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FW gurus:

I switched jobs this year:

Job 1: $12582 of 401k contributions (employee). I've already liquidated this by rolling it out.

Job 2: $702 of 401k contributions per paycheck (employee). There were supposed to be 7 paychecks in 2014. Paid on the 15th and 31st of the month.

Well, my employer sprung a doozy on me. We're actually getting an advance on the 1/15/15 paycheck. It's being paid on on 12/31/14 along with the standard 12/31/14 paycheck.

So I'll be overcontributed to 401ks in the aggregate by $698 in 2014. I don't want to lose the match on this $702. What's the easiest way for me to prevent a headache on this?

rated:
Hi Guys -

I want to diversify my vanguard portfolio, I am referring to all my roth iras only in this situation.

Currently I have it as:

Voo 49 % - Stock - Large-Cap Blend
VBK 29 % - Stock - Small-Cap Growth
VEU 10 % - International
VSS 9 % International
VTI 1 % Stock - Large-Cap Blend
VWO 1 % International

Age: 33

what should I do to diversify this moving forward?


 just in case it matters, my 401k/roth 401k is composed of this:
 
 

Interm./Long-Term Bonds 7%

 
 
 

Large-Cap Stocks 35%

 
 
 

Small/Mid-Cap Stocks 31%

 
 
 

International Stocks 28%


rated:
atca1999 said:   Hi Guys -

I want to diversify my vanguard portfolio, I am referring to all my roth iras only in this situation.

Currently I have it as:

Voo 49 % - Stock - Large-Cap Blend
VBK 29 % - Stock - Small-Cap Growth
VEU 10 % - International
VSS 9 % International
VTI 1 % Stock - Large-Cap Blend
VWO 1 % International

Age: 33

what should I do to diversify this moving forward?


 just in case it matters, my 401k/roth 401k is composed of this:

 
 

Interm./Long-Term Bonds 7%

 

 
 

Large-Cap Stocks 35%

 

 
 

Small/Mid-Cap Stocks 31%

 

 
 

International Stocks 28%


  I don't really understand the point of owning VTI and VOO and small cap growth. If you are looking to round out VOO with some mid and small caps then I would either just use VTI or as you are doing add mid and small caps to VOO.

When people use the phrase "diversify" generally they are trying to decrease risk. Since we are only talking about equities and  you are spread pretty widely with an emphasis on small caps (VBK and VSS) I'm not sure adding anything else would necessarily add diversity so much as it would just complicate analyzing your portfolio.

If your goal is to decrease risk then I would back off of VWO, VBK and VSS in favor of VEU and VOO. That being said I think you have a nice aggressive holding that is still anchored in large caps (VOO, VEU). If you are truly interested in decreasing risk then you could increase your BND holding to 20% of your portfolio, but I'm not necessarily recommending doing that.

rated:
I have been doing Backdoor Roth IRA contributions for the past several years. This year, my family income may be decreasing to below the threshold for Roth IRA contributions so a direct Roth contribution would be allowed; however, I won't know for several more months what the projected annual income will be. I would prefer to make my contribution sooner, rather than later.

Is there any downside to doing a backdoor contribution now if I might otherwise qualify to make a direct contribution to a Roth IRA this year? I'm not coming up with any cons (other than the hassle of converting) but want to make sure I'm not overlooking anything. Thanks!

rated:
HKnight said:   I have been doing Backdoor Roth IRA contributions for the past several years. This year, my family income may be decreasing to below the threshold for Roth IRA contributions so a direct Roth contribution would be allowed; however, I won't know for several more months what the projected annual income will be. I would prefer to make my contribution sooner, rather than later.

Is there any downside to doing a backdoor contribution now if I might otherwise qualify to make a direct contribution to a Roth IRA this year? I'm not coming up with any cons (other than the hassle of converting) but want to make sure I'm not overlooking anything. Thanks!

  Can you not do a trad. IRA contribution now and do a recharacterization (if and) when you are sure you can make a direct Roth contribution? IOW, delay the "conversion" step of the backdoor contribution.

rated:
fwuser12 said:   
HKnight said:   I have been doing Backdoor Roth IRA contributions for the past several years. This year, my family income may be decreasing to below the threshold for Roth IRA contributions so a direct Roth contribution would be allowed; however, I won't know for several more months what the projected annual income will be. I would prefer to make my contribution sooner, rather than later.

Is there any downside to doing a backdoor contribution now if I might otherwise qualify to make a direct contribution to a Roth IRA this year? I'm not coming up with any cons (other than the hassle of converting) but want to make sure I'm not overlooking anything. Thanks!

  Can you not do a trad. IRA contribution now and do a recharacterization (if and) when you are sure you can make a direct Roth contribution? IOW, delay the "conversion" step of the backdoor contribution.

  No need to recharacterize if OP has no existing traditional IRAs.

rated:
I currently have no assets in a Traditional IRA. It seems like recharacterization and conversion would accomplish the exact same thing. What is the benefit of delaying the conversion? I do not intend to keep any holdings in a Traditional IRA.

rated:
In your situation, perhaps not much difference. If you already had a gain in the trad IRA contribution, I believe a recharacterization might be better.

rated:
Thanks for the guidance, fwuser12 & stanolshefski!

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