Hi all. Recently, my parents informed me that it is their wish to gift me $36k annually indefinitely. Seeking advice on how to handle this.
Emergency funds: more than a year of expenses: ~60k combination of I-bonds, T-bills, and cash accumulating/earmarked for a potential down payment
Debt: None
Tax Filing Status: Single
Tax Rate: 22% Federal, 8% State
State of Residence: MD
Age: 32
Desired Asset allocation: 95% stocks / 5% bonds
Portfolio ~300k
Taxable
15% Vanguard Total Stock Index (VTSAX)
12% Vanguard S&P500 Index (VFIAX)
3% Vanguard Small Cap Value Index (VSIAX)
401k
29% US Total Market Index (weird plan-specific ticker) (0.03%)
Roth IRA
22% PIMCO StocksPLUS Long Duration (PSLDX)
HSA
10% Fidelity Total Market Index (FSKAX)
Rollover IRA
4% Vanguard Extended Duration Treasuries (EDV)
4% Fidelity Total Market Index (FSKAX)
TSP
1% C Fund
New Annual Contributions
$23k 401k (Employer matches 5%)
$7k Roth IRA
$3.8k HSA
Questions:
1. My company's 401k lets me do the mega backdoor Roth, so I think my best course of action is to adjust my deferrals to redirect the gift money into after-tax 401k contributions. Is there perhaps a 'better' way I should be managing this money?
2. My gross income is about $100k, which I guess puts my AGI around $60k with the standard deduction. It's been suggested that it may be a good idea to do Roth conversion on my rollover IRA. Is this good advice? I guess the idea is to pay lower taxes now, and reduce potential RMD tax burden; however this is a future situation I don't understand well.
3. I'm also interested in hearing some perspective. I'm a STEM professional, but outside of work I'm passionate about artistic pursuits, and being outside or having my hands in soil is literally medicine for me. While my salary might be jumping in the next couple years, I sometimes wonder what the value is of not having to look at computer screens every day. I think it's wise to think of this windfall as money that doesn't exist and shovel it away, and I think it's prudent to at least do that for a year or so, but really it changes things. I guess it should be changing my existing portfolio risk profile somehow. It could mean buying a house and not having to worry as much about losing it, or it could mean switching to a lower paying job at some point and having more time to pursue other things like making art, or studying something different. I guess I could do something in the middle, where I just take a break for a year at some point. I did not grow up in an entrepreneurial environment and I don't see myself making art a full-time thing.
Thoughts welcome. Thanks for reading.
Emergency funds: more than a year of expenses: ~60k combination of I-bonds, T-bills, and cash accumulating/earmarked for a potential down payment
Debt: None
Tax Filing Status: Single
Tax Rate: 22% Federal, 8% State
State of Residence: MD
Age: 32
Desired Asset allocation: 95% stocks / 5% bonds
Portfolio ~300k
Taxable
15% Vanguard Total Stock Index (VTSAX)
12% Vanguard S&P500 Index (VFIAX)
3% Vanguard Small Cap Value Index (VSIAX)
401k
29% US Total Market Index (weird plan-specific ticker) (0.03%)
Roth IRA
22% PIMCO StocksPLUS Long Duration (PSLDX)
HSA
10% Fidelity Total Market Index (FSKAX)
Rollover IRA
4% Vanguard Extended Duration Treasuries (EDV)
4% Fidelity Total Market Index (FSKAX)
TSP
1% C Fund
New Annual Contributions
$23k 401k (Employer matches 5%)
$7k Roth IRA
$3.8k HSA
Questions:
1. My company's 401k lets me do the mega backdoor Roth, so I think my best course of action is to adjust my deferrals to redirect the gift money into after-tax 401k contributions. Is there perhaps a 'better' way I should be managing this money?
2. My gross income is about $100k, which I guess puts my AGI around $60k with the standard deduction. It's been suggested that it may be a good idea to do Roth conversion on my rollover IRA. Is this good advice? I guess the idea is to pay lower taxes now, and reduce potential RMD tax burden; however this is a future situation I don't understand well.
3. I'm also interested in hearing some perspective. I'm a STEM professional, but outside of work I'm passionate about artistic pursuits, and being outside or having my hands in soil is literally medicine for me. While my salary might be jumping in the next couple years, I sometimes wonder what the value is of not having to look at computer screens every day. I think it's wise to think of this windfall as money that doesn't exist and shovel it away, and I think it's prudent to at least do that for a year or so, but really it changes things. I guess it should be changing my existing portfolio risk profile somehow. It could mean buying a house and not having to worry as much about losing it, or it could mean switching to a lower paying job at some point and having more time to pursue other things like making art, or studying something different. I guess I could do something in the middle, where I just take a break for a year at some point. I did not grow up in an entrepreneurial environment and I don't see myself making art a full-time thing.
Thoughts welcome. Thanks for reading.
Statistics: Posted by meowmix — Fri Oct 18, 2024 7:09 pm — Replies 2 — Views 374