Author Topic: To do list on my last year of Corporate job  (Read 2276 times)

bighatnocattle

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To do list on my last year of Corporate job
« on: May 29, 2018, 09:46:12 PM »
Hi GCC and all,

Sorry if there's already a post for this but I don't recall one specifically addressing this topic.

My target FIRE date is May 2019,  and I was wondering what are some of the things I should do before then to minimize tax.

I have company stocks that will be 15% of my net worth by then
Also a 401k that is about 25% of my portfolio, it is in s&p500  in vanguard that I need to rollover to traditional IRA
about 10% in roth ira - vtsax
And the rest are in VTSAX in a vanguard account

Would the following steps be correct to get to a 90% VTSAX and 10% VBTLX portfolio ?
1. Rollover 401k to traditional ira, and this will be where I convert a portion of this to have 10% VBTLX?
2. Sell all my company stock I've accrued the past 8 years and buy VTSAX from my brokerage accout - what is the tax implication of this?

I'm thinking about keeping 1% cash around and use dividends to pay for my first year of frugal (but happier) living.  Meanwhile relax and finally bring my wife to her dream vacation spot in Greece.

Thanks for your advice in advance!




gocurrycracker

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Re: To do list on my last year of Corporate job
« Reply #1 on: May 31, 2018, 12:04:43 AM »
I don't have a list per se, but all of the normal tax minimization concepts apply - contribute to tax deductible 401k, IRA, HSA, etc... to minimize taxes this year.

You'll want to know where funding for your first several years of ER is coming from... taxable account, Roth conversion ladder, etc... (sounds like from dividends from your brokerage account)

Make a plan for Roth conversion ladder and cap gain harvesting for future years.

Rolling over 401k is optional. If e/r on S&P500 index fund is low you can just keep it there if the company allows (my 401k is still with my previous employer, mostly in S&P500 index fund)

If you sell stock in your brokerage account, any gains will be taxable. If the stock is from an ESPP, gains may be taxed as earned income. Be sure to know how that works. In either case, you can do the tax math to decide if it is better to sell now or to sell piecemeal over the coming tax years.

Also make your health insurance plan, and know how stock sales, Roth conversion, and cap gain harvesting will impact ACA subsidies (if applicable)

bighatnocattle

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Re: To do list on my last year of Corporate job
« Reply #2 on: June 01, 2018, 10:26:31 PM »
Much thanks GCC for your replies.  I didn't get an email that my post had a reply so I just found out by coming to this post.

I didn't know that some companies allow ex employees to keep their 401k.  That's an awesome option since it is at a lower expense ratio than vtsax.

I plan to travel to less expensive countries in the first year or two so I won't be using ACA.  I will review your ACA posts and stay alert this year to see if anything changes to this plan. 

Now re-reading your GCC vs RMD post (I should've done so before I asked the question, sorry):
https://www.gocurrycracker.com/gcc-vs-rmd/

I don't have traditional IRA, just roth ira and 401k.  It sounds like that I should be converting from my 401k (with less expense ration mentioned above) to a roth ira for this conversion ladder.

I read an article about the long vs short term capital gains on my RSUs.  I'll dig more into it but it sounds like if I sold them a year after they are granted, they are considered long term and will be taxed at 15-20% instead of regular earned income. 

So how I'm understanding it is: (and I will check with an accountant on this as I've procrastinated to do so for the past few years)
1. Keep accumulating until I'm FIRE, meanwhile look into medical / ACA options
2. Once retired, rollover my 401k to a Traditional IRA if necessary
3. Sell RSUs that are considered long-term first, and put most of them in brokerage account, and keep 1-2 years' worth of cash for safety (this way I can throw all my earnings into brokerage right now).  The earnings will be considered as long term capital increases at a lower tax rate
4. Start roth conversion in 2020 (as I believe I wont be able to do this since I'm still working almost half a year in 2019) and plan for capital gain harvesting.
5. Finally relax from my high stress life and spend time with my wife and family

Congrats to your highest viewing month ever!  I hope you have a great trip in Europe this year and I look forward to future posts and hopefully can finally meet you in person some day!




gocurrycracker

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Re: To do list on my last year of Corporate job
« Reply #3 on: June 05, 2018, 07:22:52 PM »
You got it.

The tax rate on those long term RSUs could also be 0%