Birchtree's Account Talk

[luv2read]

Re: Birchtree's account talk

Forgive me - but it looks like Birch left - so maybe I can help

The ROTH are TAX-FREE withdrawals and the taxes we spend in acquiring these investments are trival in comparison to what we would pay once we decide to cash in. We defer a more substantial loss by paying the taxes up front.

The focus here is minimizing TAXES (LOSS) over the long run. It took many years of sound investments to get here - so now it's doing everything possible to keep others from snatching it away.

Hey Steady,

Thanks for jumping in here and helping to clear the fuzz from my brain. I have a Roth. I know that the withdrawals are tax free because the taxes are paid up front rather than on withdrawals. I've talked to my "people" about moving my TSP to a Roth and was advised against it. I've see several others on here contemplating the same thing and the consensus seems to be (I could be wrong) that moving a 6-digit TSP into a ROTH is not a good idea. I guess that if the incremental transfers are relatively small the tax bite wouldn't be so bad. I'd be interested to know Birch's schedule, if willing to share.

I also read that it's better to just take withdrawals straight out of TSP rather than buying an annuity with it, so I'm a bit confused as to WHY an annuity? So much information to wade through! HELP! I'm drowning! LOL.

 

[Steadygain]

Re: Birchtree's account talk

moving a 6-digit TSP into a ROTH is not a good idea. I guess that if the incremental transfers are relatively small the tax bite wouldn't be so bad. I'd be interested to know Birch's schedule, if willing to share.

If you wouldn't mind a PM to me on this as well. Of course I figured you meant relatively small incremental transfers - BUT HOW SMALL and HOW OFTEN??

Thanks Birch - you are the guru of gurus.

 

[TRAFFIC_DOG]

Re: Birchtree's account talk

All aboard....the train is leaving. Snort.

I think we've heard this before..... a couple hundred times.

If it's all the same to you, I like to get on the train only when I think it's going the right direction. I don't have time for the scenic tours, derailments and the extended trips in the wrong direction.

You like to bounce around to admonish those who try to market time.
Well, here's a little back at-cha.

DCA-ing with your contribution has netted you some pennies with your pain while my account has outperformed you by roughly $150k in last 2 years..... starting with about $400k.

I've nothing against buy and holders.......
Minus some of the attitude, that is.

PS- Forgive me, I'm feeling a little frisky today. Sometimes I think the guys puting in the hard work, laying it on the line, and taking the risk of being out of the market need to tie the shoestrings together of the sleeping giant. Cheers

 

[Birchtree]

Re: Birchtree's account talk

TRAFFIC DOG,

Thankyou for the kind words, any acknowledgement is certainly appreciated. But you don't know if you made more money in you TSP in the last two years than me or not. For all you know I could be sitting with a balance of $599,996.37. I do remember round tripping with the I fund on two different occasions which were profitable and now I'm set for the third trip. As a starter you are always welcome to stop in and unload because it don't mean a thing.

Dennis - permabull #1

 

[Steadygain]

Re: Birchtree's account talk

Thanks Birch :embarrest:

I wondered how you'd respond

Anyway - I'm 100% C Fund :laugh:

Yeal, I know ya hear a lot of negative crap about how the Markets are going to tumble. But the way I see it the good ole "S&P 500" is about "American" as you can get and I'm willing to hang around for a little while and follow the strength.

 

[Birchtree]

Re: Birchtree's account talk

luv2read and Steadygain,

One of the more important advantages of a Roth IRA is that you never have to take money out of it unlike a regular IRA or even TSP which requires a minimum yearly distribution. And if you think in terms of available heirs the Roth is really the simple way to go and if the heir is careful a Roth can actually live in perpetuity being passed on to the next heir. My objective is to control my ordinary income to appreciably reduce my tax situation. I would never buy an annuity with my TSP funds and unless Uncle offers a cash out defined contribution plan I have to accept the retirement plan that is offered. As far as the TSP roll on a scheduled basis I'm thinking in terms of $20,000/year for the next ten years plus or minus $5,000. Then I'll consider the next ten years - keeping a good balance in TSP that will continue to grow. The only problem with rolling cash into a Roth is that you have to know how to make it work - what to invest the money into. I'm thinking about a solid portfolio of utility stocks purchased on a regular basis just like dollar cost averaging. I did a similar approach back in the early and late 1970s and moved the money at the 1982 bottom just in time to catch that eight month rally. I hope that answers a few questions. The bottom line is to try and stay away from 1099s so ones' ordinary income is reduced. Having the ability to live off savings for a period of time will help reduce taxes on any money that is transfered to a tax deferred program.

 

[Steadygain]

Re: Birchtree's account talk

Thank Birch - much appreciated.

Will copy/paste (add to yesterday's)

 

[pyriel]

Re: Birchtree's account talk

Totally pulled out of ROTH IRA about a year ago. Bad decision? Well it really all depends on one's investment strategy. As of now, maxing out TSP and receiving the tax savings at the end of the year makes more sense to me. RE investment seems to net me more gains than any paper investments I could muster. Still set in using RE as primary retirement package couple with military retirement and hopefully SS as well. TSP will primarily be the backup and will be left behind for the kids.
Pyriel

 

[Birchtree]

Re: Birchtree's account talk

pyriel,

From my perspective the biggest draw back with a Roth IRA is that it takes darn close to forever to build a substantial base. But there is so much flexibility in investment choices. If you have been deployed to the great country of Iraq you currently do not have any ordinary income to declare. You should be able to use that strategy in your favor somehow - you can really load up on your TSP.

What would happen to the price of oil if Iraq decided to really pump the pumps and flood the market with oil? Or if McCain even hinted about releasing a few million barrels from the national oil reserves - something as a surprise is going to happen. I think there is incredible strength yet to come for our stock market. Stay safe and keep your family well.

 

[scrambow]

Re: Birchtree's account talk

In your writings on post # 3005 you said you would never buy an annuity from the TSP. Would you explain why this is?

 

[CountryBoy]

Re: Birchtree's account talk

Great thread here guys, especially being 7 years away from retirement. This is real good stuff on keeping your captial working and how to move your funds around. Thanks for sharing. I'm doing the old copy and paste myself.

CountryBoy

 

[sugarandspice]

Re: Birchtree's account talk

......you are always welcome to stop in and unload because it don't mean a thing.

Dennis - permabull #1

This has always been the greatest thing about yours and my talk threads. Cheers!

 

[Birchtree]

Re: Birchtree's account talk

My primary objective is to try and control my tax bracket because most of my money that is invested will be impacted by that tax bracket. With decades of investing and much experience of loosing money I prefer to do it myself. An annuity provides a warm fuzzy feeling but it provides money that would be out of my control like any defined benefits retiremennt plan and helps to raise my tax bracket. I want my qualified dividends and capital gains to be taxed at 5% and not 15% - so I have to plan to limit income that adds to my ordinary income. That's why my wife will take her retirement funds only on demand. Most people are under the impression that they want to retire close to their current salary - and along with that comes the eternity of your same tax bracket. I'm just planning on doing things a little differently and trying to shield my asset base and keep my investments growing without undue sacrifice. And I'm not using any lawyers or accountants to muddy up the waters - all my education has come from TWSJ over many years. I'm more than happy to answer any questions.

 

[Birchtree]

Re: Birchtree's account talk

Gee, maybe she does like me after all....well perhaps just a little intended warming. Perhaps after second thought like does seem stronger than intended - perhaps she is simply more tolerant after two years. Anyway I welcome the hello.

 

[luv2read]

Re: Birchtree's account talk

Gee thanks for sharing Birch! I'm still a little confused about the annuity though. In the first post where you shared your plan you said

My wife will take her retirement money only on demand, I'll get my annuity and set up a transfer option to move money from TSP into a Roth on a scheduled basis.

I questioned why an annuity because my research has shown that they are not such a great idea, esp a TSP annuity.

I also read that it's better to just take withdrawals straight out of TSP rather than buying an annuity with it, so I'm a bit confused as to WHY an annuity? So much information to wade through! HELP! I'm drowning! LOL.

The last statement below I totally understand and agree with, but I'm still trying to figure out WHAT annuity you mentioned to begin with fits into your logical, well-thought-out strategy? TIA.

An annuity provides a warm fuzzy feeling but it provides money that would be out of my control like any defined benefits retiremennt plan and helps to raise my tax bracket.

 

[XL-entLady]

Re: Birchtree's account talk

Luv2read, I realize I'm taking a big risk by putting words in the mouth of the Master, but maybe when Birchtree said "annuity" he was referring to that little monthly CSRS/FERS retirement check. I know a lot of folks who refer to that as their "annuity check."

The reason why I'm making that guess is that it didn't take me much numbers crunching to realize that I would make a lot less money by buying an annuity with my TSP $ than I could by leaving my TSP account active and taking out monthly withdrawals - - even if I was so totally conservative (read chicken) as to leave it in G all the time.

Just my humble, and very deferential, opinion.

 

[Birchtree]

Re: Birchtree's account talk

luv2read,

Your government defined benefits retirement plan is an annuity and separate from TSP which is a deferred compensation plan. When you retire you will receive a monthly payment for life provided by an insurance company contracted to the government. You will have no control of this money and it will be delivered as long as you live. Still, I'd prefer to take a cash balance plan if it is ever offered - I'll be retired before that happens. My wife has a converted defined contribution plan and it is up to her to invest the funds and control her retirement and the State of Florida has no further obligations to her - they do put in 9% of her salary on a monthly basis as long as she continues to work. She has already gained over $250,000 since taking over her plan and it will continue to grow even after she retires. Her payments will be on demand. If you were a high risk employee of the State they would put in 20% of your salary on a monthly basis. There will be corrections officers in this State that have the potential to retire at a million dollars - and I know several of them.

 

[Warrenlm]

Re: Birchtree's account talk

Now the hard part is trying to keep our ordinary income under $61,500 per year

Is this possible with a CSRS annuity that drives one into the 25-28% (+state) bracket? Is your CSRS annuity low enough or is there something to learn here?

 

[Birchtree]

Re: Birchtree's account talk

"Near-term Top in the Euro/Dollar, Bottom in the SP 500?

http://www.safehaven.com/article-10199.htm

 

[Birchtree]

Re: Birchtree's account talk

"Fundamentals Remain Negative for Small Cap Stocks. Tightening lending standards have historically weighed on small cap relative performance vs. large caps, given the riskier credit profiles of small firms and the ability of large firms to secure financing from global sources. Bottom line: Stay underweighted small versus large caps.

http://www.bankcreditanalyst.com

One of my major themes is that emerging market leadership is coming from mega-cap multi-nationals in what could develope into a 1970s "Nifty Fifty" style market. That was a long time ago but I still remember those days when I was getting my toes wet in the markets. And of course that style eventually ended badly.