Author Topic: New To Investing Thread (Read 333918 times)

steve dave · « **Reply #3650 on:** March 18, 2021, 08:37:40 AM »

Quote from: BIG APPLE CAT on March 18, 2021, 08:36:11 AM

SD as one of the world's leading experts on meme usage, I have to say this is probably the best i've ever seen.

that's fair criticism

BIG APPLE CAT · « **Reply #3651 on:** March 18, 2021, 08:57:19 AM »

hey everyone shut up about SDs memes real quick i have a serious question:

The last couple years Mrs BAC said we should put money into IRAs and then immediately roll them over into Roth IRAs. Is that stupid or a good idea? We just used vanguard. As we were working on our taxes the other day we were realizing we have to pay out the ass for those things

steve dave · « **Reply #3652 on:** March 18, 2021, 09:22:07 AM »

Quote from: BIG APPLE CAT on March 18, 2021, 08:57:19 AM

hey everyone shut up about SDs memes real quick i have a serious question:

The last couple years Mrs BAC said we should put money into IRAs and then immediately roll them over into Roth IRAs. Is that stupid or a good idea? We just used vanguard. As we were working on our taxes the other day we were realizing we have to pay out the ass for those things

explain the "pay out the ass" part. you shouldn't have any additional taxes from rolling it as the IRA is already after tax

catastrophe · « **Reply #3653 on:** March 18, 2021, 09:22:29 AM »

Quote from: BIG APPLE CAT on March 18, 2021, 08:57:19 AM

hey everyone shut up about SDs memes real quick i have a serious question:

The last couple years Mrs BAC said we should put money into IRAs and then immediately roll them over into Roth IRAs. Is that stupid or a good idea? We just used vanguard. As we were working on our taxes the other day we were realizing we have to pay out the ass for those things

Three points here:

(1) Roth IRAs are awesome. If you got cash to invest in anything (other than maybe a pre-tax HSA), do this first.

(2) You’re talking about a back door Roth, which is the best you can do if you make too much to either contribute to a Roth directly or make tax deductible contributions to a traditional IRA. I’m assuming you’re talking about making post-tax (and non-tax deductible) contributions to an IRA both because

and because otherwise there’s no reason to go the back door route

(3) DO IT. But be careful how you report the transaction on stuff like turbo tax if you do your own taxes. You should only be taxed on the GAINS in investment between when you contributed to the IRA and converted to Roth. Stuff like TurboTax might assume your original IRA contributions were pre-tax and will think the ENTIRE amount of the conversion should be taxed. (The reason is because places like vanguard don’t opine as to what part of the conversion is taxable when they submit the form for taxes, so it’s on you to make clear the nature of the conversion)

Kat Kid · « **Reply #3654 on:** March 18, 2021, 09:27:21 AM »

I think Roth’s are fine, but I also have come to believe that most people would probably be better off doing a traditional Roth even though that isn’t the conventional wisdom. I don’t think it is a huge deal either way but probably true.

BIG APPLE CAT · « **Reply #3655 on:** March 18, 2021, 09:29:42 AM »

Quote from: catastrophe on March 18, 2021, 09:22:29 AM

Quote from: BIG APPLE CAT on March 18, 2021, 08:57:19 AM
hey everyone shut up about SDs memes real quick i have a serious question:

The last couple years Mrs BAC said we should put money into IRAs and then immediately roll them over into Roth IRAs. Is that stupid or a good idea? We just used vanguard. As we were working on our taxes the other day we were realizing we have to pay out the ass for those things
Three points here:

(1) Roth IRAs are awesome. If you got cash to invest in anything (other than maybe a pre-tax HSA), do this first.

(2) You’re talking about a back door Roth, which is the best you can do if you make too much to either contribute to a Roth directly or make tax deductible contributions to a traditional IRA. I’m assuming you’re talking about making post-tax (and non-tax deductible) contributions to an IRA both because and because otherwise there’s no reason to go the back door route

(3) DO IT. But be careful how you report the transaction on stuff like turbo tax if you do your own taxes. You should only be taxed on the GAINS in investment between when you contributed to the IRA and converted to Roth. Stuff like TurboTax might assume your original IRA contributions were pre-tax and will think the ENTIRE amount of the conversion should be taxed. (The reason is because places like vanguard don’t opine as to what part of the conversion is taxable when they submit the form for taxes, so it’s on you to make clear the nature of the conversion)

re: 2) yes, we make too much to directly contribute to Roth IRA so we have to do the backdoor.

3) okay see that's what i thought...the money we put into those IRAs was post-tax so it seemed strange to me that we would get taxed again on it. And we immediately converted them from IRA to Roth IRA so there were no gains to be taxed between the conversion. I think maybe turbo tax is thinking some or all of this money was pre tax but it was all after tax money.

To SDs question: when we input the 1099-R (or whatever its called) into TurboTax the amount of taxes we owed jumped up like $6K and i'm like holy crap why on earth would anyone do this?

BIG APPLE CAT · « **Reply #3656 on:** March 18, 2021, 09:50:46 AM »

ok she just explained to me that in late december 2019 is when we opened the IRAs but we didn't covert them to Roths until January of 2020 and so we took a deduction for the traditional IRA but then we had to give that deduction back when we converted them. or something like that. i dunno does that make any sense?

steve dave · « **Reply #3657 on:** March 18, 2021, 10:08:51 AM »

Quote from: BIG APPLE CAT on March 18, 2021, 09:29:42 AM

Quote from: catastrophe on March 18, 2021, 09:22:29 AM
Quote from: BIG APPLE CAT on March 18, 2021, 08:57:19 AM
hey everyone shut up about SDs memes real quick i have a serious question:

The last couple years Mrs BAC said we should put money into IRAs and then immediately roll them over into Roth IRAs. Is that stupid or a good idea? We just used vanguard. As we were working on our taxes the other day we were realizing we have to pay out the ass for those things
Three points here:

(1) Roth IRAs are awesome. If you got cash to invest in anything (other than maybe a pre-tax HSA), do this first.

(2) You’re talking about a back door Roth, which is the best you can do if you make too much to either contribute to a Roth directly or make tax deductible contributions to a traditional IRA. I’m assuming you’re talking about making post-tax (and non-tax deductible) contributions to an IRA both because and because otherwise there’s no reason to go the back door route

(3) DO IT. But be careful how you report the transaction on stuff like turbo tax if you do your own taxes. You should only be taxed on the GAINS in investment between when you contributed to the IRA and converted to Roth. Stuff like TurboTax might assume your original IRA contributions were pre-tax and will think the ENTIRE amount of the conversion should be taxed. (The reason is because places like vanguard don’t opine as to what part of the conversion is taxable when they submit the form for taxes, so it’s on you to make clear the nature of the conversion)

re: 2) yes, we make too much to directly contribute to Roth IRA so we have to do the backdoor.

3) okay see that's what i thought...the money we put into those IRAs was post-tax so it seemed strange to me that we would get taxed again on it. And we immediately converted them from IRA to Roth IRA so there were no gains to be taxed between the conversion. I think maybe turbo tax is thinking some or all of this money was pre tax but it was all after tax money.

To SDs question: when we input the 1099-R (or whatever its called) into TurboTax the amount of taxes we owed jumped up like $6K and i'm like holy crap why on earth would anyone do this?

I believe Turbo Tax is double dipping you on that thing. Not 100% certain but you should have already paid those taxes unless you made an absolute truckload of money on it prior to rolling it.

BIG APPLE CAT · « **Reply #3658 on:** March 18, 2021, 10:41:59 AM »

yeah they got rolled over in less than a week so they made like literally $0.06 in that time. I guess if you open an IRA turbo tax lets you take a deduction on that? That's the only explanation that makes any sense like if you get to take a deduction on an IRA then you have to pay forfeit that deduction if you roll it into a roth. i dunno. taxes are complicated when you try to invest in different stuff

catastrophe · « **Reply #3659 on:** March 18, 2021, 11:04:58 AM »

Yes I’ve run into this exact problem, although I thought TurboTax finally fixed it this year. What happens is vanguard gives you your form characterizing the entire conversion as income, but with a little box checked that says “taxable income not determined” or something like that. In other words “we’re not gonna figure out whether these were pre or post tax contributions.”

This year when I used TurboTax, it characterized the full conversion as income UNTIL I filled out the “deductions” part where I specified that I wasn’t deducing any of my IRA contributions.

steve dave · « **Reply #3660 on:** March 18, 2021, 11:27:27 AM »

Sounds like we’ve got another gE problem solved success story on our hands guys

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chum1 · « **Reply #3661 on:** March 18, 2021, 11:36:46 AM »

steve dave · « **Reply #3662 on:** March 18, 2021, 12:11:25 PM »

Kat Kid · « **Reply #3663 on:** March 18, 2021, 12:15:20 PM »

BIG APPLE CAT · « **Reply #3664 on:** March 18, 2021, 12:46:50 PM »

SD and chum1 are crushing it this day - also thanks for the input catastrophe! Glad to know i'm not the only one who has run into this crap

sys · « **Reply #3665 on:** March 19, 2021, 06:10:56 PM »

https://twitter.com/lijukic/status/1372584441038696449

steve dave · « **Reply #3666 on:** March 19, 2021, 06:40:36 PM »

Holy crap

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steve dave · « **Reply #3667 on:** March 19, 2021, 07:31:58 PM »

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steve dave · « **Reply #3668 on:** March 19, 2021, 07:32:17 PM »

Thank you for your service chads

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ben ji · « **Reply #3669 on:** March 19, 2021, 08:16:33 PM »

Gonna give a shout out to myself for starting my roth IRA about 10 years ago to this day. I went on a heater at the boats and won about $800 playing blackjack one night and was about to deposit it back into my bank when I thought "Hey, maybe I should put this in one of those roth IRA's I recently learned about" Went into a physical Fidelity location the next day and gave them $800 in cash.

Started out contributing a couple hundred a month then was eventually able to max it out. It adds up.

steve dave · « **Reply #3670 on:** March 19, 2021, 08:32:02 PM »

Incredible work Ben Ji. Especially (no offense, only respect) given what you were exposed to with money moves growing up. KK has a great IRA story.

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ben ji · « **Reply #3671 on:** March 20, 2021, 07:18:53 PM »

Quote from: steve dave on March 19, 2021, 08:32:02 PM

Incredible work Ben Ji. Especially (no offense, only respect) given what you were exposed to with money moves growing up. KK has a great IRA story.

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My dad did teach me about how important it is to invest/compounding interest etc so it wasn't that hard to switch from YOLO Penny stocks to index funds.

My favorite YOLO penny stock he pumped back in the day was Queer TV which was surprising coming from his MAGA ass. Supposedly it was going to be a cable TV channel focused on gay people or something, all I know is I gave him $100 to invest in it and it went poof.

https://en.wikipedia.org/wiki/Q_Television_Network

steve dave · « **Reply #3672 on:** March 20, 2021, 08:55:53 PM »

amaze

DaBigTrain · « **Reply #3673 on:** March 22, 2021, 09:08:44 AM »

Do I sell some BTC and buy an assload of Crowdstrike here?

DaBigTrain · « **Reply #3674 on:** March 22, 2021, 10:22:50 AM »

Quote from: DaBigTrain on March 22, 2021, 09:08:44 AM

Do I sell some BTC and buy an assload of Crowdstrike here?

Welp pulled the trigger and feel great about it