Tax Time

by Finn

We’re now in the middle of everyone’s least favorite time of year: tax time.

We’ve already touched on a number of tax topics this year, but perhaps it’s time for a day of asking our questions, sharing our knowledge, and airing our complaints.

Totebaggers, what have you learned over the years that you can share with your fellow totebaggers that will help ease this time of year? What questions do you have that others here might be able to answer? If someone died and made you king, what changes would you make to our income tax system?


181 thoughts on “Tax Time

  1. If someone died and made you king, what changes would you make to our income tax system?

    10 year phase out of the mortgage interest deduction starting at $500k and going down $50k a year until no mortgage interest is deductible.

  2. Eliminate the deduction for mortgage interest for a second home and tax “carried interest” at ordinary income tax rates.

  3. We spent several hours last week on our 2014 taxes. The bulk of the time was spent on our charitable deductions. We used to receive a letter for every charitable deduction, but now some charities just send an email.
    I wish I had printed every email at the time of donation and stuck it in a file, or updated a spreadsheet during the year. I already started a 2015 folder because I don’t want to go through this next year.

  4. 1. I have learned to write details on receipts immediately, and to put them into their correct file immediately. Allowing any time to pass between receiving them and filing them will lead to no good, and to tremendous complication at tax time.

    2. I have learned that tax docs often look like junk mail, so I open every single envelope that comes into the house now. I’ve inadvertently recycled important docs without opening.

    3. I have learned to never leave any tax-related thing for “another day.” I’m new to the quarterly tax filing thing and I find quarter ends sneak up on me very quickly, and I am always relieved that I took care of the quarter’s tax issues early, so I’m not scrambling at the end.

    5. I have learned that my accountant is worth her weight in gold. I’ve outsourced so many things related to our household, but this bit of outsourcing is by far the wisest and greatest value, for me.

  5. Lauren – on gmail, I create a separate file for each year’s tax info. Email receipts for charitable deductions go into that gmail folder. At tax time, I forward all of those receipts to my accountant — it would be just as easy to print them. Not sure if that would work for you, or maybe you already do that and simply the printing is a hassle. I’ve found this works well.

  6. Thanks for idea. The problem is my husband doesn’t use gmail. I have to bug him to create an account because it would be useful for this and a shared calendar.

  7. I wish my accountant were less of a procrastinator or that I were further up the chain on the list of VIP clients – we always get the estimates for what we have to pay on April 13 or something. I hate scrambling at the last minute. Even a ballpark estimate in March would be helpful!

    I think I would also phase out the mortgage interest deduction after a certain level and cap the total $$ of deductions you could take. AND get rid of the carried interest loophole.

    Of course, my ideal is from that movie “Dave” where he hires his accountant friend to be the head of the IRS and they fix the entire tax code in a night! LOL.

  8. My dad is the king of deductions and just taught me this tidbit – you can deduct $3 for every $4 girl scout cookie box you bought. And the boy scout popcorn is something like 75% deductible. Making the $40 box not such a hard hit. All this sums up that there are too many annoying things about taxes.

    Last night on Larry Wilmore he had a good bit about Ted Cruz wanting to eliminate the IRS all together…and then Ted goes on to say that it will be a flat tax and we file our taxes on a postcard. But where would we send this postcard since the IRS was eliminated? What department would collect our internal revenue?

  9. will be a flat tax and we file our taxes on a postcard

    That’s just silly. The tax code is complicated because it’s hard to determine income in many cases and a flat tax won’t change that. For example, ADA’s rental property vs. expenses and depreciation, Risley’s book royalties vs. book tour expense, Murphy’s farm, etc.

  10. L – that would drive me crazy, too. We receive our “Client Organizer” from our accountant in December. If I jump on it, we can be done in January. There’s no way we’re VIP clients, so I’ve always assumed she’d rather get low-hanging fruit like us out of the way asap, and free up her time in March and April for the folks who’re less on top of things, have more complicated issues, etc. I think it’s a personality thing, and maybe you need an accountant who’s personality aligns better with yours. ?

  11. Just got our federal refund today…bad planning resulted in that. Fixed withholding a few minutes ago.

    What would I change? It’s a pretty long list, but essentially I agree with (former presidential candidate) Steve Forbes, and others, who promote the **idea** of a “flat tax”.
    – Mine would include progressivity like the current system, but would get rid of **ALL** deductions and exemptions, capital gains / dividends special treatment. $1 of income is $1 of income.
    – No AMT
    – FICA and Medicare tax would be part of the tax rate. And **everyone** would get the same benefit regardless of lifetime income.
    – I envision the tax structure looking something like this (income ranges made up for simplicity) assuming a family of 4 filing jointly; there would be flex for singles, HOH, and different sized families:
    – up to $20k, no tax
    – $20-50k: 10% tax on income above $20k
    – $50k-$250k: 17.5% tax on income above $50k
    – > $250k: 25% tax on income above $250k

    At $50k HHI tax = $3k (10% of $30k), an overall tax rate of 6%
    At $150k HHI tax = $20.5k (17.5% of $100k + 10% of $30k), overall tax rate of 13.7%
    At $500k HHI tax = $100.5k (25% of $250k + 17.5% of 200k + 10% of $30k), overall tax rate of 20.1%

    Businesses would be treated the same way, different net income bands would probably be necessary. The business tax return would look like:
    Gross income
    Less: cash compensation paid, cost of goods sold, administrative costs, cash costs associated with investment in PPE (that is, if you pay cash for a new building that immediately reduces current year income; if you debt finance it, only the debt service reduces income).
    = Net income

    But revamping the revenue side alone is insufficient. What we get for the taxes paid/collected needs to change also and at the top of my list is single-payer health care for all legal residents.

  12. – up to $20k, no tax

    So, no EITC? IIRC someone making $20k would have a substantially negative tax rate.

  13. Rhett, I’m sad to inform you that the BBC has declined to renew Jeremy Clarkson’s contract. We can pause now for a moment of silence.

  14. I would eliminate the charitable deduction entirely, or limit it as is done in most other countries to very narrow categories such as disaster relief and medical research within the borders. Nothing for educational institutions, religious organizations, fine or performance art, international organizations. ( I don’t object to sales or property tax abatement or payments in lieu of taxes for non profits, because that is a local matter. ) Eliminating the carried interest loophole is a no brainer. I would cap IRA/Roth IRA lifetime balances, prevent the contribution of privately held stock or partnership interests to either. I would require full distribution of non spousal inherited retirement account balances over 5 years. I don’t have any objection to the mortgage interest deduction, but it should be severely capped. Primary residence only, with a 2 year window for delayed sales, two homes at once, renting out during sabbatical, etc. Unless we go to a VAT system, I would tax capital gains at full ordinary rates with a reduction for an inflation factor. SS income would never be taxed. And of course I would go to single payer, so no medical or health insurance deductions/preferences for individuals or corporations. Eliminate AMT, of course.

  15. MBT,

    It’s fine, he has numerous offers from other networks to do the same show under a different name. I also understand that Hamster and May have a deal where they agree to all go together.

    It is the end of an era though, so a little sad.

  16. Agree – tax preparer worth their weight in gold. For decades, my crunch time was the same as tax time, so I outsourced purely on time contraints. Then, every few years we have had something happen – divorce, inheritance, health issue, retirement – that means more rules come into play.

    This year the client organizer came via email. I hated that is was not a fillable pdf, so I printed, filled in, scanned and uploaded to their secure site. Scanned or pulled into pdf all my supporting documents, and uploaded to their secure site. LOVE THIS. I will get my completed return via the secure site, then I just upload the file electronically form. When I get the bill, I send an e-check. I couldn’t be happier as my tax person moved the office clear across town and it is a PIA to get to.

  17. I am reading with great interest. We should be done filing taxes this weekend. I am bad about having receipts for charitable contributions and also hate email receipts. But also, I usually throw away anything that junk mail too. Maybe I will make a folder in my Gmail like Risley suggested. Thankfully ours is pretty straightforward filing.

    Totally unrelated, but. I keep on forgetting to ask this. So, if farmed tilapia is bad for you, what is the alternative? We love fish and eat it often. Need to find a tilapia like fish.

  18. Rhett – I said “income ranges made up for simplicity”

    The whole thing could start at $50k, or wherever is politically palatable.

    But, yeah, no EITC per se.

    In my system, if you earn less than the minimum, you file a return saying e.g. income = $17k…the gov’t would send you a check for $3k.

    Probably get rid of food stamps, WIC, whatever. Just direct cash (actually on a stored value card replenished weekly) payments to those who can prove the need up to the equivalent of the determined benefit. The cards can be used only at merchants in certain industry codes. ideally grocery stores, drug stores, gas stations, auto repair places. Gets dicey if someone does all their shopping at Wal-Mart for the things “we think they should spend their assistance on” but really they buy flat screens, guns and ammo, fishing tackle. (Now if the guns/ammo/tackle are actually so you can stock your freezer with venison, duck, goose, salmon, etc., then that would be approved use, right?). This plan does not address the thing RMS has brought up before that the working poor need a reliable personal vehicle to make commuting tolerable almost everywhere in the country.

  19. Dell – flounder? maybe not much better for you and I am not up on species scarcity.

  20. All these are such good ideas. I agree with everyone.

    Planning to drop off our tax docs tomorrow to the accountant. We won’t get a refund, but for the first time in years, we won’t have to pay any additional taxes.

  21. I’ll also add that an app like expensify is very helpful in keeping track of receipts. So, for ADA she should could have report called – “Rental House” and as the various home depot receipts, property tax bills, water bills, etc. come in she can save them to that report. Same goes for charitable deductions, etc.

  22. Guaranteed income instead of a crazy quilt of programs is my preference as well.

    I do not support using the tax code to make back door government expenditures, including EITC, energy tax credits, college subsidies. If I were being entirely consistent, I would include the support of home ownership via the mortgage interest deduction, so maybe I have to modify my prior post to a twenty year phaseout for that. (They manage to own homes in Canada without it.) If the government wants to support an industry or activity, legislate it and pay out a direct subsidy.

  23. Interesting that an over all fairly democratic board favors fairly radical tax reform. I heard a tax guy on TV say the only way tax reform has happened in the past is if tax receipts are less in the years immediately following the reform, so taxpayers end up paying less and therefore will support the new plan.

  24. It is difficult to file before April if you have any complex investments, and usually it is best to extend and file later in the year to avoid late information. This year I filed my taxes about March 1, and lo and behold, a small mostly preferred stock fund I have just sent me a small supplemental 1099-B for undistributed REIT income. You never know what might be embedded in something that is not a single stock or bond (I have just a small amount in funds, and sold off all my LP’s years ago). Since I was overpaid for Fed, all that will happen is that in two years my overpayment applied to the following year (I always do this) will be reduced by 25 dollars, and MA will send me a bill for $5 plus interest. But notices from the tax authorities don’t send me into a tizzy.

  25. I basically agree with Fred on changes to the tax code, and with Meme’s statement that “Guaranteed income instead of a crazy quilt of programs is my preference as well,” and with stopping tax deductions for organizations that call themselves “‘religious”.

    Risley, I don’t think the people with really complicated taxes are filing now or in April–they file estimated taxes now and the final thing in October. (Is there anyone in here who does that?)

    A Parent, I don’t see the inconsistency between wanting people to have a fair chance and taking out loopholes that those in the know can use to their advantage.

  26. I don’t agree with cap gains being taxed as ordinary income. I own a share of the corporation, therefore I already paid corporate taxes on those earnings.

  27. Milo,

    Most suggestions for taxing cap gains as income involve the abolish of corporate taxes.

  28. Milo – my thinking is that by including everything as ordinary income, the pie gets a lot larger and the tax rate commensurately lower, down from the high 30s% + 3.8% “medicare tax” we have today to a number like 25% at the overall top end.

    So the difference between what you probably pay now as a capital gains rate and what you would pay under a unified rate is pretty small.

  29. We file an extension every year due to one tiny partnership. We still do our taxes before April 15 and that one partnership document usually shows up in the summer.

    I am glad that we are forced to wait because a couple if our mutual funds or brokerage accounts ALWAYS send corrected tax forms in March. This would be a headache if we actually filed on time.

  30. Our tax situation is fairly simple and I promised an update on the H&R Block (we use Deluxe version) software. We filed Schedules A, C-EZ, SE and H. No Schedule D this year.

    Mr WCE did the taxes since Baby WCE had the 6 week fussies and it took him a few hours on Sunday afternoon. The two tricky parts were recognizing that he had to input all our childcare expenses (we had 5 providers and most were already reimbursed via the dependent care account) and then the dependent care account and the child care tax credit played nicely together. We had to file on paper due to the number of providers. The other tricky part was properly answering the questions around my individual 401(k) because it wanted to calculate an allowable employer contribution and we ended up just inputting the employee deferral contribution.

    The state taxes (we file in only one state, which came with the package) also worked fine. Mr WCE said the questions are the same as going through the tax book but we didn’t have to crank through the arithmetic of changes and worksheets ourselves. We plan to buy the software for future years. We had an Amazon download of the Mac version.

    I concur with Mémé and MBT about appropriate changes to the tax system, mostly. I’d like to see some sort of subsidy/deduction for childcare, higher education and medical/long-term care insurance not provided by an employer, but mostly those are my pet issues. I think any mortgage deduction phase-out would need a long horizon, say, 30 years, or people in their 20’s who just bought houses will be affected unfairly for too long.

  31. Rhett – LP’s are Limited partnerships, frequently energy or extractive industries, or real estate, don’t have to send out the K-1’s until April because they file returns on the same schedule as individuals. They may be publicly traded, or not. They may be registered tax shelters. And if they extend for some reason, they would send provisional K-1s or estimates. So anyone who has those sorts of investments usually has to extend because the information is not actually in hand. I sold all of my interests because it is a PITA to track the yearly flow through income, allowed losses, if any, suspended losses, flow through tax credits, AMT preference items, possible capital gain and loss items that might throw off your other planning. Also, when you go to sell, you (and your brokerage firm does not really do this for you if you own the interest through them) you have to figure out your cost basis, which is increased or decreased each year for all of the earlier items. And there are a bunch of other complicated rules I will spare you.

    A working tax “partnership” (used to be legally general partnerships, but now usually just a multiple owner LLC) such as a garage you own with your brother in law (with no complex special allocations based on when you bought in or whether you contributed cash or property) are like a fixed percentage of a Sch C business – just hits your tax return as income as if you earned it yourself.

    And if any of these do business in multiple states, you may have to file tax return in all of those states.

    Well, you did ask.

  32. Milo & Meme,

    My understanding is they would be for things like say me and PTM buying a commercial building in Little Havana together and we’d structure it as a LP. So, I’m assuming there is a world where people get together and do these things but I can’t imagine how one would get involved.

  33. We have several partnership interests and they all issue K-1s late, as Meme said – although I think they are all in now except for 1. So we pay estimated in April and file in October. I would rather go on extension and then file in May or something, but see above re: accountant procrastination.

    We also hire a nanny tax service to do that side of things, and they send us the schedule (H?) in Jan along with the W-2 that we give to the nanny.

  34. Lauren- I know I made several donations but could not find the receipts. I agree about keeping track of them throughout the year.

    My accountant just did my taxes and then recommended bumping up my 401K this year to 10%. What % do y’all use for contributions?

  35. Rhett, haha, that’s a funny title. Advertizing isn’t for me, but you know I don’t want to go back into academia (and if I did, it sure wouldn’t be as an adjunct!). The Iowa writers’ workshop is famous, so having been there gives her some clout to write this piece.

  36. Agree with others who would rather see the “tax breaks” as a program that provides a grant or subsidy to the individual or entity.

    S&M – I think the big problem is that if you aren’t in the know or aren’t paying someone who is, determining the best way to prepare your taxes to benefit from all the loopholes is difficult or at least time consuming. Many will file an EZ form or take a standard deduction when the long form or itemizing would be to their benefit.

    Some years we have filed after April 1, either because we didn’t receive information timely, received notification that corrected information was coming, or one year, so very sadly, our preparer died in late February, but he had all our documentation, and we had to wait until the executor could go through the files to know what was what (one man shop).

  37. SM: I, too, thought that you wanted to go back into academia. What type of job are you targeting?

  38. SWVA, thanks for the article! I just tried to write you a reply on email on my computer, but it’s been unplugged for so long that it went black after the first sentence. I’ll let it charge for a while and then write to you this afternoon, maybe while I’m getting my allergy shot.
    You and I can both do this!

  39. I have done some work with family limited partnerships – discount estimates on the minority interests. Interesting way to pass on the family winery, etc.

    I haven’t gotten a K-1 myself until this year and it was a surprise, guess I was lucky I didn’t file early. My grandmother passed away last year and I was a small beneficiary of the estate. I think (really I have no idea) when my grandfather passed several years ago a family trust was established – with me as one of the remainder-men (though I didn’t know it) and there was a loss on the sale of her condo through that trust, I ended up with a portion of a capital loss I wasn’t expecting. Otherwise mine are very easy, TurboTax a few weekends ago and done with Federal and State in under two hours.

    Carried interest is my pet peeve – and I think not allowing private company equity to be contributed to IRA’s or 401K’s is a fantastic idea. Truth be told, not a big fan of discounts on minority LLP interests. Some LLP interests are publicly traded – quite a few own public storage facilities, we use their market data in our work sometimes.

  40. LAgirl – from this group there will be a bunch of people who are maxing out their 401k contributions which = $18k/year/worker in 2015. For those of us >50 we can contribute and additional $6k this year.

    10% is a good goal, then whenever you get a raise, bump it by another 1% until you max out. You’ll never feel it. Whatever payroll system your company uses should stop the contributions when you do max out.

    But it’s also important to have money stashed away in a taxable account, even like a regular savings account wherever you bank. So don’t ignore that. Set up an automatic transfer from your checking account where I suppose your paycheck is deposited to a savings account to help build a fund for the unexpected.

  41. Austin, I agree with what you say. It’s kind of an expanded version of what I said (a la Louise). I’m not sure what remark of mine you are responding to with it.

    LAGirl, I always paid in as much as my employer would match.

  42. Agree with Fred that most here will be at the annual max amount. Looking forward to bumping mine up in a few years ;) There has to be some benefit of getting older.

  43. lagirl – unless you need the money for cash flow, you should contribute the % that gets you to the max every year (17k-ish).

  44. Rhett – Most people who want to form a side business and have the profits or losses flow into their individual tax returns form an LLC. That is a limited liability company that with one owner is treated by default as a sch C business, and with more than one owner as a partnership for tax purposes. If the business is in one of the licensed professions, usually an LLP, limited liability partnership, is required by state law. Real estate is usually held in a limited partnership, or a family limited partnership. The details of how RE LP’s and FLP’s work are outside my area of expertise. If the business has employees and one or more of the owners works pretty much full time for the business, an S-corp may be a better choice, but there are a lot more rules and limitations. The LLC is the default form.

    Investment LP’s in which one’s involvement is entirely passive and the hedgies make carried interest are what really rich people make a lot of money on. Most of what ordinary UMC citizens purchase are small shares of natural resource partnerships or lower level investment or real estate partnerships, but the K-1 and tracking issues have to be weighed against the diversification benefits. One can use REITs or ETF’s for a lot of the same diversification.

  45. We haven’t even sent our stuff to the accountant (hangs head in shame). We always file an extension, but he needs the stuff so that he can at least give us a somewhat reasonable number of what we owe. We do quarterly payments to make sure we come within the safe harbor. I don’t want to make too many changes to the code. If it was being done from scratch in a new country, sure. But unless there were really long phase-ins, I worry about the effects that the changes would cause.

  46. S&M – your response to AParent struck me as saying it was OK for only those in the know to get the loophole rather than everyone who could use the loophole to take it. May have misinterpreted your comment

  47. Man, my taxes are very plain and uncomplicated compared to most. We are unimaginative in our earnings, I guess!

    lagirl – I agree you won’t miss it after the first month or so, so if you can swing it, I’d get as close to $18k as you can. Rhett can do all the #s to show that an extra $1000 saved at this point in your life amounts to an extra $3 billion or so by the time you’re my age. Or thereabouts. :) But ITA w/ Fred that you need some $$ in savings somewhere so you can use it in a pinch.

  48. Off topic – Google hired Ruth Porat the CFO of Morgan Stanley to be their new CFO. I’m sure she’s a lovely women but in every picture of her she looks absolutely exhausted. I’m thinking she may just have exhausted resting face.

  49. LAGirl, I would consider what earnings, if any, you’re paying a federal tax rate of 25% on and what earnings you’re paying 15% on. For our family, maxing out the 15% bracket (because we assume our bracket will be at least that high in retirement) and avoiding the 25% bracket has been a good strategy. The transition from 15% to 25% for single filers is at a taxable (not gross!) income of $36,900 in 2014. Your income in southern CA hopefully is so far above this that it’s irrelevant!

  50. I’ll be honest for an MBA I am woefully ignorant about taxes and investing. I’ve never invested in anything and besides my 401K I have several savings account (that basically get no interest) and i transfer about 18% of my monthly salary into different accounts for things like my trip to Hawaii or property taxes etc. Since my salary took a big jump last year I’ve started thinking about these things. I’m going to run some numbers and see about bumping up the 401K-I know I can’t afford the $18K but I like the idea of annual increases.

    WCE- I don’t even make twice that but I think I need to start educating myself on all these issues. Honestly, half the time I have no idea what y’all are talking about during these discussions but I’m determined to become more educated. Fidelity is coming to my work on Friday and giving free consultations and I was able to get a time slot.

    I’ve had a lot happen in the last few months which has cost a lot of money but I was able to pay for everything without dipping too much into my savings so I have a bit of confidence in expanding my financial horizons.

  51. Fidelity is coming to my work on Friday and giving free consultations and I was able to get a time slot.

    In what funds are you currently invested?

  52. Rhett- I just checked and it’s the Fidelity Freedom K 2045 Fund. and apparently I already contribute 8 % so bumping it up to 10 % should be ok.

  53. Just got an email from the school about upcoming Science night — the opportunity for people to present posters on topics or experiments. No categories or judging and all optional — with the explicit invitations for kids to do their own, do them with parents, or for parents to present things applicable to the community. Gives me a warm fuzzy feeling after yesterday’s conversation. For what it is worth, my kindergartener does a lot of observation work and hypothesis formation in class, so I do not worry about the need for science fair to teach her these concepts.

    Now to plan my poster… cliche, I know, but beef hearts??

  54. Lagirl – I say this jokingly – whenever I have gone to financial firms, they show me via their tool – how much I have saved so far, how much I can expect in retirement – and I ALWAYS end up short. It also doesn’t help that I have two kids to whom I have to funnel money for college (big red negative in the tool ). I still go because I need a periodic scare to keep me saving more.

  55. lagirl,

    Max Front End Sales Load: N/A 5.15%
    Max Deferred Sales Load: N/A 2.06%

    Clutches chest. It also looks like the expenses are 0.66% vs. 0.15% at vanguard. Putting away $700 a month, that fee difference would cost you $125,000 by 2045.

  56. LaGirl,

    Never mind, I read the chart wrong. Ignore the sales load part. The expenses do seem high though.

  57. LAGirl, I think you’re younger than I am. Our thought process at your age was “59 is a long way away. We can’t access this money if we need it without paying a big penalty. So let’s save money in taxable, accessible accounts unless there’s a clear benefit to the 401(k).” Our excess about 10 years ago went into VWLTX, a Vanguard tax-exempt bond fund, and that has turned out to be an accessible option with a reasonable return. (4.8% over the past 10 years, you can sell and have your money in a day or so if you need to, say, buy a minivan)

    Now, we’re realizing that we’d be legally able to access the 401(k) when Baby WCE goes to college…

  58. LaGirl: Here is my advice:

    1. Decide what % you want in stocks v. bonds. For someone your age, I would suggest an aggressive portfolio of around 80-20. Mine is 70-30, and my financial advisors are always trying to get me to be more aggressive.
    2. Go to Vanguard and set up an appointment with their financial planners. I used to be with Fidelity, but I found that Vanguard funds (at the time) outperformed Fidelity funds and had much lower expense ratios.
    3. Your financial planner should be able to come up with a sample portfolio for you, given your financial goals. You can tweak it, as you see fit, but it’s a good place to start.
    4. If you must invest with Fidelity, their S&P 500 index fund is a good one. They keep their fees lower than Vanguard’s on purpose–it’s a selling point.

  59. LAGirl, following up on what Houston said, does your employer have the “typical” Fidelity options or specific “employer” options for stock/bond funds? I’ve left my old 401(k) with Fidelity in part because the last time I checked, my employer-specific-negotiated index funds had lower expense ratios than Vanguard, both so low the difference was negligible. Don’t assume anything about your employer’s funds expense options based on what you read here.

  60. lagirl – one other thought. If you get bonuses at your job, you can direct your entire bonus (or up to $18k of it) to your 401k. Once you do that, you won’t have the deduction from each monthly pay check. I think most of us miss a bonus even less than we miss a paycheck. “Easy” way to get closer to maxxing out your 401k.

  61. Rhett – the expenses are ok given the underlying holdings, all actively managed Fidelity funds.

    LAGirl – given this is your 401k, that theoretically you’re not going to touch this till you retire 25+ years from now, your best bet for the long haul is 100% stocks like in the following index funds with my suggested amounts in each:
    – Fidelity Spartan 500 index fund 50%
    – Fidelity Spartan Total Market index fund (includes smaller companies) 20%
    – Fidelity Spartan Real Estate index fund 10%
    – Fidelity Spartan International Index Fund 20%

    Much cheaper and much simpler approach, assuming these funds are options for you within your 401k plan.

  62. L,

    You remember how George Costanza looked busy at the Yankees by walking around carrying papers and looking angry? I wonder how much of her success is due to always looking exhausted so everyone things she’s working really hard?

  63. lagirl, please be careful about some of the advice that you’ve received here today with regards to the expense ratios for certain funds. This applies to any fund from a company such as fidelity, vanguard or their competitors. The reason is that you would have to be able to share the “class” that your particular shares are in within a named fund for this group to be able to determine the actual expenses. For example, certain employers will negotiate much better fees for their employees and you may, or may not be eligible for those share classes in your 401k. These are share classes that may have no sales charges, or even lower management fees.

    Also, an employer match in a 401K is free money so I would try to make sure your deductions meet the requirements of your employer to get the best match. This is going to be specific to your employer. For example, at my last bank – they would match up to 6%, but I had to time my payments throughout out the 52 weeks to get the maximum match. If I tried to dump a bonus payment into my 401K, I would have missed out on the match from the rest of the year.

  64. Rhett –
    the dow is down 1.5% today but RIG is up 2.75%…dead cat bounce?

  65. “but I had to time my payments throughout out the 52 weeks to get the maximum match. If I tried to dump a bonus payment into my 401K, I would have missed out on the match from the rest of the year.”

    Ah, excellent point, and something I hadn’t considered. It doesn’t work that way for us. Yes, best to check your EOR’s rules!

  66. I need to read through all your comments carefully so I understand them. Fidelity is the one picked by my company but I will ask on Friday if I can pick a different fund. The reason I don’t want to put my bonus in my 401K is that I’m using my bonus money to pay for my trip to the Olympics next year. I’m hoping to not have to touch any of my regular savings.

    My employer does match and I do take advantage of that.

    Question- should i open a Vanguard account on top of my 401K? I’ve seen in past discussions that many of you like Vanguard.

    Also, do you recommend making one extra mortgage payment a year?

  67. I like Vanguard or any firm that has really low fees for someone in your situation. The Financial Times recently wrote an article that confirms some discussions that we’ve had in this group – in the long run, fees may matter more than anything else. There is new research from Cambria Asset Management that proved that the gap between the best and the worst allocations is smaller than the gap between the highest and lowest fees. This study found that the allocation you use is less important than low fees. The research looked at the period from 1973 to 2013.

    I am sharing this even though the majority of my household income comes from firm(s) that are profitable due to the higher fees that they charge vs. Vanguard.

    As for the mortgage, you can run a simple calculation that would show how much interest that you could potentially save if you made one extra payment per year, or paid extra in each payment.

  68. Lauren-that is so interesting about the fees. But that does make sense! Thanks :)

  69. “do you recommend making one extra mortgage payment a year”

    First of all, it depends on your interest rate and whether it’s fixed or variable. If your rate is e.g. 4% over the long haul you’re likely to be better off financially if you invest in a stock index fund in a taxable account. Above 4%, maybe just buying down the mortgage is better. If you have a variable rate mortgage, paying the extra is a good way of preventing outsize shocks when the fed begins to raise interest rates.

    Generally I recommend adding 1/12th of your required payment to each month’s payment being sure it’s notes as “additional principal” rather than a single lump sum equal to one payment. Our mortgage is on auto pay so whenever one of us has gotten a raise or a sizable bonus, we’ve taken the opportunity to increase the amount we pay each month in this manner knocking a bunch of time off the length of the loan.

  70. lagirl – all this discussion so far is on target, and if all you did was take the advice and either keep your current target date fund, or pick a more aggressive fund, and you kept contributing and never touched it, that would be good. but the danger is that you don’t have a strong understanding of what you’re actually buying, so five years from now, if the market drops 50%, you’re going to see a bunch of headlines like “stocks are for suckers,” and you’ll sell everything at the worst possible time, then you’ll miss the recovery. at that point you’ll be 10 years further behind, which means you’ll be retiring with half of what you could have had.

    Soo, I’ll say nothing else if you don’t ask, but please just take two nights and read every article in this series:

  71. lagirl, if you eventually have a lot more money to invest – then it might make sense to look at different types of investments that might pay a higher return even with a higher fee. For the type of money that you are thinking about investing right now – it makes sense to keep it some where with low fees and easy access in case you need the money.

    I still think you should talk to Fidelity this week if it is free, and you have time. You might get some interesting information, or advice from the person. I have an old 401k that I never moved from an old job, and the manager switched to Fidelity this year. I haven’t done anything yet with Fidelity, but they invite me to a lot of interesting events for women in the NY metro area. I am thinking about going to one in Stamford next month because I really like some of the speakers, and none of the speakers work for Fidelity.

  72. Lauren- it is free and it’s downstairs which is why I signed up. I figured it wouldn’t hurt to go and at least listen

    MIlo- I will bookmark and read it! I will read anything y’all recommend because I really have very little knowledge on the subject and I’d like to learn more. I’ve kept quiet all these years when y’all discuss it because I didn’t want to admit that I didn’t understand what y’all were talking about.

    And for those of you who remember my dating travails, I signed up for eHarmony and have gone on more 1st dates in the past 3 months than I have in my entire life. It’s been out of my comfort zone but I’m getting better at going on dates.

  73. and have gone on more 1st dates in the past 3 months than I have in my entire life.


  74. Hooray for dating, LAGirl! I love being married and the zoo that is my family. They’re way more interesting than finances.

  75. Rhett- I went on a second date this weekend (my first 2nd date in over 3 years!) and I remember thinking I can’t wait to tell Rhett and the totebag which made me realize I need to come here more often.

  76. “which made me realize I need to come here more often.”

    Yes, you do. Congrats on the 2nd date!

  77. LA–your employer is required to give you specific information regarding the fees charged by the plan and the fees charged by the investment choices in the plan. See if you can find your copy or ask HR for another copy to study before you make any investment choices. And keep in mind that the Fidelity rep’s job is to make money for Fidelity. He’ll probably try to talk you into a fund of funds choice, which may be good if you just want to init worry about your investments. But they’re expensive and tend to underweight equities. So don’t automatically do what he says.

  78. LAGirl, good luck with the eHarmony! I read something about how icky the comments women get on a different dating site are & thought of you. Glad to hear you’ve found a good place to look–hope you’re having fun!

  79. Rhett’s poopooing of balcony deaths

    Poopooing? I’m surprised it doesn’t happen more often – especially on cruise ships.

  80. Ugh, filing taxes gives me anxiety. I’m always afraid of screwing something up. We also have way too many separate investment accounts and need to consolidate- tax time is a good reminder of just how much we need to simplify.

    Glad you’re enjoying EHarmony, lagirl.

  81. LAGirl, my advice is a bit different than what you’ve gotten so far.

    I suggest that, unless you’re leaving employee match 401k money on the table, you first make sure to fully fund a Roth IRA before increasing your 401k contribution. Here are a couple reasons for this:

    -Your Roth contributions serve double duty as the accessible cushion Fred mentioned. You can take our your contributions, but not earnings, at any time without any tax liability.

    -You have more control over your investments. You could, e.g., open your Roth at Vanguard, which would address the management fee concern Rhett raised.

    If your cash flow still allows you to increase your 401k contributions after fully funding a Roth, then I suggest you do that. Do you have the option of a Roth 401k?

  82. “do you recommend making one extra mortgage payment a year”

    Only if you’re already fully funding a Roth IRA and your 401k, and have enough cash flow to comfortably cover all your expenses, including the big ones like trips to the Olympics.

  83. “Our mortgage is on auto pay so whenever one of us has gotten a raise or a sizable bonus, we’ve taken the opportunity to increase the amount we pay each month in this manner knocking a bunch of time off the length of the loan.”

    This is what DW and I have done, and we are on schedule to have our mortgage fully paid off before firstborn is off to college.

    Part of our plan to cover college expenses was being able to direct cash flow that had been going to a mortgage over to college.

  84. “Of course, my ideal is from that movie “Dave” where he hires his accountant friend to be the head of the IRS and they fix the entire tax code in a night! LOL.”

    Dave actually brought his buddy Murray (played by Charles Grodin) in to examine the federal budget. Dave was told by his chief of staff, and POTUS wannabe (Frank Langella), that he could save a bill that was important to the first lady (Sigourney Weaver) if he could find a combination of increased revenue and savings to cover it, so he brought Murray in to find that.

    As you might guess, this is one of my favorite movies, and IMO would appeal to all of us who like to think about what they would do if they were POTUS.

    It also has one of my favorite movie endings, which could be the subject of discussion some other day.

  85. “will be a flat tax and we file our taxes on a postcard

    That’s just silly. The tax code is complicated because it’s hard to determine income in many cases and a flat tax won’t change that. ”

    ITA with Rhett’s point. Somewhere above 99% of the effort I spend on doing taxes is getting to the point where I go to the tax schedules to figure out how much I owe.

    I realize that part of the push was to eliminate deductions, which would make it easier to get to the tax schedule part of doing taxes, but whoever suggested this apparently never had to figure out capital gains when a stock you bought years ago went through multiple splits, spin-offs, and cash-in-lieu distributions.

    Semantic point– I always considered what most people refer to as a “flat tax” to actually be a “flat tax rate.” IMO, a flat tax is everybody paying the same amount, e.g., $5000.

  86. Finn- I do not have a Roth IRA – my accountant has suggested one in years past and I’ve always ignored it because I needed the money. This is the first year I’ve ever felt comfortable even thinking about doing anything but holding on to it.

  87. “10 year phase out of the mortgage interest deduction starting at $500k and going down $50k a year until no mortgage interest is deductible.”
    “Eliminate the deduction for mortgage interest for a second home ”

    I agree with eliminated the mortgage deduction, especially for second homes.

    However, I would like to point out that for many people, most (in many cases, nearly all) of their net worth is in their homes, and there is a definite value of home ownership to society in that it increases the net worth of retirees, and can be used to cover much of the cost of long term care for its owners, relieving the rest of us of that responsibility.

  88. Finn, a flat tax by your definition is also referred to as a head tax

    Rio, that sounds ridiculous, but near the end of the article they quote a woman saying it took her a few times to get used to it, but now she thinks jazz hands are nice (disclosure: I do not know how to do jazz hands, although it is a familiar phrase). Her comment makes me wonder if this was already an established thing that they just wanted to make sure newbies were informed about, and someone saw an awkwardly worded tweet and wrote a slanted article. I have no evidence other than that one quote, but if I seriously cared, I would check into that.

  89. Lagirl: Do you have an adequate emergency fund? That would be a first priority, before increasing retirement contributions.

  90. “Probably get rid of food stamps, WIC, whatever. Just direct cash (actually on a stored value card replenished weekly) payments to those who can prove the need up to the equivalent of the determined benefit. ”

    Here, SNAP (aka food stamps) benefits are provided on a payment card that, at checkout, is scanned like a credit card. I believe there are limitations on those cards, e.g., cannot be used for whiskey, although not as many as many would like.

    However, I’ve heard that beneficiaries often sell their cards, often so they can buy drugs. One consequence of this is that kids who are supposed to benefit instead go hungry.

    I have much more concern for the kids that go hungry because their parents or custodians don’t feed them, than I do for adults who make choices, such as the above, that cause them to go hungry.

    Thus, if I were king, I’d get rid of food stamp benefits for school-age kids, and cut them way back for adults. I’d use the savings to fund free meals for the kids in schools, and extend the free meal program to summers, spring breaks, winter breaks, fall breaks, etc.

  91. “Lagirl: Do you have an adequate emergency fund? That would be a first priority, before increasing retirement contributions.”

    They are not mutually exclusive. My suggestion that she fund a Roth IRA was based in part on the fact that it could serve as an emergency fund as well as a retirement fund.

  92. there is a definite value of home ownership

    Germans have a 50% lower rate of home ownership but vastly higher rates of savings. It remains to be seen if it’s better for the government to push people into illiquid real estate vs. bank deposits like the Germans.

  93. cut them way back for adults

    So the guy with cerebral palsy gets by on brown bread and raw carrots? How kind of you?

  94. Houston: I do have an emergency fund- it’s one of the many savings accounts i mentioned. It’s not a ton but I did have to dip into it a bit last year for something. I just increased the monthly amount I am putting into it.

    I think I will take some of my tax refund and start a Roth IRA. I will start researching that next week.

  95. Finn,

    Can you take out your ROTH contributions without a 10% penalty if your under 59.5? When I google it and always get two answers.

  96. I thought that you could withdraw funds from a Roth IRA only in certain situations without penalty, diminishing its value as an emergency fund. I’d love to learn that I’m wrong.

  97. My understanding was that you can take out your Roth IRA contributions, but not earnings, without any penalty or tax due whether or not you have reached age 59.5.

    However, a look at shows that this isn’t exactly correct.

    First of all, it looks like withdrawals made ” after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA ” are completely tax and penalty free. (DS had a part-time job last year, and this is one more reason we will open a 2014 Roth IRA for him; apparently, that would allow him to make tax and penalty free withdrawals from his Roth IRA starting in 2019, even if he only contributes a few dollars for 2014).

    Contributions withdrawn before the due date for those contributions are tax and penalty free.

    Between one and 5 years, it looks like allocation rules (which sound like the same rules that cause problems for people who have large traditional IRA balances, and want to do backdoor Roth contributions) come into play. The part of the distribution allocable to earnings apparently would be subject to tax and penalty.

    So to LAgirl, I suggest you make a Roth IRA contribution before April 15, and make sure the contribution is for tax year 2014. This will start your 5 year clock at January 1, 2014. Even if you have a limited amount of cash on hand, put at least a few (literally) dollars into your 2014 Roth to start that clock.

  98. “So the guy with cerebral palsy gets by on brown bread and raw carrots? How kind of you?”

    The cuts would be aimed at those with a preference for leisure.

  99. On the side topic, our church has done a version of “jazz hands” instead of clapping for a while. Apparently it’s part of an ADA compliance thing because certain individuals cannot handle the sound of a large group clapping. I’ve been told (have not researched the truth of it) that this is a sign language version of clapping.

    Ada- I love that idea of a science fair.

    Ok. Sort of dumb question but I can’t find an easy answer anywhere. I max out my SEP IRA every year at 25%. No matching since I’m self-employed, but I’m fairly low income (individually), so I put in whatever I can. Last year I was out due to medical reasons for a lot of time, and my 25% number is ridiculously low. Anything else I can do to add to the retirement account? I’ve been told I can’t do a regular IRA (not sure why) over my 25% SEP #. I believe we are (collectively) income-capped out of some of the options.

  100. Finn,

    How would that be evaluated? And, to what degree do people have control of their preferences?

  101. BTW, DW and I had a good laugh a couple nights ago. We looked at one of DS’ retirement plan statements, which showed a quarterly contribution of $1.08, and a projection that continued contributions at that rate would provide him with income of $8/month at age 65.

  102. Finn,

    Am I misreading the flowchart? It seems to say 10% penalty unless you’re 59.9 or disabled erc.

  103. “Apparently it’s part of an ADA compliance thing ”

    I thought I was going to read that certain individuals cannot clap (e.g., because of not having a second hand.) Which, of course, brings to mind the joke about the one-handed fisherman. Which brings to mind a scene from “Dave.” (BTW, during our Amazon Prime trial, IIRC “Dave” was one of the few movies I looked for that was actually available.)

    At local speech and debate competitions, during the awards ceremony, when finalists are introduced, in the interest of time, audience each give each finalist a single clap.

  104. Rhett, I don’t think you’re misreading; I think I didn’t read carefully enough that 5 years AND one of the other conditions must be met to avoid the 10% penalty.

    But keep in mind, that penalty is only on the earnings. The contributions themselves are (unless I missed something) not ever subject to tax or penalty.

    If your Roth IRA money is kept in a cash equivalent, current interest rates are so low that any penalty would be negligible. If you never need to tap your Roth for emergency funds, you will probably be able to, over time, save emergency funds outside of the Roth, freeing up the Roth contributions for other investments. The net result is a much larger balance in tax-favored retirement accounts when you hit retirement.

  105. But keep in mind, that penalty is only on the earnings.

    I don’t think that’s true,

    Meme can chime in but I think these rules read that any withdrawl other than for disability, house, etc before 59.5 incur the 10% penalty,

  106. The chart says, “The portion of the distribution allocable to earnings may be subject to tax and it may be subject to the 10% additional tax.”

  107. But it says attributable to conversion or rollover. Your earning aren’t attributable to conversion or rollover debut to regular contribution.

  108. I think the conversion or rollover part is there because those are, or could be, pre-tax contributions. I didn’t see any mention of direct Roth contributions being subject to tax or penalty (which isn’t to say that I didn’t miss that).

  109. Oops, scratch that last comment. Conversions are taxed.

    I don’t have time now, but I think there’s clarification in the section below the flow chart.
    “If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable.”

    Note the first item is regular contributions, which weren’t mentioned in the section just above the flow chart.

  110. I always understood that you could withdraw Roth contributions without tax or penalty at any age for any reason.

  111. Milo, that was my understanding, but it may not be that simple. It now appears to me that you can’t just withdraw your contributions and leave your earnings.

  112. Saac,

    Not if he was on a suicide mission like the pilot of Egypt Air 990 or Silk Air 185.

  113. Saac,

    Not a conspiracy – the other option is stroke, heart attack, etc. of the other pilot which is certainly a possibility. But, historically the most likely explanation is pilot sucide.

  114. Roths are not like regular savings accounts.

    When you take money out of an IRA, 401k or other deferred plan, whether pretax or after tax dollars, if you don’t meet the requirements for a qualified distribution (and there are some fine details there, and Roths have additional very special rules – consult your accountant) you owe a penalty of 10% on the entire withdrawal. Period. If the money you take out was previously taxed, you do not owe income tax. Usually if you take out something it is part untaxed and part taxed, and there are rules for calculating the taxable portion.

    The confusion for the layman lies in the difference between the 10% penalty and the hypo income tax.

    Many people use a Roth to save up for a first home purchase – only money used for the first one is a qualified distribution. LA girl is already a homeowner. The usual other qualified penalty free uses are college tuition and extreme medical costs.

    The Max Roth IRA contribution is 5500 per year, for a young single person with AGI less than 116K. The allowable contribution is phased out until 131K. I am not a Roth fan, but going back to what WCE mentioned, the 15% bracket or avoiding Fed tax on SS will likely never be in play for me even if I end up a 95 year old widow, so I don’t spend any energy on planning for it.

  115. Investigators and government officials, including at the White House, said they have found no link to terrorism but conceded that it was too early to make any determination about the cause of the crash Tuesday.

    “We cannot completely rule out terrorism, but it is not considered the most likely explanation at the moment,” French Interior Minister Bernard Cazeneuve told French news media. “We need to let the investigation do its work.”

    Germany’s interior minister, Thomas de Maiziere, likewise told reporters Wednesday that there is “no concrete evidence that third parties were involved in the causes of the crash,” Reuters reported.


  116. Saac,

    “The guy outside is knocking lightly on the door and there is no answer,” the investigator said. “And then he hits the door stronger and no answer. There is never an answer.”

    He said, “You can hear he is trying to smash the door down.”

  117. Rhett, yes, but the same guy also says that they can’t even tell yet if either of them is speaking. I don’t know what kind of recording they have that they can’t figure that out, but if my colleague had had a heart attack and was crashing the plane, I’d try to knock the door down too.

  118. Actually, it wasn’t the same investigator. It was a different guy, who has a name.
    “Asked if there was any hints as to the cause of the crash from the scraps of “usable audio” on the cockpit recorder, Remi Jouty, director of France’s aviation investigative agency, said it was too soon even to say whether the captain or the co-pilot is speaking on the recording.”

  119. Protocol in the US is that if one of the flight officers leaves the cockpit, a flight attendant has to go in to be the second crew member – somebody has to open the sealed cockpit door on his return and/or monitor the health of the pilot.

  120. Pretty much the same thing as here. Couple things about the French village and Spain being in mourning, first soccer game taking a moment of silence before starting play, the school writing to a favorite soccer player, German Wings employees given the day off. And this is in the first news article that came up “Seyne-les-alpes/New York – Beim Absturz der Germanwings-Maschine in den französischen Alpen ist nach Informationen der «New York Times» nur ein Pilot im Cockpit gewesen. Das berichtet die Zeitung unter Berufung auf einen namentlich nicht genannten Ermittler.” They cite the NYT and give exactly the quote you gave above.

  121. Tulip — Are you eligible to set up a solo 401(k)? I did this last year for my solo law practice. You can make the standard 401(k) contribution of $18,000, and that amount can go into either a Roth 401(k) or a regular (pre-tax) 401(k). On top of the $18,000, you can contribute 20% of your business profits, up to a maximum of $52,000, to the 401(k) (this profit-sharing component has to go into a regular 401(k), not a Roth). All in all, I think the solo 401(k) is a terrific benefit for the self-employed. You might want to ask your accountant about it.

    I think the solo 401(k) would be in lieu of the SEP IRA, so it might be too late to make any kind of 401(k) contribution for 2014. But maybe you could look into it for 2015.

  122. Milo, LfB and others with an interest in easy, last minute recipes: We had this Cooking Light recipe tonight, pasta with spinach and tomatoes- I added turkey kielbasa. It takes around 30 minutes and was featured as an “easy” recipe that upper elementary school age kids could cook because you don’t want to boil the water for pasta and drain it. I used whole wheat spaghetti and the liquid ratios were good.

  123. Cooking Light recipe tonight, pasta with spinach and tomatoes

    I read that as Coors Light and I thought to myself….hum.

  124. Milo – yes, if you are under 59.5 years you can withdraw the amount of your direct Roth contributions without penalty or tax after the Roth has been in existence for five years.

    Everything else is complicated. You can take out the amounts converted from IRA or rolled over from 401k without penalty five years after each rollover or conversion (including yearly backdoor Roth conversions) – the clock runs separately for each event. But you need good records. The deemed ordering of the withdrawals is very specific but taxpayer friendly. For conversions or non Roth rollovers, the tax due has to be funded out of other accounts, and you can’t withdraw the converted balance without penalty for another five years.

  125. North of Boston– How painful was that to set up? I’ve been told it’s rather complicated, so I’ve shied away from having to be 401k administrator on top of the other stuff. But I suppose it would be good to give it a real look if we want to boost our long term savings.

  126. WCE– That looks good! I like a lot of Cooking Light’s recipes and may give that a try. With help, I bet even the 7 year old could do a bunch of the prep.

  127. This is probably not workable for you, Tulip, but for awhile I was working extra hours at a non-profit/government job and putting 85% of my income into a 403b. I could put in just enough hours during the year to fully fund my 403b (same limits as 401k), which would make up for anemic SEP contributions. From what we were told, you are allowed to fully fund an SEP (if you can manage on 25% of earnings) and a 401k/403b (one, not both) each year.

    Unlikely you have time/desire/opportunity to do the above – but something to think about.

  128. Tulip, I have an individual 401(k) with Fidelity. At the time, they had clear instructions (including how your deferral interacts with any social security you owe due to self employment) and didn’t charge a fee other than a small fee ($10?) for trades. You have to get an EIN (employer identification number). Paperwork is minimal (my contribution paperwork took about 10 min, which mostly involved finding my EIN number) until the account is worth $250k, after which the paperwork changes in some way. (I expect to be retired and have time to deal with it by then…)

    You can still make 2014 contributions till April 15 so you could still do it for 2014. I don’t know how it interacts with an SEP- I chose an individual 401(k) instead of an SEP because of the higher allowed contribution.

    Vanguard probably has a similar option. I chose Fidelity because of the clarity of the instructions, my other 401(k) was already there, and the costs (~$10 to trade and no annual fee) were minimal.

  129. “I’d like to see some sort of subsidy/deduction for childcare, higher education and medical/long-term care insurance not provided by an employer”

    These already exist.

    There’s a child care tax credit (as well as a child tax credit), in addition to the pre-tax dependent care plan.

    For higher education:

    Obamacare makes medical insurance available that is not from an employer.

    LTC care insurance can be purchased directly from insurers.

    Would you prefer other options?

  130. Finn, I meant “deductions/adjustments I’d like to have continue if a flatter tax structure were implemented,” in light of the comments by Meme and MBT about changes I agreed with.

  131. Ada– I think 403(b) is for nonprofits, which I am not, but I think the same applies for 401k.

    WCE— Glad to know it wasn’t impossible to set up. I think SEP IRA allowed a higher % of income to be tax deductible, but 401k allowed a higher flat $ amount to be saved (not necessarily tax deductible) regardless of income earned. Truthfully I’m probably not motivated to pull it off before April 15 for 2014, but it’d be good to figure it out for next year. I suspect the issue of me wanting to save a high amount, separate from my piddly earnings, will continue.

  132. Tulip — I hired an employee-benefits specialist to set up the 401(k) and deal with all the paperwork/filings. The only effort it required on my part was to sign a bunch of papers that he sent me. He charged a flat fee of $750. Now that the 401(k) is set up, to make contributions, all I have to do is write a check. So far it has been totally painless.

    I think there was another way to set up the 401(k) (maybe more like what WCE has done) that would have been cheaper up-front, but that would have required more work on my part. I established the 401(k) at the time my mother was terminally ill, so I didn’t have the time or energy to research all the options. I just went with the option that seemed like the least amount of work/hassle for me, and I was willing to pay for the convenience.

  133. LTC care insurance can be purchased directly from insurers

    Is that still available? I had heard that so many insurers got burned offering it that it’s not really available anymore.

  134. Rhett – totally agree. I think the play is on Broadway now – that would be AMAZING.

    Also, LTC insurance is available but very expensive. There is a new product now that is a blend of life insurance and LTC insurance so it comes with some death benefit – apparently it is cheaper with better coverage.

  135. CoC,

    That sounds like a terrible product. What I want is long term care insurance with a $100k deductible so if I spend 20 years in a home I don’t burn through all my assets. Insurance that pays from 0 – 150k hardly seems worth the bother.

  136. I loved Wolf Hall and the sequel, and am dying to see them on TV. Did anyone else see the photos or Richard III’s body being carried through the streets of Leicster and laying in state in the Cathedral? It gave me chills thinking about it (but in a good way, as I am a fan of Richard’s).

  137. ssk,

    Notably absent from the cathedral for Thursday’s ceremony was Queen Elizabeth II. Perhaps wary of the controversy stirred by the honor being accorded the man who has come down through history as the most vilified of her predecessors — a man identified on the monarchy’s official website as having “usurped” the throne from its rightful heir — Elizabeth, 88, limited her role to an anodyne message on the opening page of the order of service for the reburial, noting the “importance” of the occasion.

    I can see why she didn’t attend the ceremony. Nothing worse for a reigning monarch than, of all things, a usurper. It’s all very Game of Thrones.

  138. Late to this discussion. Feel like I’m drowning in paperwork, with three kids working and attending college. In the last six weeks I have filled out:

    – federal, state, local tax forms for household
    – federal, 2 state, local tax forms for DS#1
    – federal, state, local tax forms for DS#2
    – federal, state, local tax forms for DD#1
    – CSS Profile (financial aid application) x 3
    – FAFSA x 3
    – IDOC x 2 (additional paperwork required by specific colleges for aid)

    And while (a large) part of me feels like I should have had the kids fill out their own returns, it’s really difficult with them at school 3+ hours away, and I need their returns to be completed before some of the other paperwork can be completed. We went over it all with them when they were home on their various breaks in the last few weeks.

  139. Meme – that recipe looks great – I can’t wait to try it next week, I think DD will really like it.

  140. “Insurance that pays from 0 – 150k hardly seems worth the bother.”

    What a novel idea. With different numbers, that’s what I’d like in health insurance.

  141. If you look at the lifetime premiums for the sort of coverage you can purchase today, not ten years ago before they knew how to price it, (current policies have lifetime and daily caps on reimbursements), I did the math and figured out that if I burned through the max benefit in an inflation adjusted policy at an actuarially normal time, I would have paid $1 in premiums for every $3 in benefits – the calculation also accounted for forgone conservative investment earnings on the premium payments. That was simply too high a premium cost for my taste.

  142. FB comment re the Top Gear dude:
    “He was already on final notice for a whole range of problems, such as using the ‘N word’ while on camera. Then he punched a producer (which, by all accounts, was an entirely one sided affair relating to the availability of food on set). I’m sorry, but if you don’t fire the guy then you’re admitting you don’t have any control over your employees.”
    Is that right?

  143. With different numbers, that’s what I’d like in health insurance.

    That’s why the ACA offers Bronze, Silver and Gold plans :-)

  144. S&M,

    Clarkson makes $1.5 million as the host of Top Gear. If I were the head of the BBC, I’d have Clarkson pay Timon $150k and let everyone keep their jobs.

  145. I just took a quick look at some big insurance comapanies’ websites, and they all had pages to request LTC care insurance quotes.

    “What I want is long term care insurance with a $100k deductible”

    The plan offered through my employer has an option with no payouts until after 1 year in LTC, which is in the ballpark of $100k.

  146. The plan offered through my employer has an option with no payouts until after 1 year in LTC, which is in the ballpark of $100k.

    What’s the max payout.

    S&M, Next stunt $300k. On the other hand, all the other networks are falling over themselves to offer them 8 figure deals to continue the show under a new name.

  147. Rhett – I don’t remember too much of the details, but from reading The Daughter of Time and books about the Tudors, I think Henry VII did quite a bit of killing to make sure he got the throne. He (and maybe VIII) made sure to kill any remaining Plantaganets that might have had a claim to the throne.

    I think Henry, not Richard, killed the princes in the tower. A very intriguing mystery! I hadn’t read about Elizabeth II not going to the ceremony – interesting.

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