Holding $600K in cash - feeling like an idiot. Options???

[ivinsfan]

OK. Then, I did not miss or lose that 1099 in the mail.

I suspect that I was not the only one neglecting to pay the taxes on the cashed-out I bonds.

I don't think they even sent me an e-mail reminding me to log in to see the 1099. They don't have to do anything like commercial enterprises, because they are the gummint.

Ironic the arbitrator of who does and doesn't need to send 1099s can simply decline to send you one...

 

[LarryMelman]

I last sold I-bonds in 2015 and 2016. I see that I saved screen shots of the 1099's. They are real 1099's, not "a paragraph with numbers". I don't remember if I was prompted to go get the 1099's by a letter or an email, but I set up a spreadsheet every year to estimate my taxes and in those years I would have included entries for the I-bond interest, which would have reminded me to go get the 1099's if nobody else did.

I really don't get the resistance some people have to Treasury Direct. They had two-factor security many years before banks did. I've never had an issue with it.

 

[Dash man]

Another note, the annual purchase limit is only $10K.

The limit is $10k/person, so each spouse can get one.
Funny thing though, one year I accidentally bought two $10k bonds. They gave me a message saying the limit is $10k, but never canceled the bond. So I have two for that year. It was a few years ago.

 

[ivinsfan]

The limit is $10k/person, so each spouse can get one.
Funny thing though, one year I accidentally bought two $10k bonds. They gave me a message saying the limit is $10k, but never canceled the bond. So I have two for that year. It was a few years ago.

It's higher now but complicated check the I Bond info page

 

[ut2sua]

Have you actually run a 72t (SEPP) calculator? At current rates it would take a pretty large balance to get 20k/yr. Fidelity does have support for this type of distribution.

I didn’t realize your funds were locked up in deferred accounts. My earlier idea of using MYGAs only helps with the ROI concern. Perhaps a large broker for MYGAs would support a 72t using the 10% free withdrawal feature.

You are correct on the large balance required. I think it is due to the current super low interest rate. It probably won't matter too much since I should have the ability to invest the balance in ways I desire. The required, fixed withdrawal is the only turned off.

 

[ut2sua]

The limit is $10k/person, so each spouse can get one.
Funny thing though, one year I accidentally bought two $10k bonds. They gave me a message saying the limit is $10k, but never canceled the bond. So I have two for that year. It was a few years ago.

I learned from another thread that a MFJ couple could buy 10K for each spouse (10K*2) plus 5K if you have a federal tax refund of 5K or more. All that would add up to $25K. Then if one has a living trust, another 10K could be bought. This last one is a bit too advanced for me. I would not know what complications ones might run into when it comes time to cash out a such a bond (thru a living trust). So total of 35K per year was stated as the limit.

 

[harley]

One of my main reasons for holding a large amount of cash is so I can pay the taxes on my Roth conversions. That will eat up a couple hundred K over the next few years. Cash may be a lousy long term investment, but it has some excellent uses for managing your other investments.

 

[Finance Dave]

I had/have this same issue and I bought a 3-year "private placement annuity" that pays 1.7% (that was 4 months ago), higher than typical CD rates. Every little bit helps.

If this interests you, discuss with your FIDO advisor...requires some special "contract" paperwork and minimum investment of $100k.

 

[CSdot]

As long as the home and other debts paid off, no problem.

 

[24601NoMore]

ATT is paying 7% dividend. Century Link at 7.8%. SOS at the money calls and puts are paying 10% two weeks out. QYLD is paying almost 12%.

Century Link (CTL) recently rebranded as Lumen Technologies (LUMN).

I hold both LUMN and AT&T (as well as VZ) for the dividend also. Note, however, that CTL cut their dividend (after strongly insisting that they wouldn't on an IR earnings call literally a week or two prior) over 50% - from $2.16 to $1/sh per year.

They're reducing debt substantially, but sales have been flat to declining in many key segments.

CTL bought LVLT, which previously bought Global Crossing. Many (including me as I have history in the industry) believed GLBC to have one of most advanced and comprehensive fiber networks on the planet. It's a heck of an asset, and if LUMN can ever figure out how to capitalize on it, "should" return the company to growth. It's also pretty attractive as an acquisition target for a prospective buyer like Alphabet..

In the meantime, the 7+% dividend - assuming management doesn't cut it AGAIN, is pretty nice income.

 

[MrLoco]

LOL! I have more than you in cash....about $800k and I don't feel like an idiot.
Especially when it represents just 13% of our net worth.
I see this as an opportunity. If I need to rebalance, I can use cash and not worry about any taxes from rebalancing using other assets.
Plus, due to probable impending changes in the estate tax exemption threshold; we may make huge gifts to the adult children.
We want to make this in cash so they can use the $$$ as they see fit.
Plus, we need a large cash portfolio as we plan to book many month long luxury cruises when the cruise industry starts up again.
And the cruises we want to book ain't cheap.
Some people are always trying to squeeze every last 1/10 of 1% interest out of every investment. After awhile, it just isn't worth the aggravation anymore.

I remember a quote from one of my all time favorite MAfia movies (Gotti) where the actor says "That guy. He's always trying to squeeze the quarter until the Eagle screams."
So.........stop trying to always squeeze the quarter until the eagle screams. Sometimes it ain't worth it.

 

[Koolau]

90 degrees to the discussion, but I have half an inch of paper I-bonds - purchased at the bank back in the early 00's. Anyone know how to cash them WITHOUT a gummint account? I don't think banks do it anymore but have not asked. A little help

 

[ivinsfan]

90 degrees to the discussion, but I have half an inch of paper I-bonds - purchased at the bank back in the early 00's. Anyone know how to cash them WITHOUT a gummint account? I don't think banks do it anymore but have not asked. A little help

Me too... from 91. I going to be sad for several reason when I cash those puppies in. I'm not bothering to research how to do it till about 2029...I'll have cash them in several different years for tax purposes.

 

[Koolau]

Me too... from 91. I going to be sad for several reason when I cash those puppies in. I'm not bothering to research how to do it till about 2029...I'll have cash them in several different years for tax purposes.

Correct me if I'm wrong (anyone - and I didn't look this up) I bonds "expire" (don't earn more interest) after 30 years. Maybe check your status so you don't lose anything - I'm just going on 20 year old memory, so YMMV.

 

[ivinsfan]

Correct me if I'm wrong (anyone - and I didn't look this up) I bonds "expire" (don't earn more interest) after 30 years. Maybe check your status so you don't lose anything - I'm just going on 20 year old memory, so YMMV.

Fat fingers they are from 2001

 

[Koolau]

Fat fingers they are from 2001

A VERY good year for I-bonds IIRC. Congrats!

 

[ivinsfan]

A VERY good year for I-bonds IIRC. Congrats!

It wasn't a good year for me.. My Mom died and I put my share of her house sale into i bonds..but I will tell her Thank you when I cash them out...

 

[LarryMelman]

90 degrees to the discussion, but I have half an inch of paper I-bonds - purchased at the bank back in the early 00's. Anyone know how to cash them WITHOUT a gummint account? I don't think banks do it anymore but have not asked. A little help

My first I-bonds were on paper from 2001. I transferred them to my Treasury Direct account (mailed them to the Treasury, registered mail and etc.) where they remain today. You can redeem them from the TD account and EFT the proceeds, or they will probably mail a check but I've never done that.

 

[jr6035]

Have you checked out Ishares Ibonds etf's? You buy them for whatever year they mature. They have Corporate, Treasury, Municipal and "junk" bonds. All short term. I have the Corporate 2022 etf, IBDN.

 

[disneysteve]

90 degrees to the discussion, but I have half an inch of paper I-bonds - purchased at the bank back in the early 00's. Anyone know how to cash them WITHOUT a gummint account? I don't think banks do it anymore but have not asked. A little help

You can cash paper I bonds at your bank.


From treasurydirect.gov:
Paper bonds
You can cash paper I bonds at most local financial institutions. This is the easiest way to cash bonds and the quickest way to get access to your money.

 

[ShokWaveRider]

I hold a 7-figure sum in cash or cash equivalents right now. I don't feel like an idiot.

Me too.

 

[gauss]

My 2 thoughts are:

#1) Could you do a 72(t) plan to get you to age 59 1/2 without a 10% early withdrawal penalty? You would have to run the 72(t) plan for a minimum of 5 years, but should be able to access your traditional IRA funds in this manner

#2) You say that your 401(k) does not play well with rule of 55 -- Does this mean that your plan will not allow partial distributions once you separate from service? If this is not the case, perhaps that plans could indeed be made to play well together. There is a common misconception that if the HR department does not know about the rule of 55 or explicitly mention it in the plan documents, then it is not allowed. This is untrue. All that is i needed is the ability to take partial distributions once you have separated from service.

-gauss

 

[Fleur58]

Here I was feeling like an idiot too because I have 100K at Cap One and I came here looking for ideas. Its a insecurity nest egg. After reading this thread I am going to leave it as is, but I am motivated to check out ibonds.

 

[Dash man]

Me too.

We also have over $1M in cash and equivalents. Want to have a cushion in case the market turns bearish for an extended period. Still have plenty in the stock market to benefit from the growth. In five year we’ll both be taking social security at 70, but we can take it earlier if the bear shows up.

 

[ut2sua]

My 2 thoughts are:

#1) Could you do a 72(t) plan to get you to age 59 1/2 without a 10% early withdrawal penalty? You would have to run the 72(t) plan for a minimum of 5 years, but should be able to access your traditional IRA funds in this manner

#2) You say that your 401(k) does not play well with rule of 55 -- Does this mean that your plan will not allow partial distributions once you separate from service? If this is not the case, perhaps that plans could indeed be made to play well together. There is a common misconception that if the HR department does not know about the rule of 55 or explicitly mention it in the plan documents, then it is not allowed. This is untrue. All that is i needed is the ability to take partial distributions once you have separated from service.

-gauss

For #2, I was on a phone call with Fido (MC 401K), and the rep basically told me my MC 401K doesn't allow the 55 rule withdrawal. I tried to connect with MC HR, no one seems to know. I read the 401k plan doc. The English in there could be understood either ways. I totally agree that if I can make the partial withdrawal, all should be good since I will be dealing with the IRS from that point. So far, no one was able to give me an answer, and it is a bit difficult to find out since I am still working.