Seek your smarts to get better at this retirement stuff

[PedsDocLearning]

Hi,
I have been reading on this (super smart and helpful) forum for a couple of months but its my first post here.

Here is roughly what I have going for retirement assets (Approx 55k), and I appreciate your input as I try to get better at this. I am aware these may be poorly managed, but thats the point...

A)  TIRA w/ Betterment - 7k (rolled over from previous employer, no contribution in >3 yr)
US Total Stock Market: 15%; US Large-Cap Value: 15%; Developed Market: 30%
B) Taxable account w/ Betterment 90% stocks - 7k (no recent contribution)
US Total Stock Market: 15%; US Large-Cap Value: 15%; Developed Markets: 35%; Emerging Markets 10%

I know the above are redundant, and hope there is a way to change that in Betterment.

C)  403b w/ Metlife - 10k (from previous employment, no contribution in > 3 yrs)
D)  Roth 403b w/ TIAA Lifecycle 2045 - 5k
E)  403b TDA retirement plan w/ TIAA lifecycle 2045 - 20k
My plan is to

1. Convert TIRA to Roth (under current 403b, or new Vanguard account) by April

2. Roll over dead 403b into current employer 403b

3. Max out on 403b/401k deductions

4. Plan to learn about Backdoor Roth contribution.

5. Plan to learn about HSA account and deduction since I have high deductible account.
Please let me know what you think about the above (Betterment, roll over to TIAA or Vanguard, and the plan). Appreciate minor to major overhaul suggestions for the above.
Thanks y'all!

[jfoxcpacfp]

PedsDocLearning wrote:

My plan is to 1. Convert TIRA to Roth (under current 403b, or new Vanguard account) by April 2. Roll over dead 403b into current employer 403b 3. Max out on 403b/401k deductions 4. Plan to learn about Backdoor Roth contribution. 5. Plan to learn about HSA account and deduction since I have high deductible account.

Click to expand...

1. Yes


2. Yes if you cannot get any IC work and set up a SOLO-k (or if your spouse cannot do same and hire you for admin work)


3. Yes


4. Don't just learn - do it!


5. Ditto! If you had HDHP in 2016, you have until 4/18/17 to max out HSA for 2016 .

Good for you to have a taxable account.

You're doing fine on allocations except for those silly Lifecycle funds. Read the most recent copy of Simple Wealth, Inevitable Wealth (not available on Amazon, sadly).

[The White Coat Investor]

It's not clear to me what your desired overall asset allocation is.

This is one of the issues with using a roboadvisor for half of your portfolio and no advisor for the other half. It's hard to follow any sort of a real, comprehensive investing plan.

[PedsDocLearning]

jfoxcpacfp wrote:

PedsDocLearning wrote:

My plan is to 1. Convert TIRA to Roth (under current 403b, or new Vanguard account) by April 2. Roll over dead 403b into current employer 403b 3. Max out on 403b/401k deductions 4. Plan to learn about Backdoor Roth contribution. 5. Plan to learn about HSA account and deduction since I have high deductible account. 

Click to expand…

1. Yes


2. Yes if you cannot get any IC work and set up a SOLO-k (or if your spouse cannot do same and hire you for admin work)


3. Yes


4. Don’t just learn – do it!


5. Ditto! If you had HDHP in 2016, you have until 4/18/17 to max out HSA for 2016 .

Good for you to have a taxable account.

You’re doing fine on allocations except for those silly Lifecycle funds. Read the most recent copy of Simple Wealth, Inevitable Wealth (not available on Amazon, sadly).

Click to expand...

Thanks! I appreciate your vote of confidence.

I will have to understand "IC work". My spouse and I, both have a 403b at work - which we have to (finally) be maxing out.

The Lifecycle funds are with TIAA, and options are limited. I am considering - (1) rolling my prev 403b to this TIAA account or Vanguard? and (2) rolling over TIRA from Betterment to TIAA or Vanguard (esp betterment raised their rate and are not manageable)?

I will try to get my hands on that book. I am still working on WCI.

[PedsDocLearning]

The White Coat Investor wrote:

It’s not clear to me what your desired overall asset allocation is.

This is one of the issues with using a roboadvisor for half of your portfolio and no advisor for the other half. It’s hard to follow any sort of a real, comprehensive investing plan.

Click to expand...

You're right WCI. Its a start and I'm trying to learn from sources including this group.

Half managed funds aren't much good (perhaps better than no funds though). Any recommendations on building a real investing plan?

[DMFA]

IC = independent contractor.

The first thing you have to figure out, before anyone can really advise you, is nail down exactly what you *want* from your money, and how comfortable you are with risking it in various forms.  If you think that's vague, well, it is.  Money does a lot of things in a lot of different forms.  Are you just going for retirement, or planning for other things?  Dealing with student debt?  Planning for kids' college?  Buying a house?  Are you okay going more aggressively to earn, or do you need to be more cautious with the assets?

Your TIRA can either be rolled over into a 401k (maybe your 403b accepts them, but then I'd make sure you actually like the choices in the 403b and ensure it can fit well into your asset allocation, as per asset class and taxability status (e.g. tax-deferred like TIRA, tax-free like Roth, or taxable).  Vanguard doesn't accept incoming 401k rollovers (silly VG).  You can also just convert it to Roth - it's only $7,000, so you'd probably only pay like $2,000 of taxes on the conversion (since it was deducted when you contributed, and Roth is post-tax).

Backdoor Roth is actually quite simple.

1. Make TIRA contribution and don't deduct it from your taxes


2. Use a money-market fund or cash as the core position in the account


3. Transfer it to a Roth account a few days later


4. When doing taxes for 2017, fill out form 8606 properly to ensure it's not taxed (shouldn't be if your trad/SEP accounts were 0 at EOY)

Why are you using a taxable if you're not maxing out your tax-advantaged accounts?  Sure, taxables are useful for being able to draw them without penalty (other than tax), but you should be getting every tax break you can.

K, sorry to have more questions than answers, but there's a fair amount going on.  The "good" thing is that you're dealing with a few thousand dollars, so if any movements you do make are taxable, the hit shouldn't be difficult to absorb.

[The White Coat Investor]

PedsDocLearning wrote:

The White Coat Investor wrote:

It’s not clear to me what your desired overall asset allocation is.

This is one of the issues with using a roboadvisor for half of your portfolio and no advisor for the other half. It’s hard to follow any sort of a real, comprehensive investing plan.

Click to expand…

You’re right WCI. Its a start and I’m trying to learn from sources including this group.

Half managed funds aren’t much good (perhaps better than no funds though). Any recommendations on building a real investing plan?

Click to expand...

Start at the beginning. First decide if you need help or not, then line out your goals. Then decide which accounts you'll use for each goal. Then choose an asset allocation for each goal. Then choose which investments you'll use to fulfill that asset allocation. This is the financial planning process and is what a good fee only financial planner can do for you that a roboadvisor really cannot. You can be your own financial planner, but you're going to have to learn something about financial planning to do it well.

https://www.whitecoatinvestor.com/how-to-be-a-do-it-yourself-investor/

https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/

Hope that helps.

[PedsDocLearning]

Thanks for all the knowledgeable replies!
Some of my investing confusion has always been related to whether or not I will continue to live in US after 5-10 yrs. Originally from India, kids growing up now and who knows if/when we may make that move. So plan to dive in make the most of investments. Hoping I am thinking straight.

Anyway, questions for the collective wisdom -

If it helps - focusing on > 10 years (retirement and kids' college), ready to be aggressive and take some risk to make the most.

1. Employer TDA 403b plan: Will max out only starting this year. I tried to catch up with the entire last paycheck of 2016, and reached the TDA after 1/1/17. Am I correct that I can still count that towards 2016?
Also, I have TIAA Lifecycle 2045 plan, wonder if I should be considering 2060? I am 34, plan to retire in about 30 yrs.

2. Old / 'dead' 403b: Consolidate to current TIAA plan (which accepts incoming transfers but ER and the asset allocation aren't ideal), or would Vanguard be a better option?

3. TIRA at betterment: Plan to convert that to Roth at Vanguard as DMFA mentioned above. Don't have any other TIRA, so I plan to do Backdoor Roth starting 2018. Can I do it this year?

4. 529: Reading up on these for kids - 3 and 1, but haven't started one yet. Live in MO, have state tax deduction and may supplement with NV plan. Found the Turner v. WCI debate insightful. Am not very sure how that would work if my kids decide to go to college outside of US (live with their grandparents in India).

Lastly (and kinda importantly), I know I should be maxing out on tax deferred accounts before taxable, which both wife and I have started but can't go to previous years. I would like to put the money (in excess of 6 months of emergency fund) thats doing little work in an online bank to some use. Would you recommend putting it in a taxable account at Vanguard and use 3 fund portfolio? Any other suggestions?

Thanks a lot in advance.

[jfoxcpacfp]

1. I'm not clear on why you reached out to TDA but you can't contribute for 2016 on a 2017 paycheck. Since your options are limited to lifecycle funds, the best choice for now is to stretch them out as far into the future as possible.


2. If you plan to use a backdoor Roth strategy, you'll need to roll into your current plan, even though it's not ideal. Of course, this assumes you are rolling your current TIRA over to a Roth. otoh, if you have the option for some IC work, as mentioned previously, then this is what I would recommend for both accounts (solo 401k and roll both accounts into it or into a Roth but not into current employer plan).


3. Oops, just read this question. Yes, you can do it this year as long as you convert to Roth before 12/31/2017.


4. Distributions from a 529 college savings plan are tax-free only if used to pay for qualified higher education expenses at a college or university that is eligible for Title IV federal student aid. Such a college will have a federal school code that can be listed on the Free Application for Federal Student Aid (FAFSA).


5. Not necessarily. This is a very individual decision and depends upon your financial plan. See the lively discussion on the thread Draw Down Strategy.

[PedsDocLearning]

jfoxcpacfp wrote:

1. I’m not clear on why you reached out to TDA but you can’t contribute for 2016 on a 2017 paycheck. Since your options are limited to lifecycle funds, the best choice for now is to stretch them out as far into the future as possible.


2. If you plan to use a backdoor Roth strategy, you’ll need to roll into your current plan, even though it’s not ideal. Of course, this assumes you are rolling your current TIRA over to a Roth. otoh, if you have the option for some IC work, as mentioned previously, then this is what I would recommend for both accounts (solo 401k and roll both accounts into it or into a Roth but not into current employer plan).


3. Oops, just read this question. Yes, you can do it this year as long as you convert to Roth before 12/31/2017.


4. Distributions from a 529 college savings plan are tax-free only if used to pay for qualified higher education expenses at a college or university that is eligible for Title IV federal student aid. Such a college will have a federal school code that can be listed on the Free Application for Federal Student Aid (FAFSA).


5. Not necessarily. This is a very individual decision and depends upon your financial plan. See the lively discussion on the thread Draw Down Strategy.

Click to expand...

Appreciate you input -

On #2 - Done. Just so I know, did I "have" to roll into current plan and not a new Vanguard account?

# 3 - Would you recommend (a) converting to Roth and transferring to Vanguard, or (b) rolling into current voluntary retirement TDA plan? In the latter, I would save the tax and am I right in thinking that it will be 403b and not TIRA anymore?

Thanks a lot!

[jfoxcpacfp]

I think I'm losing the threads of all of of your accounts :-) . You can roll either or both of the TIRA and the "dead" (I call it "orphan") 403b account into your current 403b account or into a Roth IRA.

• You will owe no current tax on any r/o into the current employer's 403b, you will just be stuck in a less than desirable plan without access to the funds until you sever employment (for all practical purposes).


• You will owe taxes currently on any amount you convert to a Roth IRA but you will have total control over your account, including better choices and tax-free growth from this day forward.

The choice of part or all is up to you. My preference is current conversion to Roth (as you would see in the thread I referenced above) but many disagree with me (same thread) so you have to decide what is personally best for you. I cannot tell you that on a forum message board.