https://twitter.com/rstanzel/status/1461010472560381958?t=KW4QACllZVUDcCoBJ_bx7g&s=19
Bank error not in my favor
I’ve never had something like that - basically an RSU but it’s cash and you can invest it - but RSU’s are taxed as income at their value when they vest - so I would imagine the same would be the case for this bonus. With RSU’s, I would typically sell right away, but if you keep them sitting there and they increase in value, you then get hit with capital gains taxes when you sell.
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Usually if you are fired you can keep the money - unless fired for cause, and in my experience it’s rare a company fires for cause, as that can lead to lawsuits, etc. So as long as you’re planning to stay three years, I’d treat is as if it’s already yours and do the standard investing.
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Based on personal experience, I wouldn’t assume this. Again, my experience is based on RSU’s. I feel like vesting cash bonuses are unusual - if you google, most of the results are about RSU’s.
Company 1: Laid off as part of the company being acquired. All my RSU’s vested immediately upon termination, regardless of the vesting schedule.
Company 2: Laid off as part of an economic downturn. Assumed all my RSU’s would vest, and was in for a surprise when they were all prorated (e.g., if I was 1 year into a 3 year vesting schedule, I kept 1/3 of the RSU’s from that grant), AND I still have to wait for the vesting schedule (particular LOL at that part).
I was pretty pissed at this, and frankly feels like it should almost be illegal - you give me a long-term incentive and then do not provide me the opportunity to uphold my end of the bargain. But I found a lot of people have been in situations where they got nothing when terminated without cause. So it could have been worse. I may have been fortunate in the first situation that it had to do with a change of control of the company, so I got to keep/vest all RSUs.
I think it makes sense for @Tilted to ask, and if not too late, to get it in writing that it’ll be paid out if terminated without cause.
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I haven’t been following up on all the details of the legislation, but can I do a backdoor Roth in 2022? Not, mega, just regular (i.e. 6K in to trad, then convert trad to Roth).
If you’re a billionaire you don’t have to pay taxes. If you are a millionaire, you can pay people $10,000 to save you $20,000. If you are neither, you’re fucked.
Disclaimer - I am not an actual tax accountant or lawyer but this more or less is how it works as far as I can tell.
I’m glad you put that disclaimer in there. You really need to be more than a mere millionaire to get that kind of ROI on 10K of tax prep/planning. I’m also assuming you’re talking about shady stuff.
Also, as I’m sure you know, many people make little enough that they don’t pay any federal income tax. Granted, they are fucked, but it’s not by the effect of the federal tax code on them.
Pretty sure regular backdoor was never in the chopping block and is fine for 2022.
Great. I always do it first week of Jan, so now is the time I start thinking about it. I’ll surely do a deeper dive on my own when time permits.
I have like $40k in a traditional IRA at Vanguard. Can somebody point me to a website that explains what I need to do to do a backdoor roth?
But what you probably also want is to understand what your potential tax implications are if any of your contributions to the tIRA were tax-deductible.
I think all of my contributions in my tIRA were tax-deductible. Most of that $40k was transferred in when I left my previous job. I’ll check out the link. THanks!
ETA: Wouldn’t all contributions to a tIRA be tax-deductible? Is there a reason to put money into a tIRA if it isn’t tax-deductible?
One may put in post tax money aka non tax deductible for the purposes of making a backdoor Roth transfer.
Well, that certainly makes sense. Thanks.
As above, what you’re asking about is just a Roth conversion, not a back door Roth.
As far as whether to convert or not, it mostly depends on whether you think your current marginal tax rate will be greater or less than your tax rate in the future (i.e. at retirement). For most working people, their tax rate now is likely higher so converting probably doesn’t make sense. It may be possible that there are other factors that may tip the scales in favor of conversion.
Are you sure about this? I have had multiple different ESPP programs over the years and they all had at least that the shares were bought at the price at the start of the quarter or the end of the quarter whichever what is lower and then an x% discount. I always maxed them because it is easy money and basically risk free if they offer an instant sell option.
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Yah I double checked and that is how it is worded in the ESPP. We passed initially as it didn’t seem like we would be giving up a ton of EV for the effort. Probably dumb and the stonk will moon, but we are index funds for lyfe.
If you only get a discount then I probably wouldn’t join ESPP either but I always had vesting RSU as well so if the shares mooned I would still have that.
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My last company’s plan worked like this, you could put up to 15% of salary in the plan and at the end of the quarter you would get to buy the stocks at 95% of the market price on the last day of the quarter. I did notice that the 5% discount was taxed immediately as income, so it operated more like I pay a 2.5% front loaded fee to get the shares at 95% of their fair market price. I always maxed out because, as you say, free money is free money. But is was kind of annoying how little net value it really provided considering all the cost and administration to set up a stock plan. I much prefer my new company’s plan which is a simpler “employee puts in up to x% of pay, employer matches 1 for 1 up to y%” arrangement. Again the employer match is taxed as income but it’s more transparent.
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How much liquid cash do you guys keep? I’m starting to feel like I keep way too much. I have always kept enough liquid cash in my bank account to cover me for almost a year if I was to lose my job. However that means I have like $45k sitting in a bank account collecting like 0.5% interest.
Is this nuts?