I received an email from Vanguard notifying me of upcoming changes to its fee schedule. The one change that stands out for me is that Vanguard may charge $100 effective July 1 if I transfer an account to another broker unless I have $5 million with Vanguard. I’ve been investing with Vanguard for over 25 years. I have had the feeling from some changes by Vanguard in recent years that I’m not as valued as before. This latest announcement finally pushed me to the inevitable. I submitted a request to transfer my account to Fidelity before the new fee takes effect. If you’re thinking along the same ..read more

I wrote in a previous post Our Experience in Building a Home Over Buying an Existing Home that I built a new home. By coincidence, the final all-in cost of this new home came to about the same as the net proceeds from selling my previous home in California four years ago. That previous home is worth a lot more now. If I take an average of the estimated value from Zillow and Redfin, it’s worth 50% more than my new home. As a house though, the previous home has nothing to compare to the new home. It was a tract house built in the 1960s with 1/3 of the living space of my new home. Successive owne ..read more

The previous post Split-Year Backdoor Roth IRA in FreeTaxUSA, 1st Year dealt with contributing to a Traditional IRA for the previous year and recharacterizing a previous year’s Roth IRA contribution as a Traditional IRA contribution. This post handles the conversion part in FreeTaxUSA. We cover two example scenarios in this post. Here’s the first: You contributed $6,000 to a Traditional IRA for 2022 in 2023. The value increased to $6,200 when you converted it to Roth in 2023. You received a 1099-R form listing this $6,200 Roth conversion. You should’ve already reported the con ..read more

The best way to do a backdoor Roth is to do it “clean” by contributing *for* and converting in the same year — contribute for 2023 in 2023 and convert in 2023, contribute for 2024 in 2024 and convert in 2024, and contribute for 2025 in 2025 and convert in 2025. Don’t split them into two years such as contributing for 2022 in 2023 and converting in 2023 or contributing for 2023 in 2024 and converting in 2024. If you did a “clean” backdoor Roth and you’re using FreeTaxUSA, please follow How to Report Backdoor Roth In FreeTaxUSA (Updated). However, many people didn’t know they shou ..read more

You may have contributed to a Roth IRA and then realized later in the year that you would exceed the income limit. You recharacterized the Roth IRA contribution as a Traditional IRA contribution and converted it to Roth again before the end of the year. Your IRA custodian sent you two 1099-R forms, one for the recharacterization and one for the conversion. This post shows you how to put them into the H&R Block tax software. If you had done the recharacterizing and converting in the following year, you would have to split the tax reporting into two years by following Split-Year Backdoo ..read more

The previous post Split-Year Backdoor Roth in H&R Block, 1st Year dealt with contributing to a Traditional IRA for the previous year and recharacterizing a previous year’s Roth IRA contribution as a Traditional IRA contribution. This post handles the conversion part. We cover two example scenarios. Here’s the first: You contributed $6,000 to a Traditional IRA for 2022 in 2023. The value increased to $6,200 when you converted it to Roth in 2023. You received a 1099-R form listing this $6,200 Roth conversion. You should’ve already reported the contribution part on your 2022 ..read more

The best way to do a backdoor Roth is to do it “clean” by contributing for and converting in the same year — contribute for 2023 in 2023 and convert in 2023, contribute for 2024 in 2024 and convert in 2024, and contribute for 2025 in 2025 and convert in 2025. Don’t split them into two years such as contributing for 2022 in 2023 and converting in 2023 or contributing for 2023 in 2024 and converting in 2024. If you did a “clean” backdoor Roth and you’re using H&R Block tax software, please follow How to Report Backdoor Roth in H&R Block Tax Software. However, many people didn’t know they ..read more

Selling a short box spread is a way to get a loan at a good rate using your investments as collateral. I sold some short box spreads to get cash for building a home because I didn’t want to sell stocks when stocks were down. Now that stocks recovered, I sold stocks to close out the box spreads before the expiration date. When you close out a box spread early, you may end up with a gain or loss depending on the interest rate changes. The interest rate happened to have gone up since I originally sold the short box spreads. I ended up with a small gain. The broker will include the realized gain o ..read more

You may have contributed to a Roth IRA and then realized later in the year that you would exceed the income limit. You recharacterized the Roth IRA contribution as a Traditional IRA contribution and converted it to Roth again before the end of the year. Your IRA custodian sent you two 1099-R forms, one for the recharacterization and one for the conversion. This post shows you how to put them into TurboTax. If you had done the recharacterizing and converting in the following year, you would have to split the tax reporting into two years by following Backdoor Roth in TurboTax: Recharacterize &am ..read more

17th-century French mathematician and philosopher Blaise Pascal put forward this reasoning on whether one should believe in God (paraphrasing): You’re not sure whether God exists. If you believe in God and God doesn’t exist, you live with some unnecessary inconvenience. If you don’t believe in God and God does exist, you receive infinite suffering. The cost of being wrong is much higher in the latter case. Therefore you should believe in God whether God exists or not. This is called Pascal’s wager. It’s a strategy to minimize loss when you’re not sure. We face many laws and rules in handling o ..read more