Author Topic: My Situation, and the Way Forward?  (Read 1248 times)

GrayGhost

  • Bristles
  • ***
  • Posts: 389
  • Location: USA
My Situation, and the Way Forward?
« on: October 10, 2019, 08:24:01 PM »
Greetings Mustachians,

I am in the process of transitioning my career and I figured it'd be a good time to do a gut check, with you, to see if I'm on a good track.

Here's my situation...

Retirement accounts: about $200k in Roth IRA and Roth TSP combined. high bond mix as I suspect a market correct is very soon to come
Non retirement accounts: about $50k. some individual stocks from years ago and some index funds
Cash: nearing $40k

I'm at a high mix of cash as I've been stocking away rental income. I'm also planning on selling the property to the tenants which will have me even more cash heavy.

As well, the job I'm taking is at a smaller company and part of my compensation package is equity.

Here are my questions...

  • Is there any way to put business equity into a 401k or IRA? The only possibility seems to be through a self-directed IRA, but since the investment is capped at $5k a year and there are complexities, I'm not sure it'd be worth the trouble.
  • My retirement accounts are with Betterment and the TSP (federal government). Should I transition to Vanguard, at least for the Betterment holdings, in order to buy small cap index funds? Since I'm planning on these funds to be my old man money, I'm willing to take quite a bit of risk since age 65 is quite a ways off for me.
  • Once I sell my house, and as I continue to stock away cash, what should I buy next? My new employer does NOT offer 401k matching so I COULD put money into a 401k, but I'm tempted to buy REITs, RE itself if the prices come down, or indicies with a good mix of dividends and small cap to ensure growth. I guess I have to decide how much risk I'm willing to take and how soon I want tangible cash from my investments.

I believe I have achieved CoastFIRE and am on the verge of BaristaFIRE. LeanFIRE is closer to 900k and I'd consider myself fully FIREd at 1.5m.

So, what do you think and what should I do next?

Thanks all!

GizmoTX

  • Handlebar Stache
  • *****
  • Posts: 1450
Re: My Situation, and the Way Forward?
« Reply #1 on: October 11, 2019, 12:16:53 PM »
Why do you want equity in an IRA/401K? It's not being taxed, is it?

GrayGhost

  • Bristles
  • ***
  • Posts: 389
  • Location: USA
Re: My Situation, and the Way Forward?
« Reply #2 on: October 11, 2019, 02:34:03 PM »
In my understanding, equity grants are indeed taxed.

Lucky Penny Acres

  • 5 O'Clock Shadow
  • *
  • Posts: 64
    • Lucky Penny Acres
Re: My Situation, and the Way Forward?
« Reply #3 on: October 11, 2019, 03:07:12 PM »
Yes, you can put business equity into an IRA/401k. Usually a self-directed IRA would work but it might be a big hassle to set up depending on how much you expect that equity to generate and you might want an accountant / attorney to verify you aren't breaking any rules as there can be penalties for getting it wrong.

If you can put in the equity of a new business at the very beginning, it may only be valued at ~$5,500 or less when you first contribute the equity to the IRA. Then as the business grows, the IRA value grows a lot. Even better if you use a Roth IRA as then all the growth is tax free.

GrayGhost

  • Bristles
  • ***
  • Posts: 389
  • Location: USA
Re: My Situation, and the Way Forward?
« Reply #4 on: October 12, 2019, 06:29:58 AM »
I have heard of self-directed IRAs, but since the contribution limit is so low, I'm not sure it'd be terribly useful. My vesting schedule is on the order of six figures over a few years which vastly outstrips the limit. Would it really be worth it to set up a self-directed IRA to contribute such a relatively small portion of my equity package to it?

BECABECA

  • Bristles
  • ***
  • Posts: 481
  • Age: 39
  • Location: Huntington Beach, CA
  • Retired since July 2017, not bored yet!
Re: My Situation, and the Way Forward?
« Reply #5 on: October 12, 2019, 12:47:25 PM »
Not sure on the other stuff but wanted to chime in on your TSP: I think I remember that TSP is more advantageous than a Vanguard IRA (has even lower fees on the funds than Vanguard offers) so you probably want to keep the TSP (and if itís possible to roll your Betterment funds into the TSP, do that). The C and S funds in a 75/25 mix approximate VTSAX.

I got the info on TSP from this JL Collins post:
https://jlcollinsnh.com/2015/06/02/stocks-part-viii-the-401k-403b-tsp-ira-roth-buckets/

GrayGhost

  • Bristles
  • ***
  • Posts: 389
  • Location: USA
Re: My Situation, and the Way Forward?
« Reply #6 on: October 12, 2019, 06:40:59 PM »
Interesting! I didn't know you can roll other funds (or even direct transfer) into the TSP. Very good to know. Only thing is that my IRAs are Roth, and it doesn't look like you can do a Roth IRA-> Roth TSP rollover: https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/RolloversTransfers/methods.html

So Maybe it's just best to stick to Betterment and Vanguard for the IRAs.
« Last Edit: October 12, 2019, 07:09:58 PM by GrayGhost »