ssdave's Account Talk

[ssdave]

Moved to 100% G today. Up about 2.5% for the month, a lot of small gains make for a great year. I think the pace is unsustainable, there's going to be some volatility and an opportunity to rebuy in the next 4 weeks.

My goal for the next 6 years until I retire is to make 8% per year. Last year, I missed out on a great year by being out of the market too much; but my PIP was still 10.57%. The 2.5% so far this month is over 1/4 of my annual goal; of course I'd like to make more but sometimes holding on to a guaranteed gain is the better course over hoping for some more. I have a lot of confidence there will be some volatility in the coming month that will give an opportunity to rebuy and start the gain cycle again.

 

[ssdave]

Well, I topped $400,000 by $2 today in my TSP account. Going to G yesterday gave me the little boost to make it today!

My goal is to double that in the next 6 years, will give me an adequate retirement.

 

[kb9nvh]

I remained in the 2020 fund and still made money today...that fund has amazed me a few times in its ability to balance risk. Sitting in the G fund and then the lifetime fund most of the year (2020 starting november) I made about 5% last year. I would like to get at least 8% to have a comfortable retirement.

 

[ssdave]

Realized I haven't posted in a long time.

Had a strategy question I thought I would run by the group.

I have my TSP, that is all conventional IRA, i.e. pre tax money. So, when I withdraw, have to pay taxes on it I am retired.

I have brokerage accounts also. One in particular I stuck a substantial amount in near the start of the year. As of today, I have about a $40K loss on it. It is in mutual funds through Vanguard.

The strategy question: I'm considering withdrawing $40K out of my TSP. Simultaneously, I will cash out the mutual funds to generate a $40K loss, so the net tax implications would be a loss offsetting the withdrawl, and a net cash flow of $40K tax free from my TSP. I would immediately reinvest both the Mutual fund proceeds and the 40K from the TSP, into non mutual fund individual stocks to avoid the IRS 30 day rule on tax losses/reinvestment. The result of this overall transaction would be that I would be able to withdraw $40K from my TSP tax free and shift it to an investment that has pretty similar performance to the TSP.

What are the potential pitfalls to this strategy that I've overlooked? The risk from being invested in stocks isn't a concern, I've already made the decision to do that, and this isn't money I need to live on or pay my bills, or even use to fund my play. I'm just trying to convert taxable withdrawls to post tax money.

 

[tsptalk]

Shifty! I like it.

Basically you're moving money from the TSP into stocks while trying to avoid paying the taxes now?

 

[ssdave]

Essentially, I would be using the loss on the mutual funds to offset the TSP withdrawl. An investment loss and a taxable income offsetting each other. The reinvestment would be at essentially the same prices that I withdrew, so now I would have the value in the stocks as the new basis for future profits.

Net result would be I would own same value of stocks, but wouldn't have to pay taxes on the $40K of TSP withdrawls, now or in the future.