I don’t understand how dumping 19k or more likely 38k into 401k wouldn’t significantly positively affect your tax burden.
Too late to do that for 2019 (which is why I suggest IRAs) which is what I thought he was asking about. But yeah, for 2020 max away in the 401k and IRAs.
And I agree it would be some unusual circumstances if putting away money pre-tax wouldn’t significantly help his tax burden.
Yes, you can still contribute to an IRA for 2019.
I don’t think you can contribute to a workplace savings plan like a 401k or 403b, but I’m honestly not 100% sure.
The primary reason for gifting to children while alive is to reduce eventual estate tax burden, and the threshold is now so high (no estate tax until $11.5 million for an individual or $23 million for a couple) that it is irrelevant for most. In most cases it would be better to hold investments in the parents’ accounts, so that, among other reasons, heirs get a stepped up basis at death.
In my opinion, if you have the cash, you should max out your 2019 contributions (ideally Roth) and fund as much of your 2020 pretax space as possible. If you have access to an HSA, I would also fund that before investing in a taxable account.
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Don’t have what available to you?
Ok, well the good news is that you can still contribute to an IRA for 2019 now, assuming you qualify. You should be able to figure out if you qualify in less than 5 minutes with a quick web search.
Just note: if you do choose a Roth over a Traditional IRA, it will not reduce your 2019 taxes.
The hack is to find something that is actual work that you can legally pay them to do. Modeling is a common one if you have something legit for them to model for. If you’re just pretending, it’s tax fraud. And if you’re OK with that, there are far better ways to commit tax fraud
As others have stated, you can only give the 15K post-tax. You can give even more but then you either pay gift tax or take it off your lifetime cap. There is no point in doing this unless you’re anticipating an estate tax problem.
The only reason to do that would be so that they can put it in a Roth. Then they get extra decades of tax-free compounding and tax-free withdrawals. Also depending on the amount, it may not be taxed going in.
In isolation, it’s probably not worth the hassle. I think it might be worth it just so you have the process down and the accounts set up, so if similar opportunities arise in the future, you can do it with ease.
Got pre-q’d for $200k, 30-year fixed @ 3.375%, need about $17,000 cash to make that happen, payments ~$1,500/month. Seems ok to me, but … thoughts?
I’ve reached a point where I just don’t want to do another winter in a tiny one-room cabin. Feeling solid about staying in this region, I think.
I’ve got a really crappy personal loan I’m carrying, about 45k, but I own the cabin and land outright. So I could probably clear that loan fast by selling the cabin, if I found the right place. But the cabin is also an asset–it’s super quiet, which could balance any noise I wind up dealing with in a permanent home. And it’s rent-able at least sometimes, to hunters, summer tourism season and during Cornell graduation when everyting is full. … No reason I’d have to sell it, but it would clear up another $1,100 per month of cash flow.
This totally isn’t a sound financial decision, but there’s no way I can use my HSA to fund my wife’s boobjob right?
I’d have to research it to be sure, but without checking I’m 90% sure that this is technically not allowed unless it’s medically necessary for some reason.
However, even if you could, you’re better off allowing the HSA money to grow tax free and paying with after tax money. Keep the receipt. Then when you’re retired you can take whatever amount you spent on the boob job (even if it was decades earlier) and use it for anything you want tax-free.
This is the first market drop that has “cost” me a significant amount of money.
I’ve read extensively on the psychology of markets and investing. Rationally, I know this will happen. I know that stocks are likely to decline 40%+ at least 2-3 times in my lifetime. I’m diversified, I have an emergency fund, I only have super long term money in stocks.
And still this has me sick to my stomach thinking about the absolute dollar amount lost. I’m pretty sure I can stay the course but it is more emotionally taxing than I anticipated. Major props to anyone who stayed fully invested through 2009.
I’m going to stop looking at my accounts and see if that helps.
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Its pretty much the only thing to do right now. Examining your account every day will do nothing but cause an ulcer.
Keep your finger crossed that the tank ruins Trump and we get at least SOMETHING good out of it.
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Hasn’t actually bothered me at all. The way I look at it, I still have more money invested than I did on December 1 2019. And way more than I had invested January 1 2019. Even if it falls another 20% that will only take me about to January 1 2019 levels. Stock market goes up, stock market goes down. You can’t explain that.
And actually that dip back in December 2018 was bigger than this one so far. Did that one not bother you?
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I’ve taught in business schools for more than 15 years and have always been a cheerleader for investing in equities. I’m a huge Buffett fanboy (attended a couple of Berkshire meetings, had lunch with him, even have a bobblehead of him and Munger in my office), and I totally understand the idea of a manic Mr. Market who has volatile mood swings about pricing stocks even though the underlying businesses haven’t changed. I absolutely understand all of those things.
I say all that only because, even with my background/outlook, 2008-2009 absolutely sucked. It just felt like stocks were going to keep going down every single day and there was absolutely no point to being in the market. It’s easy to look back at the results of the last 10 years and think that it wasn’t a big deal - just a temporary blip of market pessimism. But those days were absolutely paralyzing and I was subject to emotional feelings that I never would have expected. (This is aside from the pressure from my wife, who is much more of a market skeptic, to sell all of our investments. Thankfully we didn’t.)
This isn’t even close to that feeling. Yet.
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Feel the same way, this doesn’t bother me at all I have decades to make up it up.
I also recently convinced my wife it was ok to leave her job for something less stressful and walk away from upper 6 figures to low 7 figures in RSUs and stock options. Those would have basically set us up for life at our young age but the job was having a negative effect on her mental health and she was not happy
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Someone explain this to me. If a D President reverses the cut to the corporate tax rate, wouldn’t this alone almost automatically reduce the value of stocks accordingly? Let alone factoring in laws that might put health insurance companies out of business, reduce the value of pharmaceutical companies, etc.
I understand the advice about not timing the market generally but when you have such an obvious and foreseeable potential shock to the system and yet stocks continue to go up at a rapid pace, seems like a pretty obvious time to jump ship to me…
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Not stressed at all, but then again I’m 30 years away from retirement. I just view it as I own more stocks than I did 2 weeks ago. It’s going to go back up eventually, if it doesn’t then WAAF anyway.
At my age this could be the last big opportunity to make a huge score so I’ll be progressively shoving more into stocks the further we fall.
Then I just have to hope I don’t die.
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