All things STOCKS

[JFreak]

Any accountants here? Specifically any accountants familiar with tax breaks for military?

Not an accountant but am military and decently tax savvy. Whatcha got?

 

[BigOrangeMojo]

I know this is a stocks thread, but the search button for this site keeps leading me to things on here.
I have a couple quick questions if anyone can answer it would be appreciated.

1) Do we have a thread about 401K, IUL, stuff like that? I cant find one.
2) Do we have a thread talking about the CARES Act letting you take up to 100K out with no penalty?

I'm looking for some info or really just thoughts about pros/cons of taking out the 100k with no penalty now, paying the taxes now over 3yrs, and using that money to increase the amount of land I can purchase with a new home purchase I,m looking to do this year. I've been reading through this Stocks thread (not every page, and I honestly do not understand most of the jargon) and you all seem pretty knowledgeable around here.

Any info is appreciated.

I'm not a big fan of taking money out of a 401k. I'm not an expert on the CARES Act withdrawal but I think you have to prove you have experienced a hardship to qualify (Note, if you don't qualify you'd still be able to take a loan up to $100K but see my next comment on that). The qualifcations to qualify are kind of vague and you might be able to get there. I never suggest taking loans out of a 401k since you are just inviting disaster.

Coronavirus-related relief for retirement plans and IRAs questions and answers | Internal Revenue Service

 

[Tri-CitiesVol]

I’m a CPA but I don’t have a tax background. When one of those guys sees this they might want to know if the military wages are earned over seas or in the states/territories.

Domestic, in reserve status. Just hoping for something out there to offset the expenses of my long commute.

 

[Tri-CitiesVol]

Not an accountant but am military and decently tax savvy. Whatcha got?

Live in Indy, drill in East TN. I will soon have to go in 6-8 days a months and am hoping to accomplish that in two trips. The drive sucks, so I plan on flying ~$300 round trip.

Hoping there are some kind of tax breaks for reservists to offset the trip costs. I will be eligible for per diems, so that is something.

 

[Go aeiou]

I’m a CPA but I don’t have a tax background. When one of those guys sees this they might want to know if the military wages are earned over seas or in the states/territories.

Still in accounting? What area?

 

[BigOrangeMojo]

Live in Indy, drill in East TN. I will soon have to go in 6-8 days a months and am hoping to accomplish that in two trips. The drive sucks, so I plan on flying ~$300 round trip.

Hoping there are some kind of tax breaks for reservists to offset the trip costs. I will be eligible for per diems, so that is something.

You can get an above the line deduction (You don't have to itemize) for travel costs.

https://www.irs.gov/pub/irs-pdf/f1040s1.pdf

https://www.irs.gov/pub/irs-pdf/i2106.pdf

(See page 4 of 9)

 

[Tri-CitiesVol]

You can get an above the line deduction (You don't have to itemize) for travel costs.

https://www.irs.gov/pub/irs-pdf/f1040s1.pdf

https://www.irs.gov/pub/irs-pdf/i2106.pdf

(See page 4 of 9)

Awesome, thank you!

 

[Sudden Impact]

SRNE Covid 19, Cancer and Non-Opioid Pain Mgt Play is sitting on a Powder Keg. Got into it a while back just for the heck of it after thorough DD. The more I read the more I bought. Worth a Look...

 

[Thunder Good-Oil]

Still in accounting? What area?

I worked with accounting system development, broadcasting, intellectual property assets, and in a few other areas. I have my hands full with family business right now.

 

[DancingOutlaw]

I know this is a stocks thread, but the search button for this site keeps leading me to things on here.
I have a couple quick questions if anyone can answer it would be appreciated.

1) Do we have a thread about 401K, IUL, stuff like that? I cant find one.
2) Do we have a thread talking about the CARES Act letting you take up to 100K out with no penalty?

I'm looking for some info or really just thoughts about pros/cons of taking out the 100k with no penalty now, paying the taxes now over 3yrs, and using that money to increase the amount of land I can purchase with a new home purchase I,m looking to do this year. I've been reading through this Stocks thread (not every page, and I honestly do not understand most of the jargon) and you all seem pretty knowledgeable around here.

Any info is appreciated.

I would really have my ducks in a row for something like that. You need to know your cash inflows and outflows, so you know how much you're clearing each month to put towards making those repayments. Would an illness or loss of job put you in a strain with regards to repayment? Do you need the withdrawal because you have equity tied up in your current house that isn't sold? If it's something simple like that where you're basically getting an advance that you'd immediately put back I think it would be fine. But if you're considering taking out $60-80-100k you need to have a very good plan on how you'll manage to put that back. The consequences aren't necessarily the end of the world but that would be a big tax hit to take in a given year and the IRS certainly won't let you float that without interest and penalties.

 

[volinsd]

I'm not a big fan of taking money out of a 401k. I'm not an expert on the CARES Act withdrawal but I think you have to prove you have experienced a hardship to qualify (Note, if you don't qualify you'd still be able to take a loan up to $100K but see my next comment on that). The qualifcations to qualify are kind of vague and you might be able to get there. I never suggest taking loans out of a 401k since you are just inviting disaster.

Coronavirus-related relief for retirement plans and IRAs questions and answers | Internal Revenue Service

I qualify due to furlow.
My thoughts are this, taxes will be much higher when I turn 72 than they are right now at 42 so I would actually lose more money by taking the tax hit on the 100k later.
The extra 100k would enable me to buy much more property which will only increase in value from here on out.

From what I have been reading, you can just do a withdrawl of the 100k instead of a loan. Looking at the IRS site you linked it would seem that I can spread the taxes out over 3 years so I should stay in my same tax bracket that way.

Also, if I do this I plan on contributing more to my 401K than I do now or set up a different retirement plan altogether so i can recoup the money. Not sure how much I can put in until I find out the morgage payment but I will cut some spending somewhere to fill the void.

Ive always heard that you should never take a 401k loan or a withdrawl, but (with no penalty) it seems like it would be better to get the taxes done now instead of 30 yrs from now for people eligable?
What kinds of disaster am I missing BigOrangeMojo?

 

[volinsd]

I would really have my ducks in a row for something like that. You need to know your cash inflows and outflows, so you know how much you're clearing each month to put towards making those repayments. Would an illness or loss of job put you in a strain with regards to repayment? Do you need the withdrawal because you have equity tied up in your current house that isn't sold? If it's something simple like that where you're basically getting an advance that you'd immediately put back I think it would be fine. But if you're considering taking out $60-80-100k you need to have a very good plan on how you'll manage to put that back. The consequences aren't necessarily the end of the world but that would be a big tax hit to take in a given year and the IRS certainly won't let you float that without interest and penalties.

If I took it out I would pay the taxes on it over 3 years. If I add the additional 33k a year, I will still be in my same bracket so I wouldn't get a big tax hit on my normal income....if my math and tax charts are correct.
Also, Im looking at a straight withdrawl, not paying back a loan to the 401k. From what I see, you can do that (withdraw without paying back) as long as I pay the taxes on that withdrawl.
Is this correct?

 

[Go aeiou]

I qualify due to furlow.
My thoughts are this, taxes will be much higher when I turn 72 than they are right now at 42 so I would actually lose more money by taking the tax hit on the 100k later.
The extra 100k would enable me to buy much more property which will only increase in value from here on out.

From what I have been reading, you can just do a withdrawl of the 100k instead of a loan. Looking at the IRS site you linked it would seem that I can spread the taxes out over 3 years so I should stay in my same tax bracket that way.

Also, if I do this I plan on contributing more to my 401K than I do now or set up a different retirement plan altogether so i can recoup the money. Not sure how much I can put in until I find out the morgage payment but I will cut some spending somewhere to fill the void.

Ive always heard that you should never take a 401k loan or a withdrawl, but (with no penalty) it seems like it would be better to get the taxes done now instead of 30 yrs from now for people eligable?
What kinds of disaster am I missing BigOrangeMojo?

I wish I knew what the would will be like in 30 years.
What kind of job are you going to be working at age 72 that will make you pay higher taxes. Most people at 72 are in a lower tax bracket.
Non productive real estate? I have 250 acres I'll sell you. What makes you think it will appreciate more than diversified investments in equities?
You need to meet with someone that understands money, time values, etc. You seem like the person who needs the 401k most.

 

[volinsd]

I wish I knew what the would will be like in 30 years.
What kind of job are you going to be working at age 72 that will make you pay higher taxes. Most people at 72 are in a lower tax bracket.
Non productive real estate? I have 250 acres I'll sell you. What makes you think it will appreciate more than diversified investments in equities?
You need to meet with someone that understands money, time values, etc. You seem like the person who needs the 401k most.

You dont think taxes will go up, by a good amount, in the next 30 years?

If I have no job at 72, and the taxes are higher I would be giving away more money from that 401k than trying to do it now.

The land is for me and my family, not an investment. Although if all hell broke loose and medical bills started piling up, our vehicles started exploding or what not, I guess I could sell it then to get some money to help with those expenses.

I agree, I need to meet with someone who understands this situation more than myself. Kinda why I was asking about it on this forum though. Hopefully I can meet with one soon.

Thanks for the snarkiness

 

[DancingOutlaw]

If I took it out I would pay the taxes on it over 3 years. If I add the additional 33k a year, I will still be in my same bracket so I wouldn't get a big tax hit on my normal income....if my math and tax charts are correct.
Also, Im looking at a straight withdrawl, not paying back a loan to the 401k. From what I see, you can do that (withdraw without paying back) as long as I pay the taxes on that withdrawl.
Is this correct?

Yes you can take it and only pay your tax rate on the withdrawal. Are you currently jobless? If your income has been severely impacted I would consider selling your LTCG equities (if you have them) to take advantage of the 0% tax rate up to the threshold (assuming you have room to do that). That would give you cash without creating a tax burden. One thing to consider on the withdrawal is that your employer does not have to adopt the CARES changes. I would look into that first and foremost.

 

[Carp]

Can someone explain $MDLQ and similar types of funds/trusts for me? I've been trying to do some research on this, but google gives me nothing. I was searching upcoming dividend stocks and this one popped up as one with a .45 dividend being paid out next month but with a share price of only 5.75 currently. Do these trade like any other stock?

 

[Go aeiou]

You dont think taxes will go up, by a good amount, in the next 30 years?

If I have no job at 72, and the taxes are higher I would be giving away more money from that 401k than trying to do it now.

The land is for me and my family, not an investment. Although if all hell broke loose and medical bills started piling up, our vehicles started exploding or what not, I guess I could sell it then to get some money to help with those expenses.

I agree, I need to meet with someone who understands this situation more than myself. Kinda why I was asking about it on this forum though. Hopefully I can meet with one soon.

Thanks for the snarkiness

Sorry for snarkiness. I used to talk when I worked as a CPA with people that had similar ideas. It's still frustrates me. You simply cannot predict the future of your life or the world.

Do get some advice. Hopefully you'll never be in the position of needing to sell your home to pay medical bills. Ive known several people who have bankrupted because of that. Better than selling your home. Home and IRA might be safe in bankruptcy.
Again, sorry.

 

[volinsd]

Yes you can take it and only pay your tax rate on the withdrawal. Are you currently jobless? If your income has been severely impacted I would consider selling your LTCG equities (if you have them) to take advantage of the 0% tax rate up to the threshold (assuming you have room to do that). That would give you cash without creating a tax burden. One thing to consider on the withdrawal is that your employer does not have to adopt the CARES changes. I would look into that first and foremost.

Thanks Outlaw,
Im not currently jobless but I was furloughed at one point so it still applies to me.
Not sure how the LTCG works but here is a snippet of what I have. I haven't put money into this in years and no longer work with NVO so I cant buy no more of that. I know I should start putting money back in....I suck.
One thing is, since I no longer work for NVO, they shouldnt have anything to do with this at all.

 

[volinsd]

Sorry for snarkiness. I used to talk when I worked as a CPA with people that had similar ideas. It's still frustrates me. You simply cannot predict the future of your life or the world.

Do get some advice. Hopefully you'll never be in the position of needing to sell your home to pay medical bills. Ive known several people who have bankrupted because of that. Better than selling your home. Home and IRA might be safe in bankruptcy.
Again, sorry.

Thanks @Go aeiou
No hard feelings at all!

 

[JFreak]

Thanks Outlaw,
Im not currently jobless but I was furloughed at one point so it still applies to me.
Not sure how the LTCG works but here is a snippet of what I have. I haven't put money into this in years and no longer work with NVO so I cant buy no more of that. I know I should start putting money back in....I suck.
One thing is, since I no longer work for NVO, they shouldnt have anything to do with this at all.

Coming in a bit late to this convo, but you have way too much of your net worth in NVO. I'm looking at your 401k right? If so, immediately sell the NVO and get into a market wide ETF such as SPY. Keep the 100k in the account.

 

[volinsd]

Coming in a bit late to this convo, but you have way too much of your net worth in NVO. I'm looking at your 401k right? If so, immediately sell the NVO and get into a market wide ETF such as SPY. Keep the 100k in the account.

Yeah, I know I need to get it more diverse. Like I said, I haven't done anything with it in years....maybe like 5 years or so.
All of us that worked there made a killing off of that stock so we all just left it like that. Company matched 9% and we were 100% vested in 3 yrs. I just never changed or added to it since 2015.

Do you have any recommendations of who I could talk to about this in the Tri-city area?

Schwab doesn't have anyone local at all to me. I would rather have a face to face with somebody so I can ask all my dumb questions about how to move ahead.

 

[BigOrangeMojo]

I qualify due to furlow.
My thoughts are this, taxes will be much higher when I turn 72 than they are right now at 42 so I would actually lose more money by taking the tax hit on the 100k later.
The extra 100k would enable me to buy much more property which will only increase in value from here on out.

From what I have been reading, you can just do a withdrawl of the 100k instead of a loan. Looking at the IRS site you linked it would seem that I can spread the taxes out over 3 years so I should stay in my same tax bracket that way.

Also, if I do this I plan on contributing more to my 401K than I do now or set up a different retirement plan altogether so i can recoup the money. Not sure how much I can put in until I find out the morgage payment but I will cut some spending somewhere to fill the void.

Ive always heard that you should never take a 401k loan or a withdrawl, but (with no penalty) it seems like it would be better to get the taxes done now instead of 30 yrs from now for people eligable?
What kinds of disaster am I missing BigOrangeMojo?

1. If you took $$$$ out of your 401k plan and put towards land/house, what happens when/if you get furloughed/lose job again and have to file BK? You'd lose your retirement and your house. In most states, 401k plan survives bankruptcy (not a BK attorney so don't quote me on that).

2. What makes you think you will have higher bracket at retirement? Do you have a significant net worth now? Significant income generating assets? If not, then you will likely pay less at 72 than 42.

3. Over 30 years, the stock market will likely have higher rate of return than land. You are giving up the compounding there.

4. Generally speaking, I don't like the words "Taking 100K out of retirement and mortgage payment" in the same sentence.


Personally, I'd rather cut back my 401k contributions (to extent of Company match) and squeeze every dollar out of my budget rather than take the $$$ of my 401K. You are playing with fire a little bit here; however, unlike a 401k loan, you aren't playing with a blowtorch and tractor trailer full of gas though.

 

[volinsd]

1. If you took $$$$ out of your 401k plan and put towards land/house, what happens when/if you get furloughed/lose job again and have to file BK? You'd lose your retirement and your house. In most states, 401k plan survives bankruptcy (not a BK attorney so don't quote me on that).

2. What makes you think you will have higher bracket at retirement? Do you have a significant net worth now? Significant income generating assets? If not, then you will likely pay less at 72 than 42.

3. Over 30 years, the stock market will likely have higher rate of return than land. You are giving up the compounding there.

4. Generally speaking, I don't like the words "Taking 100K out of retirement and mortgage payment" in the same sentence.


Personally, I'd rather cut back my 401k contributions (to extent of Company match) and squeeze every dollar out of my budget rather than take the $$$ of my 401K. You are playing with fire a little bit here; however, unlike a 401k loan, you aren't playing with a blowtorch and tractor trailer full of gas though.

Thank you for the explanation @BigOrangeMojo

 

[Thunder Good-Oil]

Thank you for the explanation @BigOrangeMojo

As far as paying taxes now or at a lower rate in 30 years, let’s say you pay $20k in taxes now. If you can get close to 10% annual return on that money it could have instead doubled 4x in 30 years. $320,000.

 

[Firebirdparts]

Do get some advice.
Again, sorry.

I disagree. No one should ask for advice about spending money on a lifestyle, ever. That’s ridiculous. Those of you arguing about taxes didn’t even understand the question. The question was should I cash out 401k money and spend it on my lifestyle.