Generation-X' Journal

Where are you and where are you going?
Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

Organizing some of my thoughts on financial changes due to COVID19


IRS - Tax Day now July 15: Treasury, IRS extend filing deadline and federal tax payments regardless of amount owed
https://www.irs.gov/newsroom/tax-day-no ... mount-owed

IRS - Filing and Payment Deadlines Questions and Answers
https://www.irs.gov/newsroom/filing-and ... nd-answers

CA FTB - FTB is postponing until July 15 the filing and payment deadlines for all individuals and business entities for: 2019 tax returns, 2019 tax return payments, 2020 1st and 2nd quarter estimate payments, 2020 LLC taxes and fees, 2020 Non-wage withholding payments
https://www.ftb.ca.gov/about-ftb/newsro ... demic.html

The COVID19 direct payment calculator (up to $1200)
https://www.cnbc.com/2020/03/27/the-sti ... d-get.html

Retirement Plan loan (up to $100k, payment delay up to 1 year, still subject to 10% income tax withholding, 10% early withdrawal penalty waived)
https://www.businessinsider.com/persona ... ans-2020-3

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

Implications of these financial changes for the housing plan (my plan to purchase a home as I retire)


The details are yet not straight forward, but there appears to be two paths for the 100k loan:

1. 3-year IRA rollover up to 100k
*10% income tax withholding
*no payments need to be made so long as it's paid back in 3 years
*payment does not have to be lump sum and can be in installments
*0% interest
*up to 100k
*distribution must be before 12/31/20 to be eligible
*self-certified reasons are valid

2. Retirement Plan (401k etc.) loan up to 100k
*10% income tax withholding
*payments waived for 1 year
*100% or up to 100k whichever is less
*5 years to pay back BUT payments must be made after 1 year delay -- since this is an increase of the borrowing limit under 401k loan
*4.25% interest, since the current Libor is 3.25% and usually it's Libor +1% = 4.25%, but the interest is paid back to myself
*self-certified reasons are valid

The optimal way to utilization would be:

1. 3-year IRA rollover up to 100k
2. additional 50k "normal" loan under retirement plan for additional liquidity, using the first time home buyer provision as a 15 year loan.

This would provide 150k in liquidity at the cost of a 50k loan.
I would be able to keep the IRA without a distribution, while being given 3 years to save for the loan while paying 0% interest. The monthly payment would be on the 50k "normal" for 15 year term at 4.25%, which is $376.14 per month.

$150k for $376.14 per month.. that is not bad.

The only other thing needed here is for the housing market to crash.
Last edited by Generation-X on Sun Mar 29, 2020 12:29 am, edited 2 times in total.

classical_Liberal
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Re: Generation-X' Journal

Post by classical_Liberal »

Do you need to prove some type of COVID related hardship to take advantage of the 100K post tax withdrawal and/or loan?

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

Per Bloomberg --

"The legislation requires that the money be a “coronavirus-related distribution,” but the rules are loose. People diagnosed with the virus are eligible, along with anyone who “experiences adverse financial consequences” as a result of the pandemic, including an inability to find work or child care. Retirement plan sponsors are told to rely on employees’ word that they’re eligible."
https://www.bloomberg.com/news/articles ... ment-money
https://www.mcafeetaft.com/new-coronavi ... and-loans/

Another plus for the ERE folks appears to be that this allows immediate access to funds to bypass the 5 year rule for when they're doing the Roth IRA laddering. (but it would have to be paid back in 3 years or it would be a distribution - it could get complicated for funds distributed that didn't meet the 5 year rule. Therefore, 3 years to pay back means 3 years worth of ladder which would meet the 5 year requirement I would think).

Clearly it is a work in progress, so the IRS guidance here would be the focal point going forward for the access of funds.

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

Is it time to retire? - It's getting close.


As the US stock market spirals downward, it is creating an opportunity for the savers.

The cash is king - for the savers, there will be a reprieve in the form of a temporary purchasing power increase.
It's still early, but as the market downturn continues, I will be looking out for bargains in:

Equities - yes, they have come down a bit, but it needs to go down more. Market never goes down in a straight line.
Housing - in six months to a year, I am expecting that we will begin to see the housing market being affected.
Rent - as the the difference between rent and ownership become marginal, I expect rents may drop at some point.
Things - I expect to see prices of cars and some commodities to start dropping as the effects of unemployment kicks in

The $1200 check and the unemployment insurance will help pay the bills for most people, but people will not be spending without jobs.
Many people in the US (estimated 60-70%) live paycheck to paycheck every month. This has consequences for this market.
It's a vicious cycle, and once the economy stops, it has repercussions. I expect the economic picture will be much different a year from now.

I do not know when the market will bottom, but it will be volatile and provide a great trading opportunity for traders short term.
Eventually, when the market does bottom, it will provide an opportunity of a lifetime for investors with a significantly reduced market risk.

This is my 4th such downturn in my lifetime - 1987 (was too young), 2000 (didn't know much), 2008 (knew too much and was scared) and 2020 ( ;) ) [I'm a slow learner]

Depends on the point of view, but I would like to believe that we are being blessed by Mr. Market.
Politics, is another matter. We can only hope that yet another charlatan will not lead our nation into a destructive path.

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

Should reverse here - will wait for a bounce and see how far it retraces back.

Still has some room left to go, let's see if it can climb back above the day high here.

Nice, will let this ride for a while and see how far high it can go. Will know soon at 21.9k.

market trying to decide... Pretty much break-even at this point... (Picasso - watching the paint dry...)

Think happy thoughts - https://www.youtube.com/watch?v=2J7JM0tGgRY

Ok needs to stay above 21.9k and conquer 22k next..

Either exit here pretty much break-even or take more risks at this point.. It should pull back..

Ok exiting.. will watch from sidelines.

22.4k is such a long ways to go from this vantage point.. Should reverse down from this point.. trying a little head fake

OK, will return later to see where we head from here, time for some nice breakfast.

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

A couple of Fed back of the napkin scratch estimates showing 30 million to 47 million unemployment lie ahead...
https://www.cnbc.com/2020/03/30/coronav ... -says.html


5:30 pm: Newsom says California has ordered over 100 million N95 masks
https://www.cnbc.com/2020/03/30/coronav ... roach.html

“Let me tell you specifically, as of this morning we have distributed 32.9 million N95 masks. We have ordered 101 million more N95 masks,” Newsom said. “When you hear people talking in the tens of thousands or hundreds of thousands they’re not having an honest conversation with you. We need to be talking in the millions, tens of millions, and in a state as large as ours, hundreds of millions.

California Gov. Newsom is trying to recruit thousands of new medical workers with a new Health Corps
https://www.cnbc.com/2020/03/30/califor ... rkers.html

On Twitter, Newsom asked retired doctors, nursing students, members of medical disaster response teams, nursing students, medical students, medical assistants, emergency medical technicians and other professionals to sign up to work in California.

Governor Newsom Takes Executive Action to Establish a Statewide Moratorium on Evictions
https://www.gov.ca.gov/2020/03/27/gover ... evictions/

Governor Gavin Newsom today issued an executive order banning the enforcement of eviction orders for renters affected by COVID-19 through May 31, 2020.

Governor Gavin Newsom Announces Major Financial Relief Package: 90-Day Mortgage Payment Relief During COVID-19 Crisis
https://www.gov.ca.gov/2020/03/25/gover ... 19-crisis/

Governor Newsom secured support from Citigroup, JPMorgan Chase, U.S. Bank, and Wells Fargo and nearly 200 state-chartered banks, credit unions, and servicers to protect homeowners and consumers.


I had my doubts when Newsom was first elected, but he seems to be listening to the experts, taking proper risks decisively and making the right choices for our State. This is time to be assisting those in need and not a time for politics. I am beginning to appreciate our young Governor.

wolf
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Location: Germany

Re: Generation-X' Journal

Post by wolf »

Thanks Generation-X for summing up news from the US and the market. And I look forward to your (ER) plan and investment choices. Take care!

CS
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Joined: Sat Dec 29, 2012 10:24 pm

Re: Generation-X' Journal

Post by CS »

Thanks for the CA update. It's much appreciated. I wish I wasn't so high risk, I'd go work there as a medical worker.

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

Also, be sure to check with your bank website. Many banks are offering additional help such as deferment of car loans and credit card payments, waived fees, low interest emergency personal loans, 0% balance transfers etc., they all differ. (Seems credit unions are doing a lot more than big banks)


I've also called many financial institutions about the covid-19 relief bill 100k "distribution"/rollover.
They're all working on the details. These were echoed by all:

* The up to 100k limit covid related "distribution" is available to BOTH - IRA and 401k.

* If the "distribution" is paid back within 3 years of receipt of the funds, then it will be as if nothing had happened (considered trustee-to-trustee rollover)

* Self-certification for the distribution but one institution stated that documentation will be required by IRS for tax purposes.

Some of the better articles that I've found so far regarding this:
https://www.foley.com/en/insights/publi ... efit-plans
https://www.bradley.com/insights/public ... -cares-act

Stay safe guys, we'll all get through this in no time.

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

H.R.748 - CARES Act

https://www.congress.gov/bill/116th-con ... 19AB05D7CA

SEC. 2202. Special rules for use of retirement funds.
https://www.congress.gov/bill/116th-con ... 08F9F80756

(B) EMPLOYEE CERTIFICATION.—The administrator of an eligible retirement plan may rely on an employee’s certification that the employee satisfies the conditions of subparagraph (A)(ii) in determining whether any distribution is a coronavirus-related distribution.


So there are some hurdles here that I can see -

If it's a distribution and repayment, then one must deal with:
1. the plan administrator - the plan administrator can make the certification process easy or difficult.
2. the IRS - they can require documentation proof for tax refunds as the repayment is made within 3 years
3. Income tax - spread over 3 years, but must deal with IRS filing of some sort (1040? amend the filing? )


A loan would be easier because:
1. The loan would only deal with the plan administrator, especially if the plan administrator would allow self-certification.
2. As long as the loan is repaid on schedule, IRS is not involved
3. Payment is delayed for 1 year then the normal 5 year payment starts
4. It's a loan and not a distribution, therefore no income tax to deal with
Negatives:
5. The monthly payment (made after-tax) would be $1,852.96 at current Libor +1 = 4.25% for 5 years once the payment starts. The total payment would be $111,177.60. (interest would be paid to self)
6. Per usual loan rules, the combined maximum for both the general and the first time home buyer would be 100k since it is a limit increase of the existing rule.
7. No early payments to the loan is allowed other than a lump sum payoff.
8. Limit increase is valid for 180 days once the bill is enacted.

Best approach may be - save like there is no tomorrow during the 1 year delay period and build a cushion to alleviate the payment blues during the payment years.

Generation-X
Posts: 334
Joined: Mon May 06, 2013 4:43 am

Re: Generation-X' Journal

Post by Generation-X »

What a disgrace, of so-called the "president" of the United States.

Trump administration won't reopen Obamacare enrollment for uninsured as coronavirus spreads
https://www.cnn.com/2020/03/31/politics ... index.html



For California, the special enrollment has been extended to June 30, 2020 due to Coronavirus.
https://calmatters.org/california-divid ... -coverage/

Cost of treatment can be very high without insurance.
https://www.marketwatch.com/story/how-m ... 2020-03-24

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Toilet paper checker

https://www.instok.org/

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »


Generation-X
Posts: 334
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Re: Generation-X' Journal

Post by Generation-X »

Bit early for shopping but X-mas will come


I have been out surveying the landscape for buying a new vehicle.

Last time something like this happened (2008), I bought a new vehicle for almost 40% off.

The dealers were better prepared this time, but I believe time will be on my side.

I have a wide array of choices - a van, truck, suv etc., therefore I can rationally focus on maximizing the best value for the quality (reliability, safety, mpg, cost of insurance etc.)

The preference is for the hybrid - and I do have my eye on the upcoming 2021 Sienna hybrid to be released this fall, hoping that the current recession will aid in the purchase. If AWD is offered, it will be preferred, depending on the cost.

https://www.motorauthority.com/news/103 ... -spy-shots
https://www.motor1.com/news/405973/2021 ... na-hybrid/


The next step will be to convert to something like this (a combination thereof):

https://www.youtube.com/watch?v=K2tsTyYz_Is
https://www.youtube.com/watch?v=asS59cdmwag
https://www.youtube.com/watch?v=OQwDTIFAFzE
https://gtrv.com/photos/sienna-weekender/

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Coronavirus Update 3/27/20

Image



Coronavirus Update - 14 days later (4/10/20)

Image

Image

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

The blood in chief


58,220 Americans died in the Vietnam War.

Lyndon Johnson lost his presidency as a result. So will Donald J. Trump.

22,056 Americans are dead as of today. And I do not understand what they had to die for.

Did Trump really expect me to believe him?

“It’s going to disappear. One day — it’s like a miracle — it will disappear.” -- Donald J. Trump, Feb 27, 2020.

The Godforsaken charlatan. Their blood will stay with Trump, forever in our history.

It took 20 years for Vietnam to claim 58,220 lives. It has only been a little over a month, since the first American death due to Coronavirus on February 29, 2020.

While people have been dying, Trump has been busy destroying more of our government - https://apnews.com/cc921bccf9f7abd27da996ef772823e4

Now he wants to eliminate Fauci - probably one of the few non-partisan rational voices remaining in this fool's administration.

Keep the blood flowing Donald, it's all on you.

ertyu
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Re: Generation-X' Journal

Post by ertyu »

I hear so many people making arguments that he will be reelected, and as of now, I don't see why they're wrong. Donald is a spineless pawn. It's the Koch brothers and the like to whom people aren't human, they're "labor." These deaths are welcome to donald and his friends. If the old and ill die, there will be less need to pay taxes to support them. The old and the ill aren't good at being "labor," so they're deadweight. The fact a disproportional amount of black ones are dying is just a bonus.

I studied in America and I love American people. What is happening to you makes me sad. You guys deserve better.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

I am not sure if I would ever be able to describe people's death in a casual manner.

It is one thing to look at a number flash across a TV screen. It is another, to actually stand before those who have passed away lying in front of you, as you say your last goodbye. And the family, crying out while holding on to their loved ones and begging them not to go.

Sometimes, it's not about the numbers. This will be one of those times.

Generation-X
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Re: Generation-X' Journal

Post by Generation-X »

Adagio for Strings


Apparently the stimulus check is very real because it has been deposited.

My efforts of trying to save money in the past several years have paid an additional dividend today in the form of free money from the gov't.

While I understand the necessity for a lot of the folks under the circumstances, on the flip side, the fact that stimulus was needed at all indicates just how fragile and unprepared the masses are and a good number of people ARE living paycheck to paycheck.

It also begs the question - just what exactly is the function of people in this "service" economy? Are they simply just worker bees for the pollination?

Is this truly the foundation of our economy? - creating money out of thin air?

IMHO, we have crossed the bridge - whether it is inflation, stagflation, we will have to see.

It is time for gold.

https://www.youtube.com/watch?v=N3MHeNt6Yjs

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