do that?) Is this okay? Good? Bad? I've never worked a job that has a savings program because I was dumb and didn't get a very employable degree.
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Jul 1, 2015 15:17
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It's good to have something, but without a match you want to do your Roth IRA first because you have control over where it's invested and what the funds cost. Being you want to put at least 15% of your gross income into savings, and the Roth limit is 5.5k, if you make over 38k you'll need both the Roth and the 403. Open a Roth IRA with Vanguard and use the auto deposit option (or set them up as an ACH direct deposit from your paycheck - this is how mine is setup) and dump your money into a Target Date fund for now, for whatever year is close to when you plan to retire. Then read The Four Pillars Of Investing and have a decent understanding of what you're doing, and you can decide if target date is right for you or if you want to manually allocate (hint: target date is great!)
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Jul 1, 2015 15:32
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Arglebargle III posted:Hey guys I'm talking to a prospective employer that offers a 403(b) savings program. They didn't say anything about matching contributions (do employers still do that?) Is this okay? Good? Bad? I've never worked a job that has a savings program because I was dumb and didn't get a very employable degree. I work for a 501(c)(3) non-profit that offers a 403(b), they provide a 2x match on a 5% required deduction (so 10%) that is structured such that I can also contribute up to the max pre-tax (i.e. another 18k for 2015). Yes, it's great. If your potential employer didn't mention a matching contribution directly I would ask as it's pretty much direct salary compensation and an important consideration. e: VVV I think vesting is either instant or 1 year. Doesn't matter, I doubt if I am leaving until retirement, even then I hope to come back and consult. Many people have been here 40+ years. Murgos fucked around with this message at 20:42 on Jul 1, 2015 |
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Jul 1, 2015 18:37
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Murgos posted:I work for a 501(c)(3) non-profit that offers a 403(b), they provide a 2x match on a 5% required deduction (so 10%) that is structured such that I can also contribute up to the max pre-tax (i.e. another 18k for 2015). Yes, it's great. If your potential employer didn't mention a matching contribution directly I would ask as it's pretty much direct salary compensation and an important consideration. SiGmA_X fucked around with this message at 20:24 on Jul 1, 2015 |
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Jul 1, 2015 20:22
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I'm not sure if this is the best place to ask this question or not, but here goes. What would the potential ramifications and resolution be for the following situation: Employer advertises a SIMPLE IRA, up to 3% match. Several employees take advantage of this, open accounts, and have their salary deferred at whatever percentage they desire. For this instance, let's go with the 3%. Salary deferrals are seemingly sporadic (payroll is always accurate, but deferrals into the IRA are sometimes absent for several months but then a large deposit is made to bring everything where it should be). Employer matches are also sporadic, in one instance over 1.5 years only $124 is deposited as the match contribution by the employer despite $1800+ by the employee. Nobody notices the above for a number of reasons, or if they have it is when they quit and inquire with the investment company and are told "yeah, we've asked several times for them to make the contributions but they never have" but it never makes it back to current employees who have been going about their day assuming the contributions are being made (partially their/our own stupid faults). Employees now realize little or no contributions have been made by the employer and uhh  I know little about this whole process, but I am being told that employee match deposits were supposed to have done twice a year. Clearly this hasn't been the case. I also see that according to the IRS for a SIMPLE IRA the contribution is suppose to have been made prior to the due date for Federal taxes, so April 15th. This hasn't happened for two years now. I am also aware of at least one, possibly three cases where employees who have quit never received their contributions, and at least two current employees (myself included) have received wildly inaccurate (low) contributions to their accounts. Right now I've contributed ~$1800 to the IRA and the company only $124 since December 2013. I knew that the company's books were probably a little wonky but I had no idea it might be this bad. The gently caress is going on, what can be done? I was already looking for a new job, but gently caress, this is going to be the straw that breaks this camel's back.
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Jul 1, 2015 20:53
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Based on my quick, non-expert, Google search, your employer is required to make the matches by the IRS: http://www.irs.gov/Retirement-Plans/SIMPLE-IRA-Plan-FAQs-Contributions You probably want to talk to a lawyer.
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Jul 2, 2015 01:35
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yeah -- i think the best case scenario here is gross incompetence on the part of your employer and/or plan management company. lawyer up
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Jul 2, 2015 01:39
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Uh, have you tried talking to someone in payroll before you 'lawyer up'? I think the first couple of replies need to calm down, incompetence in the payroll department is nothing new.
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Jul 3, 2015 22:25
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greasyhands posted:Uh, have you tried talking to someone in payroll before you 'lawyer up'? I think the first couple of replies need to calm down, incompetence in the payroll department is nothing new. This. It's $1800 a lawyer is going to eat up a chunk of that. Plus hope you are looking for another job if you're pursuing legal action against your employer.
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Jul 6, 2015 18:05
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Murgos posted:I work for a 501(c)(3) non-profit that offers a 403(b), they provide a 2x match on a 5% required deduction (so 10%) that is structured such that I can also contribute up to the max pre-tax (i.e. another 18k for 2015). Yes, it's great. If your potential employer didn't mention a matching contribution directly I would ask as it's pretty much direct salary compensation and an important consideration. It's a great setup in a student loan forgiveness world too, which is something I've posited that non profits should do. Decreases AGI until debt is forgiven and you walk away with a huge sheltered savings.
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Jul 8, 2015 17:00
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I was asking earlier about what sort of fund would be smart for rolling an old 401(k) into an IRA about (A bit over $11,000). Thread said Vanguard target fund, but my girlfriend convinced me to ask her financial advisor aunt what she thought. Her thoughts were to break them up into three different Vanguard funds, favoring stocks over bonds. $5000 into a growth an income fund $4000 into a growth fund $2000 into an international fund I came up with a list (it's probably terrible) of funds for her to help me with but she stopped answering my emails, so I'm asking you guys if this is a dumb idea or not?
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Jul 9, 2015 21:33
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The advice you'll get here is (1) Figure out what portfolio you want and (2) Get it using low priced broad market index funds (or ETFs). Seems like you're working on the first step. The main decision to make there is, what fraction stocks vs bonds? The target retirement fund is a good starting point but it isn't for everybody. Why don't you like it?
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Jul 9, 2015 21:49
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The lazy 3 fund portfolio might be what she's talking about.
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Jul 9, 2015 21:52
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Opentarget posted:I was asking earlier about what sort of fund would be smart for rolling an old 401(k) into an IRA about (A bit over $11,000). Thread said Vanguard target fund, but my girlfriend convinced me to ask her financial advisor aunt what she thought. At the $11k range, it really doesn't matter if you use a target fund or a 3 fund portfolio. The target fund is nice and simple, and you can spend the next several years contributing to it and learning more about investing without feeling like you're missing out on anything significant after you've learned the ins and outs of what you want to do for asset allocation.
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Jul 9, 2015 23:14
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Hi Folks! Due to a family tragedy I will be inheriting some money in IRA form. I understand that this means I need to set up an "inherited IRA." Everyone seems to recommend Vanguard, but I'm not sure what, exactly, I should do. I'm planning to put this money towards retirement. I've also heard of "target-date" funds- someone mentioned the T. Rowe 2050 fund is looking nice but I don't know what I'm doing.
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Jul 9, 2015 23:34
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Delthalaz posted:Hi Folks! Due to a family tragedy I will be inheriting some money in IRA form. I understand that this means I need to set up an "inherited IRA." Everyone seems to recommend Vanguard, but I'm not sure what, exactly, I should do. I'm planning to put this money towards retirement. I've also heard of "target-date" funds- someone mentioned the T. Rowe 2050 fund is looking nice but I don't know what I'm doing. I might have mentioned T. Rowe funds but because they suck? 0.76% expense ratio is what I see on fidelity's site for the T. Rowe 2050 TRRMX. If you're going through Vanguard, get a lower expense ratio target-date fund such as Vanguard Target Retirement 2050 Fund (VFIFX) 0.18% expense ratio, or allocate a portfolio yourself per others' recommendations ~2 pages ago. (Edit: of other low-expense ratio funds, while diversifying between US stocks, international stocks, bonds, etc. The target date fund is a very reasonable set-and-forget fund if you don't want to go through that process though.) Blinky2099 fucked around with this message at 00:08 on Jul 10, 2015 |
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Jul 9, 2015 23:51
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Blinky2099 posted:I might have mentioned T. Rowe funds but because they suck? 0.76% expense ratio is what I see on fidelity's site for the T. Rowe 2050 TRRMX. If you're going through Vanguard, get a lower expense ratio target-date fund such as Vanguard Target Retirement 2050 Fund (VFIFX) 0.18% expense ratio, or allocate a portfolio yourself per others' recommendations ~2 pages ago. (Edit: of other low-expense ratio funds, while diversifying between US stocks, international stocks, bonds, etc. The target date fund is a very reasonable set-and-forget fund if you don't want to go through that process though.) No it was someone IRL who said it looked good. Why doesn't it look good- the expense? I'm pretty new to this stuff. So with an Inherited IRA I need to take out required minimum distributions until I kill the fund - hopefully in a very long time. The RMDs are small while I'm still young but they do exist. Does that change my planning with this stuff at all?
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Jul 10, 2015 00:28
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Delthalaz posted:No it was someone IRL who said it looked good. Why doesn't it look good- the expense? I'm pretty new to this stuff. Well people IRL say a lot of things. The expense is why it's bad, at least when you have a choice. Vanguard isn't the only place with really low fees - Fidelity, Schwab, and others have largely equivalent index funds - but when you have freedom of choice they're often the cheapest and tend to do well on the customer service side. The performance of index funds from different companies tracking the same index will be almost identical so there's no point in paying four times as much. RMDs don't change too much; think of them as negative contributions. Once you decide what allocation of stocks and bonds you want just take the RMD in such a way that it pushes you towards that ratio. So if stocks drop significantly you'd want to take your RMD from bonds. It's the opposite of what you'd do if you were contributing to it.
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Jul 10, 2015 01:23
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Delthalaz posted:No it was someone IRL who said it looked good. Why doesn't it look good- the expense? I'm pretty new to this stuff. Low expense ratios are ironically the best way to pick investments. Studies by places such as Vanguard found high expense ratio active funds tended to perform worse over long investments windows.
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Jul 10, 2015 01:26
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Delthalaz posted:No it was someone IRL who said it looked good. quote:So with an Inherited IRA I need to take out required minimum distributions until I kill the fund - hopefully in a very long time. The RMDs are small while I'm still young but they do exist. Does that change my planning with this stuff at all?
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Jul 10, 2015 02:32
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Did any of you all read the Medium article that bashes the poo poo out of Wealthfront? http://medium.com/@blakeross/wealthfront-silicon-valley-tech-at-wall-street-prices-fdd2e5f54905
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Jul 10, 2015 02:33
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moana posted:Did any of you all read the Medium article that bashes the poo poo out of Wealthfront? http://medium.com/@blakeross/wealthfront-silicon-valley-tech-at-wall-street-prices-fdd2e5f54905 Well, I have now. It's convincing!
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Jul 10, 2015 04:04
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Delthalaz posted:No it was someone IRL who said it looked good. Why doesn't it look good- the expense? I'm pretty new to this stuff. If I understand it right, unless you are already contributing to an individual Ira, you should be able to roll that mrd into an individual Ira and at least mitigate the tax hit of your new income.
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Jul 10, 2015 04:19
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Probably the best thing to do, for now, is put it all into a target retirement fund and figure out if you want to get fancier. If you don't already have ties to another company that offers low cost index funds, this thread's advice is to go with Vanguard. In an IRA you do not pay tax if you decide, later, that you want to sell the target date fund and buy different index funds.
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Jul 10, 2015 05:08
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moana posted:Did any of you all read the Medium article that bashes the poo poo out of Wealthfront? http://medium.com/@blakeross/wealthfront-silicon-valley-tech-at-wall-street-prices-fdd2e5f54905 That was a pretty awesome article. Definitely shared that and the one about the Tiny Houses that I saw another friend post on Facebook.
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Jul 10, 2015 06:36
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savesthedayrocks posted:If I understand it right, unless you are already contributing to an individual Ira, you should be able to roll that mrd into an individual Ira and at least mitigate the tax hit of your new income. Thanks, everyone! This is new information for me -- so I could roll over the MRD of an inherited into a normal IRA and avoid paying tax?!
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Jul 10, 2015 07:05
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Delthalaz posted:Thanks, everyone! No, what he's saying is nothing special, you're going to pay tax on any money coming out of that inherited IRA. What you can do is - if you're eligible for a deductible traditional IRA and you aren't already contributing to it (or are contributing below the maximum amount) - you can contribute those RMDs into a traditional deductible IRA and defer taxes on that amount until you withdraw from your own IRA in retirement. I wouldn't make a special point of this. Treat the RMDs as part of your income and base your decisions on that. If your RMD is $3000 it is almost exactly like a $3000 raise at your job except that you can't put it into a 401(k). Another option is to increase your 401(k) contributions by the amount of the RMD, if you aren't already maximizing your company match. Desuwa fucked around with this message at 08:17 on Jul 10, 2015 |
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Jul 10, 2015 08:11
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Right, sorry for the confusion. The money is coming out anyways, so you are going to get taxed on it. The analogy above about treating it as if you got a bonus from work is a good one. My advice is coming from what happens after the tax event. The benefits I was referring to are the savers credit when you file your taxes (if eligible), and if you could deduct the amount you put into an individual Ira if you qualify. Those two points are more specific to your own situation. So you'll need to dig a bit deeper. Here's a starting point: http://www.irs.gov/Retirement-Plans...nt-Plan-at-Work http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-(Saver’s-Credit) savesthedayrocks fucked around with this message at 16:22 on Jul 10, 2015 |
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Jul 10, 2015 16:13
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slap me silly posted:The advice you'll get here is (1) Figure out what portfolio you want and (2) Get it using low priced broad market index funds (or ETFs). Seems like you're working on the first step. The main decision to make there is, what fraction stocks vs bonds? The target retirement fund is a good starting point but it isn't for everybody. Why don't you like it? Well initially I was going to use a target retirement fund, but during my initial phone call with the aunt she said target funds were bad and essentially left it at that. I think I understood her rationale as basically to just throw money into stock funds due to the current poor interest returns on bonds, but I thought that was basically achieved in a target fund as well? The only real reason I'm valuing her opinion is because she is a legitimate Big Deal financial advisor, but I'm also her niece's boyfriend and not a paying customer. My gut is pretty much agreeing with the sentiment of just doing a target fund and getting fancier when I'm smarter in the future.
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Jul 10, 2015 21:35
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Opentarget posted:I think I understood her rationale as basically to just throw money into stock funds due to the current poor interest returns on bonds, Does your aunt think a 70 year old woman who lives off of social security and her life savings/investments should have all of her money invested in stocks? Or does she think the lady should just be 100% in stocks now because bonds are bad, but she should swing her money into bonds at some date in the future?
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Jul 10, 2015 21:48
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