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  #41  
Old 05-16-2019, 07:56 AM
MathGeek92 MathGeek92 is offline
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I know te example was contrived, but remember you still can only contribute the maximum allowed by age to an IRA whether its pre-tax or post tax money. You cannot make a 10 K contribution (unless of course you are spanning 2 tax years. Like deposit before April 15th of 2020 for both 2019 tax year and 2020 tax year.

yoyo.. whats the complicated and risky part? the back door roth - just the concept, or the prorata conversion rule?
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  #42  
Old 05-16-2019, 08:06 AM
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Originally Posted by MathGeek92 View Post
I know te example was contrived, but remember you still can only contribute the maximum allowed by age to an IRA whether its pre-tax or post tax money. You cannot make a 10 K contribution (unless of course you are spanning 2 tax years. Like deposit before April 15th of 2020 for both 2019 tax year and 2020 tax year.

yoyo.. whats the complicated and risky part? the back door roth - just the concept, or the prorata conversion rule?
maybe not as much for this crowd who would likely do the research and understand the tax implications. i can see people not understanding the details, jumping in, and getting hit with a bigger tax bill than they expected
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  #43  
Old 05-16-2019, 09:07 AM
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This is just a regular old investment account in your name or greenwoman's name then?
Correct. Our "college savings accounts" for the kids are just separate investment accounts in the name of our trust.

Which brings up another tangent, have you thought about a trust? If not, it might be something that you want to look into. I think there are a few threads on the AO talking about them, search for revocable living trust.
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  #44  
Old 05-16-2019, 09:52 AM
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Yes, have to pay tax in your second scenario (as well as first). It's across all your traditional IRA accounts, doesn't matter if you have them at different companies.
Ah, I didn't realize that. That stinks. Thank-you for explaining that to me.
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  #45  
Old 05-16-2019, 09:56 AM
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Originally Posted by greenman View Post
Correct. Our "college savings accounts" for the kids are just separate investment accounts in the name of our trust.

Which brings up another tangent, have you thought about a trust? If not, it might be something that you want to look into. I think there are a few threads on the AO talking about them, search for revocable living trust.
We are, um, behind with that stuff. Don't even have wills yet. Definitely something we need to look into.

I thought you didn't need to mess with trusts unless you were likely to be hit with the inheritance tax though, is that right? We don't have enough assets for that to be a problem. At least not yet. Edward has a fat pension coming to him, so we don't have as much in retirement savings as other couples in our age / income bracket. We do have a lot, but not inheritance-tax-level.
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  #46  
Old 05-16-2019, 10:33 AM
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Originally Posted by Elinor Dashwood View Post
We are, um, behind with that stuff. Don't even have wills yet. Definitely something we need to look into.

I thought you didn't need to mess with trusts unless you were likely to be hit with the inheritance tax though, is that right? We don't have enough assets for that to be a problem. At least not yet. Edward has a fat pension coming to him, so we don't have as much in retirement savings as other couples in our age / income bracket. We do have a lot, but not inheritance-tax-level.
The trust is way more than about inheritance taxes. Our wills are part of it, as well as power of guardianship for our kids and a distribution schedule for the kids to get our money if we die. Also it has directions for what to do if you or your spouse become incapacitated and are not able to make decisions anymore.

greenwoman's work offers legal services as a work benefit, so she signed up for it for 1 year. When then met with a lawyer a couple times for maybe an 1 hour each time, did the trust, and it cost us about $200. It was a pretty quick and easy process.

https://www.investopedia.com/article...ivingtrust.asp
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  #47  
Old 05-16-2019, 11:26 AM
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Originally Posted by greenman View Post
The trust is way more than about inheritance taxes. Our wills are part of it, as well as power of guardianship for our kids and a distribution schedule for the kids to get our money if we die. Also it has directions for what to do if you or your spouse become incapacitated and are not able to make decisions anymore.

greenwoman's work offers legal services as a work benefit, so she signed up for it for 1 year. When then met with a lawyer a couple times for maybe an 1 hour each time, did the trust, and it cost us about $200. It was a pretty quick and easy process.

https://www.investopedia.com/article...ivingtrust.asp
Thanks. Edward's work has something like that too, but we can't figure out how to sign up for it. It's not a choice when we do annual open enrollment. We need to just call HR and find out what the heck we do.
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  #48  
Old 05-17-2019, 04:35 PM
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Another question: how much are you all saving for college? I'm sort of figuring that it's going to cost $50K a year by the 2030s when our LO will be in college.

Just curious what your targets are.
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  #49  
Old 05-17-2019, 05:27 PM
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We're on track to have about 50,000 saved for each child. This won't be enough unless they get scholarships, but we are also not planning on providing 100% of the funds if it were needed.
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  #50  
Old 05-17-2019, 07:09 PM
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Quote:
Originally Posted by Elinor Dashwood View Post
Another question: how much are you all saving for college? I'm sort of figuring that it's going to cost $50K a year by the 2030s when our LO will be in college.

Just curious what your targets are.
Based on historical tuition inflation, thatís a reasonable target for a public university and would probably fall between the cost of in state vs. out of state.

My hope is that tuition inflation is tempered in the next decade. I think a lot college costs have been driven by runaway administration budgets that are due for a correction.
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