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Thread: ETF or Fund Equivalent to S Fund?

  1. #13

    Join Date
    Apr 2005
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    Gainesville, Florida, USA
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    Default Re: ETF or Fund Equivalent to S Fund?

    I utilize Merrill Edge online - you can buy anything that has a symbol. I currently pay $4.95/trade but that will eventually go to 30 free trades a month when I cough up $25K in my Bank of America checking account - I'm half way there. You can also take short positions. I reinvest all my dividend income free. And I have no ceiling on my margin account - so I can drown myself in their debt and buy, buy stocks as long as I don't have a margin call.

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  3. #14

    Default Re: ETF or Fund Equivalent to S Fund?

    Quote Originally Posted by Birchtree View Post
    I utilize Merrill Edge online - you can buy anything that has a symbol. I currently pay $4.95/trade but that will eventually go to 30 free trades a month when I cough up $25K in my Bank of America checking account - I'm half way there. You can also take short positions. I reinvest all my dividend income free. And I have no ceiling on my margin account - so I can drown myself in their debt and buy, buy stocks as long as I don't have a margin call.
    Greetings BT and RMI: BT, do you utilize automatic re-investment of your dividends or do you collect them and re-invest in whatever? I've finally decided to do a total withdrawal from TSP via "gentle" monthly rollovers to a traditional and then "gentle" conversions to a Roth IRA. This must be completed within 120 months (IRS rule to be eligible). My dilemma was deciding with which firm to open the accounts as I am interested in commission-free ETF's, reasonable trading fees and low expense ratios. I currently have a Roth with TD Ameritrade but I am hampered by the $19.99 fee they charge for your buying the commission-free ETF's and selling within 30 days. I finally decided to open the accounts with Vanguard but was a bit disappointed to learn that by doing monthly rollovers I would have to complete paperwork for each conversion (can't see doing that monthly but probably periodically). I imagine that's the process no matter with whom you have your accounts. My reason for doing it this way is to manage taxes and to get as much as possible into a Roth for generational purposes and by doing monthly rollovers I can still participate in the familiar TSP for several more years. The only drawback with Vanguard is that there will be no face-to-face, considering that all the other firms have offices within 15 miles of my home. I finally completed the Vanguard paperwork today but have not mailed it yet. Any advice? What do you think of this plan? Thanks.

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  5. #15

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    Default Re: ETF or Fund Equivalent to S Fund?

    Mista Magee,

    I reinvest all my dividends automatically - that's one less decision I have to make. Your plan is excellent - I'm going to do something very similar.

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  7. #16

    Join Date
    Apr 2010
    Location
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    1,268

    Default Re: Gentle rollovers from TSP to IRA and Roth

    Magee or Birchtree, I'm curious, what is your purpose in rolling out of TSP and into IRA and then Roth IRA via the method you explained?? Is it to have access to ETF trades etc., ?? Thanks..

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  9. #17

    Default Re: ETF or Fund Equivalent to S Fund?

    Mista McGee,

    I'm thinking about doing something similar once my wife and I retire in a few years. I too use Vanguard Brokerage for buying stocks and ETFs for my Traditional and Roth IRA. Do you have a website that you can point me to that explains how to do this conversion with the least tax burden???

    TIA...

    Regards,
    Hotwings

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  11. #18

    Join Date
    Apr 2005
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    Default Re: ETF or Fund Equivalent to S Fund?

    Dutchy,

    The Roth IRA is a tax free vehicle. There is no required minimum distribution since you will live until you are 90. The idea is to reduce your adjusted gross income for tax purposes. It is an excellent mechanism to pass money to a younger generation where the distribution becomes based on a life cycle. The required minimum distribution is small and thus leaves most of the money working and growing via another generation. The darn thing can actually grow for generations. Most organizations will hold back 20% of any distribution from an IRA or fiduciary account for tax purposes and you even up when you file your 1040. I was under the impression that one could deposit directly into a Roth IRA because the tax was being held back.


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  13. #19

    Join Date
    Apr 2010
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    Default Re: ETF or Fund Equivalent to S Fund?

    Quote Originally Posted by Birchtree View Post
    Dutchy,

    The Roth IRA is a tax free vehicle. There is no required minimum distribution since you will live until you are 90. The idea is to reduce your adjusted gross income for tax purposes. It is an excellent mechanism to pass money to a younger generation where the distribution becomes based on a life cycle. The required minimum distribution is small and thus leaves most of the money working and growing via another generation. The darn thing can actually grow for generations. Most organizations will hold back 20% of any distribution from an IRA or fiduciary account for tax purposes and you even up when you file your 1040. I was under the impression that one could deposit directly into a Roth IRA because the tax was being held back.
    Thanks for the education, Birch!!

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  15. #20

    Default Re: ETF or Fund Equivalent to S Fund?

    Quote Originally Posted by Birchtree View Post
    Mista Magee,

    I reinvest all my dividends automatically - that's one less decision I have to make. Your plan is excellent - I'm going to do something very similar.
    Thanks for your comments. I've been retired for two years and have not touched the TSP. The most immediate hit that I see forthcoming with my plan is paying taxes on my SS but I'll follow through. It is also my understanding that you can roll directly into a Roth but I don't want the taxes withheld right away and feel I can better manage them by gradual conversions from the Traditional, probably will sell out of brokerage accounts to pay them.

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  17. #21

    Default Re: ETF or Fund Equivalent to S Fund?

    Quote Originally Posted by hotwings View Post
    Mista McGee,

    I'm thinking about doing something similar once my wife and I retire in a few years. I too use Vanguard Brokerage for buying stocks and ETFs for my Traditional and Roth IRA. Do you have a website that you can point me to that explains how to do this conversion with the least tax burden???

    TIA...

    Regards,
    Hotwings
    I had been trying to get comments from posters who had accounts with Vanguard to get their opinions. My decision was mostly based on the fact that Vanguard had lower expense ratios on their commission-free ETF's than the other firms and more than most. Was disappointed that TD Ameritrade charged $19.99, like RMI said that USAA did, for buying and selling the same ETF within 30 days. Since I already had a Roth with them, it would have been ideal. The other major firms have seminars at their offices on how to trade ETF, strategies, the use of their websites and a host of other topics. I don't have any websites for carrying out my plan but will be winging it on my own. Please post anything you learn along the way on how to do this efficiently and effectively. Thanks.

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  19. #22

    Default Re: ETF or Fund Equivalent to S Fund?

    Quote Originally Posted by Mista Magee View Post
    Was disappointed that TD Ameritrade charged $19.99, like RMI said that USAA did, for buying and selling the same ETF within 30 days.
    Clarification: I was referring to USAA's Mutual Funds
    USAA Funds consider "in and out" transactions into the same fund within 30 days as excessive short-term trading, and the first short-term trade could trigger a warning letter. The USAA Funds can restrict future purchases into a fund if another "in and out" transaction occurs within 90 days.
    Also:
    It is perfectly fine to exchange from one fund to another. Just remember that mutual funds are not designed for market timing. You cannot control the price you are buying and selling at, as the price is determined after the market is closed.
    So...
    Rules:
    - Trade what you see, not what you believe
    - Don't put stuff in your signature that a Mod doesn't like

    "Government exists to protect all people’s rights, not some people’s feelings." - A. Barton Hinkle

    Great Tools:
    http://www.CreditKarma.com
    http://www.Mint.com
    http://www.SaveUp.com/r/nmJ

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  21. #23

    Default Re: ETF or Fund Equivalent to S Fund?

    Mista McGee,

    I found a roth conversion calculator on the Vanguard Website.. Here is the link:

    http://www.archimedes.com/vanguard/r...Consumer.phtml

    The biggest advantage of a roth is that you can leave it for future generations tax free if you so desire.

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  23. #24

    Default Re: ETF or Fund Equivalent to S Fund?

    Quote Originally Posted by hotwings View Post
    Mista McGee,

    I found a roth conversion calculator on the Vanguard Website.. Here is the link:

    http://www.archimedes.com/vanguard/r...Consumer.phtml

    The biggest advantage of a roth is that you can leave it for future generations tax free if you so desire.
    Thanks for the link.

  24.  
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