DIRC - U.S. Money and Tax Matters Board

Apr. 29, 2013 by OperaBob: If Only A Will Then A Way

Mon, 29 Apr 2013 13:42:34 GMT

[Website Address]

OB

Apr. 7, 2013 by OperaBob: Re: Percentage of Savings in Protected Accounts

Sun, 7 Apr 2013 10:01:22 GMT

Doowah Diddy Diddy DUMB Diddy Doo!

OB

Apr. 7, 2013 by Vulstock: Re: Percentage of Savings in Protected Accounts

Sun, 7 Apr 2013 09:31:05 GMT

Dude

Apr. 6, 2013 by OperaBob: Re: Percentage of Savings in Protected Accounts

Sat, 6 Apr 2013 13:09:10 GMT

Duh! ;-)

OB

Apr. 6, 2013 by Wayneman: Re: Percentage of Savings in Protected Accounts

Sat, 6 Apr 2013 02:05:04 GMT

Why New Mexico, btw?

It's a long story.

Apr. 5, 2013 by AlexChilton: Re: Percentage of Savings in Protected Accounts

Fri, 5 Apr 2013 18:06:53 GMT

'Buy gold and store it in New Mexico.'

Why New Mexico, btw?

Alex.

Apr. 5, 2013 by tsister: Re: Opinions needed

Fri, 5 Apr 2013 13:16:48 GMT

Thanks for the response. The meeting was postponed until this Monday so I will be hopefully learning more about the fees at that time. This is going to be an interesting meeting due to the fact that I'm the only one interested in this kind of information. The last time our company tried a 401K my boss was a bit embarrassed by my dogged questions about fees and commissions. Oh well. She got over it. She will have to get over it again. <grin>

Apr. 5, 2013 by OperaBob: Re: Percentage of Savings in Protected Accounts

Fri, 5 Apr 2013 13:05:21 GMT

Interestingly enough, $200K per year is *exactly* my target for retirement income.

ROTFLMAO!

OB

Apr. 5, 2013 by AlexChilton: Re: Percentage of Savings in Protected Accounts

Fri, 5 Apr 2013 12:39:29 GMT

Well, here we go...

[Website Address]

'Obama budget to take aim at wealthy IRAs
By Bernie Becker - 04/05/13 11:45 AM ET

President Obama’s budget, to be released next week, will limit how much wealthy individuals – like Mitt Romney – can keep in IRAs and other retirement accounts.
The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code.

The senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
Under the plan, a taxpayer’s tax-preferred retirement account, like an IRA, could not finance more than $205,000 per year of retirement – or right around $3 million this year.

So, they decide what "is needed to fund reasonable levels of retirement saving.”

Interestingly enough, $200K per year is *exactly* my target for retirement income.

Alex.

Apr. 5, 2013 by Jonny_G: Re: Opinions needed

Fri, 5 Apr 2013 08:07:41 GMT

If you estimate how much tax you would save over a year and how much you would be putting aside over the year, you can create a target rate of return to compare other investment options against.

Without making it to complicated, let's say you contribute $1000 to the 401k over 1 year and you save $30 in tax. That's a 3% rate of return. So the basic equation is:

Estimate of Tax Dollars Saved / Contributions for 1 year = % rate of return

An important item to factor into the equation is if there is a yearly fee (charged to you personally, not your employer) to administer the 401k. If there is, you should deduct it from the tax savings before dividing it by the amount contributed. Please note this is not the MER for owning a fund. Here is the enhanced equation:

(Estimate of Tax Dollars Saved - yearly admin fee) / Contributions for 1 year = % rate of return

To continue the example above if you had to pay a $50 fee / year to save $30 in taxes, it wouldn't make sense to contribute.

All of the examples above assume whatever fund you choose brings you a return that equals inflation, or basically net $0 (you indicated they were lousy). If after you do the above calculation for your own situation it makes sense to put the money into the 401k solely for the tax savings, then I would investigate the funds on offer for one that has a low MER cost with a guaranteed return - like a GIC or Cash account, or a bond fund if you feel comfortable with that. Get the lowest MER fund you can - all else being equal, funds with lower MERs generally perform better. The 401k then becomes part of your fixed income component in your asset mix. You can then review your overall asset mix which may allow you to put other funds that were going into fixed income investments towards your DRiPs.

Some disclosure: I'm Canadian and don't know very much about 401k accounts, but following the above steps will at least give you some place to start. You may want to hire a fee-only financial planner (someone you pay hourly and doesn't get any commission for selling investment products) who knows your local tax laws to consult with you on this specific question. Advice from some dude on the internet is probably not as good as advice you actually pay for.

Apr. 3, 2013 by Wayneman: Re: Percentage of Savings in Protected Accounts

Wed, 3 Apr 2013 01:52:52 GMT

No worry for Canadians as government says Canadian banks will not take deposits to bail out any bank like Cyprus did.

Mar. 30, 2013 by Lew2: Re: Opinions needed

Sat, 30 Mar 2013 06:00:17 GMT

Email me direct and I will give you my opinion.

Lew

Mar. 30, 2013 by tsister: Re: Opinions needed

Sat, 30 Mar 2013 03:13:51 GMT

I am contributing to a traditional IRA but not maxing it out. I can't quite afford that but am increasing the amount of my contribution each year. The good thing about the 401K is it's money I won't see or miss. I have calculated that a 3-4% contribution won't affect my net pay too badly and I could swing that. I thought about contributing more to the IRA but I could also use the tax advantage of the 401K. I just don't know if it's worth it without a company match and funds that aren't too great.

Mar. 30, 2013 by mgk65: Re: Opinions needed

Sat, 30 Mar 2013 01:32:15 GMT

Are you maxing out a Traditional IRA and/or a Roth IRA?

Do you want to accelerate pre-tax contributions?

Mar. 29, 2013 by tsister: Opinions needed

Fri, 29 Mar 2013 15:01:53 GMT

I have an issue here. I work for a small company. We had a 401K several years ago but the funds were, what I call, class c lousy and there was no company match. Needless to say, not too many employees joined up and it was discontinued. Now my boss wants to implement a new 401K plan. There will be no match at all. We are having a meeting to find out more info as to what type of funds we will be able to contribute to but I've already been told the funds will be class c lousy again. My issue is my age. I am not sure whether it's worth it to join this program at this stage of the game. I still have at least 10 years until retirement and my only savings are my drips, which I know are not enough to live on, and an annuity that I contribute to each month. I have to admit the pre-tax advantage is appealing but I'm not sure if it's worth it without an employer match and with class c funds.

I'm wondering what the general opinions are about this kind of situation. To participate or not to participate?

Mar. 29, 2013 by OperaBob: Re: Percentage of Savings in Protected Accounts

Fri, 29 Mar 2013 07:34:01 GMT

Vulie,

Itll just end up being covered in Chicken $&!%!

OB

Mar. 27, 2013 by Vulstock: Re: Percentage of Savings in Protected Accounts

Wed, 27 Mar 2013 02:32:53 GMT

Buy gold and store it in New Mexico.

Mar. 27, 2013 by drppingsoprano: Re: Percentage of Savings in Protected Accounts

Wed, 27 Mar 2013 01:27:15 GMT

The problem is that people are going to start keeping cash under their mattresses instead of in the bank. Imagine what that will do to the banks... And if everyone starts paying for things with cash it's going to be very difficult for the government to see the paper trail and know if people are paying things like sales tax.

Mar. 27, 2013 by steamboy: Re: Percentage of Savings in Protected Accounts

Tue, 26 Mar 2013 19:36:10 GMT

I call this "regulatory risk". The risk that the rules will be changed in unpredictable ways.

Mar. 26, 2013 by AlexChilton: Re: Percentage of Savings in Protected Accounts

Tue, 26 Mar 2013 16:11:14 GMT

"Your gifts, knowledge and talent for hard work can't be taken away from you."

True. Also, to be existentialist, your attitude a/f the theft is yours to control, however, that won't pay the bills :-)

My thoughts were around tying up $s in an IRA that the government could raid vs. keeping the cash (DRiP, perhaps).

Ultimately, I went ahead and made my IRA contribution. Existentially I'm a creature of discipline, at least w/investing.

btw, just dipping in and taking money, whether deposits, IRAs or 401ks is perversely honest compared w/stealing by printing money or manipulating interest rates lower thus driving the market higher, but I digress...

Alex.

Mar. 26, 2013 by Get_Rich_DRiP: Re: Percentage of Savings in Protected Accounts

Tue, 26 Mar 2013 15:41:01 GMT

At the end of the day the government can tax anything you have, confiscate anything you have - if I'm not mistaken, at one point governments even made it illegal for citizens to have significant gold holdings (http://en.wikipedia.org/wiki/Executive_Order_6102).

Ultimately, give unto Caesar....

Your gifts, knowledge and talent for hard work can't be taken away from you.

Mar. 26, 2013 by Wayneman: Re: Percentage of Savings in Protected Accounts

Tue, 26 Mar 2013 12:42:51 GMT

It's not likely to happen here, but what if government gets it into their heads that instead of taxing people they can just take money out of their bank accounts?

Assuming that they might do it, how can we prepare for the possibility that in the US or Canada they change the law to let themselves just take money from those who hold it in bank accounts?

What other places besides bank accounts can we use to hold our money?

- we could increase the amounts sent to DRIPs
- we could put excess cash into broker accounts and let it sit there
- we could overpay credit cards like VISA and have big cash surpluses

What else?

Mar. 26, 2013 by JoeB: Re: Percentage of Savings in Protected Accounts

Tue, 26 Mar 2013 11:24:24 GMT

Governments can do as they please. Look at what is happening in Cyprus for example. (Savings above 100 000 Euros taxes by as much as 40%). I call that legal stealing....

Joe

Mar. 1, 2013 by AlexChilton: Re: Percentage of Savings in Protected Accounts

Fri, 1 Mar 2013 06:52:55 GMT

Nationalize is exactly what I mean. A congresswoman proposed such a thing a few years back when all of congress was Democrat, so it's not beyond the pale. During the Clinton administration there was a proposal to enact a one time, 15% tax on 401ks to help Social Security as well.

Sounds crazy & went nowhere, but it makes one wonder if 'locking up' savings is truly secure, which gets to to point of 'how much is best?'.

DRiPing is a hobby for those who are self empowered (and hopefully disciplined), so I socialized the thought for comments.

Alex.

Mar. 1, 2013 by Aida2003: Re: Percentage of Savings in Protected Accounts

Fri, 1 Mar 2013 01:51:51 GMT

I try not to ponder such things because it's entirely out of my control what the gov't will do in the future. BTW, I didn't understand what you meant by privatizing 401k, because they're private as I see them now...maybe you meant nationalizing them so a piece of your 401k gets distributed to the non-savers....I hope we never ever get to this point.

Anyway, we're saving in all tax-deferred accounts, savings, and what's left go to DRIP's and dream/think/hope for the best :).

Feb. 21, 2013 by steamboy: Re: Percentage of Savings in Protected Accounts

Thu, 21 Feb 2013 06:32:33 GMT

"Regulatory risk" rarely gets mentioned.
The governments, US, Canada, et al, can and have changed the rules and tax rates quite often. I'm sure they will continue to do that in the future.
This is another argument for diversifying your sources of income for retirement.
How much and where is a guessing game as we don't know what the rules will be in 10 or 20 years.

Feb. 19, 2013 by kcourt: Re: Percentage of Savings in Protected Accounts

Tue, 19 Feb 2013 13:43:58 GMT

Something to think about. With all the craziness our government is doing, it's hard to tell.

Kathy

Feb. 19, 2013 by AlexChilton: Percentage of Savings in Protected Accounts

Tue, 19 Feb 2013 13:22:15 GMT

Just a question for the community: What's the best percentage of savings to keep in a protected account (401Ks, IRAs, etc.) vs. in the open?

Personally, I'm a active DRiPper. However, the thought creeps into my mind of a possible life changing event (uses up unprotected net worth, DRiPs, brokerage accounts, cash) or a confiscatory federal government (privatizing 401Ks) that may upset the balance of my investment net worth (all securities, bonds & liquid assets minus debt).

Has anyone put any thought (or heard any rules of thumb) to wit?

Alex.

Feb. 19, 2013 by AlexChilton: Percentage of Savings in Protected Accounts

Tue, 19 Feb 2013 13:21:00 GMT

Jan. 28, 2013 by onarock: Re: quicken question

Mon, 28 Jan 2013 11:23:54 GMT

thanx sop, will check this out

k

Jan. 23, 2013 by drppingsoprano: Re: quicken question

Tue, 22 Jan 2013 23:56:17 GMT

If you start entering it in the ledger section, and then press "edit", a box will pop up. Look towards the bottom right for the place to enter commissions.

Jan. 22, 2013 by onarock: Re: quicken question

Tue, 22 Jan 2013 15:21:58 GMT

this is the thing, there is no commission box...not when it is a reinvest dividends...which is what i don't get cuz some companies do charge fees...

k

Jan. 22, 2013 by drppingsoprano: Re: quicken question

Tue, 22 Jan 2013 11:54:42 GMT

Put it into the "commission" box.

Jan. 22, 2013 by onarock: quicken question

Tue, 22 Jan 2013 11:02:04 GMT

how would i enter a fee ie.pfizer into quicken when i am entering div reinv??

stupid pfizer...

k

Jan. 9, 2013 by AndyC: Re: Thanking by Suing

Wed, 9 Jan 2013 11:19:14 GMT

That's the American way.........

Jan. 9, 2013 by Wayneman: Re: Thanking by Suing

Wed, 9 Jan 2013 09:03:56 GMT

Does this mean the government is suing itself?

As shareholders perhaps they will vote on it and vote against suing themselves. (As long as they don't let Congress do the voting.)

Jan. 9, 2013 by raleighkent: Re: Thanking by Suing

Wed, 9 Jan 2013 08:50:48 GMT

Thanks OB I needed a laugh.

Jan. 9, 2013 by OperaBob: Re: Thanking by Suing

Wed, 9 Jan 2013 03:39:07 GMT

I just heard the US government still owns 75% of the shares.

Does this mean the government is suing itself?

OB

Jan. 9, 2013 by optional: Re: Thanking by Suing

Wed, 9 Jan 2013 03:24:02 GMT

Bite the hand that feeds you...

What would have happened to these shareholders without the said onerous bailout?!

Jan. 8, 2013 by OperaBob: Thanking by Suing

Tue, 8 Jan 2013 06:57:22 GMT

AIG considers suing US government after paying back the bailout:

[Website Address]

OB

Dec. 28, 2012 by Vulstock: Tax Gain Selling

Fri, 28 Dec 2012 06:38:42 GMT

Dec. 31 is the last day for tax gain selling.

[Website Address]

Dec. 21, 2012 by Vulstock: Tax gain harvesting

Fri, 21 Dec 2012 00:15:08 GMT

[Website Address]

Dec. 4, 2012 by kcourt: Re: special dividends

Tue, 4 Dec 2012 10:48:51 GMT

All I know is that the great companies raise their dividends each year.

Kathy

Dec. 4, 2012 by goldguy24k: special dividends

Tue, 4 Dec 2012 03:07:17 GMT

Is the current fever on anticipating higher dividend tax rates a "greed" ploy by the smart money (insiders)OR??? Do they know something we don't, open for discussion.

Nov. 23, 2012 by kcourt: Re: Dividend Tax Increase

Fri, 23 Nov 2012 12:27:56 GMT

The whole mess.

Kathy

Nov. 22, 2012 by Jon-o: Re: Dividend Tax Increase

Thu, 22 Nov 2012 13:50:41 GMT

It is a bit discouraging, that is for sure!

What's that? The dividend tax increase or the fiscal cliff?

;)

Nov. 20, 2012 by kcourt: Re: Dividend Tax Increase

Tue, 20 Nov 2012 07:31:37 GMT

It is a bit discouraging, that is for sure!

Kathy

Nov. 20, 2012 by mennoen1: Dividend Tax Increase

Tue, 20 Nov 2012 06:51:14 GMT

Does this nullify the biggest benefit of dividend investing? Any thoughts?

"U.S companies are already getting nervous about the prospect of a big jump in dividend tax rates that could go into effect early next year. Without an agreement in Congress to extend an existing tax break set to expire in January, the tax rate on U.S. dividend paying stocks could jump from the current 15% to 44.6%."

[Website Address]

Oct. 23, 2012 by OperaBob: Richest Of All Time

Tue, 23 Oct 2012 17:58:50 GMT

[Website Address]

OB

Sep. 25, 2012 by OperaBob: Password Predictability

Tue, 25 Sep 2012 14:15:46 GMT

[Website Address]

OB