*Investors Blog*

[SC Maintenance]

My career was in Predictive Analytics. You can get the numbers; the real question is what do they mean? What can you glean from them?

Well yes what do they mean. You can predict direction to a degree. Predicting the timing is much, much harder. The driver on timing is flows.

There is a technician by the name Michael Green that tries to track flows into and out of markets all over the world. Its very hard and requires lots of guessing. He goes by the profplum99 and has a substack and a twitter account. He gives interviews from time to time. He does have a paid for service - I don't subscribe. Might be someone your interested in hearing given your background.

 

[SC Maintenance]

https://www.cnbc.com/2024/03/15/lai...ind-jobs-with-cuts-at-highest-since-2001.html


I feel A.I. boom will eventually run out of steam.

Sure tech will always be around.

A.I. boom took all 3 of my accounts to new highs and I’m happy with the results.

AI is just starting. The winners haven't emerged yet. Its likely the winners will be the ones that figure out how to use it, not the current crop.

For example yesterday I read that the the NAR settled and the way realtors get paid may change, and I thought AI will make a much better realtor. You can send a robot to the sellers house that completely maps and records the property, and creates a online virtual tour. You view these tours, and tell AI what you like and don't like. Then you go look at the house and tell AI in real time what you like and don't like and why its changed in person - then AI can re-adjust their algorithm for your preferences and match with other properties based on feedback from others that have toured them.

 

[99Saturn]

I checked my 401K accounts yesterday. Finally making up the prior losses.

In now 69 and retired now 3 years. Have not withdrawn a penny from them yet. Have enough in cash and my SS check.
Will most likely wait until the mandatory date for withdraws. Still have to figure that one out. Need to see if they can just transfer one
amount per year, because I think there is a fee involved, because I don't want a fee every month.

Any advise on how that works is welcome.

You can consider moving your 401k to a rollover IRA (pre-tax to pre-tax assuming your 401k is pre-tax now) at a different institution if there is truly a fee associated with withdrawals. Other things to consider like how you are going to manage whatever you rollover in that case. I'm sort of surprised there is a fee but without knowing more I can see some institutions doing annoying stuff like that. As SC Maintenance said - could that be tax withholding?

My understanding re going to a roth IRA based on what I know (but would say do some digging as well)... You can convert a pre-tax account (in whole or in part) to a roth IRA, that will be a taxable event. That conversion won't satisfy rmd requirements. You could contribute to a roth IRA with the rmd if you have earned income, but it won't get you around the rmd.

 

[SC Maintenance]

That conversion won't satisfy rmd requirements.

Roth's don't have minimum distributions - so says the IRS - from my link above "Roth IRAs do not require withdrawals until after the death of the owner." So as I said check with an advisor who knows this stuff, but since he is not at the rmd age yet, maybe he can convert it - pay the taxes, and then not have to take any out going forward?

And yes, the conversion is a taxable event, so you definitely want to check with an estate planner to determine what is the best tax planning, dependent on what your thinking of doing with that money long term - ie maybe your leaving it to someone or whatever.

 

[99Saturn]

Roth's don't have minimum distributions - so says the IRS - from my link above "Roth IRAs do not require withdrawals until after the death of the owner." So as I said check with an advisor who knows this stuff, but since he is not at the rmd age yet, maybe he can convert it - pay the taxes, and then not have to take any out going forward?

And yes, the conversion is a taxable event, so you definitely want to check with an estate planner to determine what is the best tax planning, dependent on what your thinking of doing with that money long term - ie maybe your leaving it to someone or whatever.

100% agree with what you said above. I tried to lay out the convert versus contribute outline because my understanding once you need to take the rmd it'll be a contribution not a conversion (ie not rolling it) if you want to go to a roth IRA.

I might have misunderstood what you were getting at when you said "roll your RMD" below but was laying it out that way because it would be rolling the 401K before the rmd is required not the rmd.

You may be able to roll your RMD to a roth IRA - lots of rules so check with someone who does this sort of thing. You would likely need to pay the income tax on the withdrawal before it goes into the roth, but future gains would be tax free.

 

[ArrestMeRedZ]

Once you hit RMD age on a 401k or ordinary IRA a lot of rules kick in. You have to be very careful with 401k/IRA rollovers in that you cannot and I mean cannot roll your RMD into a Roth (even if you pay taxes on it). In fact you even cannot make any Ordinary to Roth rollovers like you did during previous years until after you take your RMD first.

In my personal case, there was no reason not to roll my entire 401k into my ordinary IRA. Less fees and more investment choices. I did a lot at 59.5 years old, the rest when I retired.

AARP (I am not recommending the group, only the free tool) has a RMD calculator where you put in your 401k/IRA total, your age, and expected rate of return. I used 10% return on investment (approximate average returns for an S&P index fund) and was amazed at how much RMDs grew as I aged. If I make it to 90, they will be unmanageable from a tax standpoint. To avoid this, I will be rolling over any annual gains that are over and above the RMD to the Roth.

 

[Dave Hess]

I checked my 401K accounts yesterday. Finally making up the prior losses.

In now 69 and retired now 3 years. Have not withdrawn a penny from them yet. Have enough in cash and my SS check.
Will most likely wait until the mandatory date for withdraws. Still have to figure that one out. Need to see if they can just transfer one
amount per year, because I think there is a fee involved, because I don't want a fee every month.

Any advise on how that works is welcome.

Good to hear you are financially secure and holding off until RMD is necessary.

95% of Americans would love to be in that situation.

 

[Owen Lucas]

No, I wouldn't say that. The treasury is funding the debt that congress has decided to create. That's there job, they have no choice. However the net result is Janet is in charge, because the fed can't let the govt. not pay their bills, the currency would collapse.

Who is to say they fed doesn't want it anyway. The fed needs to give the illusion of fighting inflation, when they know themselves that their tools to do so are blunt instruments at best, and liquidity is better for the banks anyway. They would much rather have inflation over another Lehman Brothers.

The fed must keep the bond market functioning. Remember through the GFC and the pandemic the largest buyer of treasury debt was the fed itself - most of what's on its bloated balance sheet is govt. bonds.

Powell was first nominated by #45, then again by #46. Presidents nominate fed chairman's they are told to nominate - is my guess. The bankers have always been in control. Remember Janet was fed chairperson before Powell, nominated by #44. Powell was an investment banker before he was on the fed (and is reportedly worth $100M). So its a cozy group to say the least.

Neither wants to be responsible for what happens in an election. They like their cozy little arrangement that survives whomever is in office - so they stay out of the spotlight.

edit - I will add to this. Yes inflation peaked at 9%, but its about 19% total since the money printing started - so about 5% a year, and were now at 3.9%. So all this wailing and nashing of teeth resulted in 1% decrease in inflation. A lot of it was transitory after all.

Thank you for the explainer. I sure am glad I have a financial advisor running the show.

 

[Jdeere562]

Good to hear you are financially secure and holding off until RMD is necessary.

95% of Americans would love to be in that situation.

I'm not rich by any means, but my living expenses are low. House and all bills paid off. Just have monthly expenses, taxes and insurance.
Just a modest small house and never felt the need for expensive vehicles and trading them every year. Don't even own one anymore.

My last vehicle was a 2018 Subaru Forester that I bought new in 2018. Quit driving and gave it to my Granddaughter last summer. Nice
and safe for an 18 year old. Very capable in these Iowa winters. Rather she had it than some old rusty piece of junk. Now no car insurance either.

My biggest fear is a nursing home.........
That would eat up all I have saved over the years quickly. I'm not in very good shape at this point.

 

[Dave Hess]

I'm not rich by any means, but my living expenses are low. House and all bills paid off. Just have monthly expenses, taxes and insurance.
Just a modest small house and never felt the need for expensive vehicles and trading them every year. Don't even own one anymore.

My last vehicle was a 2018 Subaru Forester that I bought new in 2018. Quit driving and gave it to my Granddaughter last summer. Nice
and safe for an 18 year old. Very capable in these Iowa winters. Rather she had it than some old rusty piece of junk. Now no car insurance either.

My biggest fear is a nursing home.........
That would eat up all I have saved over the years quickly. I'm not in very good shape at this point.

Don’t forget to plan for the future if something happens to you.

Get everything in order today to make transfer of assets to your kid(s) / grandkid(s) much easier.


I told my kids not to put me in a nursing home, just invite me for an airboat ride to the Florida Everglades in alligator infested waters and I accidentally lose my balance….

No probate and very good ending for everyone.

 

[Jdeere562]

Don’t forget to plan for the future if something happens to you.

Get everything in order today to make transfer of assets to your kid(s) / grandkid(s) much easier.

Daughter and I went to a lawyer several years ago and did that. Trip to the banks as well to do POD on my accounts. She is also on my safe deposit box. That alone came in handy when I transferred the Subaru title to the Granddaughter. I had to make no bank trip for the title. Already had Granddaughter's name on the title as Mark or Hayley, so no trip to the courthouse either. Just told them to drop my name off the title.

 

[99Saturn]

@Jdeere562 - perhaps helpful, if that is a route you are looking to go down for a general understanding

https://www.investopedia.com/ask/answers/08/ira-rmd-reinvest.asp

 

[Warstud]

Don’t forget to plan for the future if something happens to you.

Get everything in order today to make transfer of assets to your kid(s) / grandkid(s) much easier.


I told my kids not to put me in a nursing home, just invite me for an airboat ride to the Florida Everglades in alligator infested waters and I accidentally lose my balance….

No probate and very good ending for everyone.

Good Advice ..... even then it's not easy to transfer all the assets to the kids . Ask me how I know .

 

[99Saturn]

AARP (I am not recommending the group, only the free tool) has a RMD calculator where you put in your 401k/IRA total, your age, and expected rate of return. I used 10% return on investment (approximate average returns for an S&P index fund) and was amazed at how much RMDs grew as I aged. If I make it to 90, they will be unmanageable from a tax standpoint. To avoid this, I will be rolling over any annual gains that are over and above the RMD to the Roth.

I find myself reflecting on what an appropriate allocation of savings is pre-tax versus roth at various points in life when thinking about being confronted with RMDs once reaching retirement. I don't have an answer but just find it an interesting question (and a great problem to have for those that have it once they reach retirement!).

 

[bovine1]

I use Vanguard. VMFXX current 7 day yield is 5.27%. VUSXX 7 day yield is 5.28%.

 

[ArrestMeRedZ]

I find myself reflecting on what an appropriate allocation of savings is pre-tax versus roth at various points in life when thinking about being confronted with RMDs once reaching retirement. I don't have an answer but just find it an interesting question (and a great problem to have for those that have it once they reach retirement!).

Yes to this! I do not know where that sweet spot is either. I retired at 64 while collecting a very modest military retirement and some rental income. At that time I had an open but largely unfunded Roth (a mistake on my part). That year and the following ones I started rolling about 14% of my tIRA (taxable IRA) to Roth IRA annually. At 70 I started SS and reduced my rollovers so as to not blow up my tax liability.
Right now my tIRA is near what it was when I retired, and is down to 40% of retirement account totals, leaving the Roth at 60%. I am comfortable with that ratio, but as mentioned before, I can't allow that tIRA to grow so I will be pulling out all gains that exceed the RMD.

 

[redbone3]

Qualified Dividends!!!! For tax year 2024, on a joint return, if your income is $94,050.00 or less the tax rate on qualified dividends is 0%. Most dividends are qualified. Reit dividends are not qualified for sure. Generally, bank common and preferred stocks are the way to go if you want to make the greatest income. I have customized my portfolio to make 66% of the dividends in my margin account qualified dividends. This tax tip does not apply to IRA's or 401K,s.

 

[Dave Hess]

AI is just starting. The winners haven't emerged yet. Its likely the winners will be the ones that figure out how to use it, not the current crop.

For example yesterday I read that the the NAR settled and the way realtors get paid may change, and I thought AI will make a much better realtor. You can send a robot to the sellers house that completely maps and records the property, and creates a online virtual tour. You view these tours, and tell AI what you like and don't like. Then you go look at the house and tell AI in real time what you like and don't like and why its changed in person - then AI can re-adjust their algorithm for your preferences and match with other properties based on feedback from others that have toured them.

Interest rates currently killing realtors….. and AI will put lots more out of business.

I had a few realtors knock on my door asking if I wanted to sell my house. They are desperate for some commission and going hungry.

 

[Dave Hess]

I find myself reflecting on what an appropriate allocation of savings is pre-tax versus roth at various points in life when thinking about being confronted with RMDs once reaching retirement. I don't have an answer but just find it an interesting question (and a great problem to have for those that have it once they reach retirement!).

Unfortunately most Americans never heard of a Roth or RMD….. they can talk about the pro athletes, musicians or celebrities they follow on social media.

Sad but true.

Roth yearly contribution limits are waaaaay too small considering the inflation.
It should be $40-50K in the year 2024.

 

[demarpaint]

Don’t forget to plan for the future if something happens to you.

Get everything in order today to make transfer of assets to your kid(s) / grandkid(s) much easier.


I told my kids not to put me in a nursing home, just invite me for an airboat ride to the Florida Everglades in alligator infested waters and I accidentally lose my balance….

No probate and very good ending for everyone.

We think alike, only I'll be taken to the mountains! Have you considered an Irrevocable Trust? If you make the five year look back the air boat ride becomes optional since the nursing home can't get at the assets in the trust.