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Old 02-21-2016, 03:41 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,923,045 times
Reputation: 6716

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Quote:
Originally Posted by mathjak107 View Post
i use mostly laddered cd's for cash . the average is pretty close to . 70% or so except for this years spending money which is at .10 . but i really don't care because i am spending it down . .

my fidelity core account which is a cma account is fdic insured . they have a program with a number of banks for sweeping and holding cash .

https://accountopening.fidelity.com/...p/fdicBankList

https://www.fidelity.com/cash-manage...count/overview

cash in your brokerage account also carry's additional extended insurance after sipc.

"Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion.
Within Fidelity's excess of SIPC coverage, there is no per-account dollar limit on coverage of securities, but there is a per-account limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry."
CDs - even 3 month CDs - aren't cash. And why buy even a short term CD that yields less than .9% (or especially .1%) if you can get .9% in a liquid federally insured high yield savings account (that you can also link to an interest bearing savings account)? Except for inertia? You're not that old - like those 90 year old widows who are joined at the hip with their full service brokers who take them out to lunch once every couple of weeks.

Also - brokerage firms tend to treat new customers/new money better than old customers/old money. I get 50k FF miles from Fidelity when I move new dollars into it every year or 2. I've even been offered free trades in my accounts for moving money into my father's account - but - since I manage his money under a POA - I thought that looked like a possible conflict of interest/breach of fiduciary duty. I also get cash bonuses from E*Trade for doing the same thing.

BTW - all that excess SIPC coverage is a bunch of BS IMO if the **** ever really hits the fan. The only entity that has the ability to come close to insuring the kinds of money you're talking about is the federal government - through the FDIC.

In any event - even if you decide not to explore new options - perhaps other people here can benefit from knowing they're out there. Robyn
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Old 02-21-2016, 03:46 PM
 
71,511 posts, read 71,674,131 times
Reputation: 49088
the fan was already hit in 2008 and surprise , all the insurance is still in place and most never needed .

if the day comes that all our accounts are out the money we have a lot more to worry about .

i like everything consolidated at fidelity and only keep a small amount in vanguard and local banks .

i have no desire to start moving money around to on line banks . the extra couple of bucks are so little in the scheme of things that if i have to deal with one extra piece of paper at tax time i don't want to bother . the effect it would have on my typical return would be negligible .
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Old 02-21-2016, 04:23 PM
 
Location: Gilbert, AZ
3,179 posts, read 1,956,881 times
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Quote:
Originally Posted by mathjak107 View Post
not sure , i have not run the numbers but basically i don't think many will be able to collect ss and not have to use use roths and already taxed money to get zero tax .

70k in dividends or capital gains which make up the zero % capital gains bracket plus 1/2 the social security already gets the ss taxed at 85% . the ss eats up the first level in the zero capital gains bracket reducing the 70k by that amount .

so the amount that can go through with zero capital gains is 70k less 85% of ss , less unqualified dividends and interest . 98k would be tough to get zero tax on.
Ok, my statement was a bit too general. There are some combinations that end up with no federal tax. For example, $68k in SS plus $30k in qualified dividends. I tried a lot of different combinations this afternoon and the most tax I could get was about $1100 (on $98k total).

I also ran one scenario through the IRS worksheet and it matched TaxCaster pretty well (a three dollar difference).
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Old 02-21-2016, 06:14 PM
 
Location: RVA
2,164 posts, read 1,265,106 times
Reputation: 4451
Well, if you were already in the maximum 50% tax bracket, then it is of course a no brainer, and most of your strategies are of no use to virtually everyone else that posts here. The thread was brought up to discuss the out of whack increase in taxes for relatively small increases in income, in the $45k to $95k range. There is not even a suggestion of a tax torpedo in your future. The amounts you have saved and invested are in far excess of even well heeled posters here. Only a few have multiple 7 figure savings and investments. We only have 7 figures saved if you consider our pensions, which are appreciable, as bought annuities. Otherwise, we will not likely hit that kind of savings until after I retire, since our income to start will exceed out costs. And I (and others) was called extravagant and ludicrous for suggesting that $5-10k/mo retirement income was considered comfortable!
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Old 02-22-2016, 03:03 AM
 
71,511 posts, read 71,674,131 times
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Quote:
Originally Posted by hikernut View Post
Ok, my statement was a bit too general. There are some combinations that end up with no federal tax. For example, $68k in SS plus $30k in qualified dividends. I tried a lot of different combinations this afternoon and the most tax I could get was about $1100 (on $98k total).

I also ran one scenario through the IRS worksheet and it matched TaxCaster pretty well (a three dollar difference).
the problem i find is that a lot of fund distributions are not qualified and are taxed at regular rates . i think mine ended up being about an equal split for 2015 .

it is not just your holding period that counts but both the funds and the sources of their income too .

our non qualified dividends and 20k pension pretty much wipe out the zero capital gains bucket so little of it gets to apply even though the bulk of our income is tax free cash now .

at 65 you can pull about 24k or so a year out of ira's using the standard deductions and exemptions for a couple and pay zero tax . but any other taxable money now becomes taxable . that 24k will eat up the first 24k of the 70k zero capital gains bracket. this is without figuring taking ss which would totally alter the equation .
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Old 02-22-2016, 08:31 AM
 
Location: rhode island
33 posts, read 22,772 times
Reputation: 42
Default so i guess ive made a big mistake

after reading the answers to my initial question it sounds like im really "screwed" I just received my first social security check but I plan on working a while longer this year. ill make approx. 50,000 plus half of my social security 14,000 that equals 64,000. its 20,000 more than the 44,000 limit for which ill be taxed at 85% of my money.im not sure how much federal tax will be deducted from my paycheck by the time I quit but im sure it wont be enough to cover the total tax liability.is there a way I can figure how much I will owe so I can put some money away to help pay the bill.
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Old 02-22-2016, 08:50 AM
 
Location: Baltimore, MD
3,745 posts, read 4,215,210 times
Reputation: 6866
Quote:
Originally Posted by daves 57 View Post
after reading the answers to my initial question it sounds like im really "screwed" I just received my first social security check but I plan on working a while longer this year. ill make approx. 50,000 plus half of my social security 14,000 that equals 64,000. its 20,000 more than the 44,000 limit for which ill be taxed at 85% of my money.im not sure how much federal tax will be deducted from my paycheck by the time I quit but im sure it wont be enough to cover the total tax liability.is there a way I can figure how much I will owe so I can put some money away to help pay the bill.
Can you contribute $6,500 to a traditional IRA? That would help.
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Old 02-22-2016, 09:05 AM
 
Location: Gilbert, AZ
3,179 posts, read 1,956,881 times
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Quote:
Originally Posted by daves 57 View Post
after reading the answers to my initial question it sounds like im really "screwed" I just received my first social security check but I plan on working a while longer this year. ill make approx. 50,000 plus half of my social security 14,000 that equals 64,000. its 20,000 more than the 44,000 limit for which ill be taxed at 85% of my money.im not sure how much federal tax will be deducted from my paycheck by the time I quit but im sure it wont be enough to cover the total tax liability.is there a way I can figure how much I will owe so I can put some money away to help pay the bill.
You should be able to suspend your benefit if you feel you made the wrong decision. I believe there is a one-year window to make that decision, but maybe someone else here can confirm?
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Old 02-22-2016, 09:06 AM
 
71,511 posts, read 71,674,131 times
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It is within one year initially . Then you get the option again at any point after fra .
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Old 02-22-2016, 09:24 AM
 
Location: Gilbert, AZ
3,179 posts, read 1,956,881 times
Reputation: 3315
Quote:
Originally Posted by mathjak107 View Post
the problem i find is that a lot of fund distributions are not qualified and are taxed at regular rates . i think mine ended up being about an equal split for 2015 .

it is not just your holding period that counts but both the funds and the sources of their income too .

our non qualified dividends and 20k pension pretty much wipe out the zero capital gains bucket so little of it gets to apply even though the bulk of our income is tax free cash now .

at 65 you can pull about 24k or so a year out of ira's using the standard deductions and exemptions for a couple and pay zero tax . but any other taxable money now becomes taxable . that 24k will eat up the first 24k of the 70k zero capital gains bracket. this is without figuring taking ss which would totally alter the equation .
Sure, each person needs to look at their own situation. That $98,000 thingy is just an interesting data point.

A number of years ago I got rid of all my taxable mutual funds and have been putting taxable money into individual stocks. That gives a lot more control over the taxes, but it's a little more to watch. Maybe I'll regret it when I'm older!

My plan is to draw down a lot of the 401k's before we take SS (probably at 70), and then after that live mainly on SS and taxable accounts. (Not sure exactly when we'll retire, but let's say age 60 for this discussion). That way any inheritance will get a stepped up basis, and we won't need to worry about huge RMDs. If the stock market does really well the gains will be in the taxable account.

The introduction of the ACA and associated credit scheme throws a bit of a wrench into this plan. Before 65 we'll have too much income to qualify for any credits (lot of reportable income from 401k). We could try to get some credits by controlling our reportable income, but not sure if that would be worth it because it would likely increase our overall retirement tax bill. It hurts my head to think about it, honestly.
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