The tax code ever multiplies in complexity. Where 401k catchup contribution was previously defined only by age, it now is defined by age & income. Over 150k puts you into a roth 401k after $24500. The lion kingdom, making below average income, will encounter the limit in 2 more pay periods. Most everyone else in the bay area has already encountered it.
Betterment only allows defining fixed percentages to contribute to the roth & traditional in every pay period while the tax code only defines specific dollar amounts to contribute in the entire year. After the next pay period, the lion kingdom would have to change the setting to 55.56% in the roth 401k & 44.44% in the traditional 401k. In 2 pay periods, it would have to be changed to 100% roth to keep a 401k rounding error from going over the limit. Then, presumably betterment would cap the roth so the total of the 2 didn't exceed $32,500.
The settings would have to hit right between the pay periods & they change every year as the limits go up, but lion income stays constant or goes down.
Betterment doesn't match the pay periods, but times the contributions based on market conditions & spaces them at least 1 week apart. Mercifully, they contribute a fixed amount every pay period. You have to reload the page every week, observe when it hits 22,500 & then adjust the percentages before it hits 27,000.
The alternative is for betterment to put 100% in the 401k & then retroactively move $8000 out near the end of the year, charging back taxes on the $8000. If the market went down, you'll over pay in taxes in the current year. If the market went up, you'll over pay in taxes when distributing the 401k.
Another option would be starting the year with 75.38% in the traditional & 25.62% in the roth. That's probably what most animals are doing.
Such is the consequence of the ever multiplying tax code.
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4/7: The 401k spreadsheet worked. They put exactly 24500 into the pre tax & the rest went into the roth, after charging a much higher tax bill. They didn't reduce the total amount withheld. The total withheld amount must be computed based on the amount of tax as if it was fully taxed.
Helas, there's no way to trade in the roth or allocate the funds in each account differently. At least they got contributions during a relatively down market.
The internet universally defends the taxation of catchup contributions as a way to reduce capital gains taxes, but it's really a way for the job states to extract money which used to go to the retirement states. The seer sucking summer liberals are happy to finally get their taxes while they bang their wealthy oligarchs.
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Another neighbor quadrupled his money over the last 30 years. It briefly hit 3/4M in 2023. Not as good as the stonk market, but imagine getting paid $1/2M to live in 1000 sq ft instead of paying $1/2M to live in 400 sq ft. Coworkers who bought in in 2015 have gotten paid $3/4M for living in 2000 sq ft. Getting paid by your housing instead of paying for your housing is how it works. In a few more years, everything is going to be 7 figures.
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The battle of the land swung back to leasing it out instead of selling it. Always figured the buyer either wasn't serious, it wasn't sellable for any price, or he didn't really have the money so there it is. It seems a stretch to manage any kind of rental income from it. Lions would be so lucky to make enough from rent to justify living somewhere else.
Rental income opens the chance of not having to live on the property. It's highly unlikely. In the short term, 34% of it would go to taxes in Calif*.
The amount of rental income required is the difference between the cost of living on the property & living somewhere else. To rent somewhere like Largo or Cocoa, the rental income would have to be more. To own the cheapest junk house somewhere like Gainesville, the rental income would have to be less. Since the land can't be sold, living on it is always the cheapest option. The property tax would be nothing compared to living elsewhere.
Lions believe if he could afford enough rent to cover the difference of living somewhere else, he would buy it. At most, the rent would be just equal to the difference.
Selling it after a rental period could be an additional source of revenue to offset the difference, but the resale value would be higher if it was developed. It's quite difficult to know the break even rent without any known numbers & without the power of dollar cost averaging. The simplest breakeven rent is just the cost of renting elsewhere.
The best compromise is to rent it for a while & see what happens. Lions won't have any choice for at least 4 years. Then there's going to be a period of renting & trying places out before committing to an investment.
Suspect when retirement comes, he'll offer to buy it instead of rent it & the price will be the current sale price - the rent already paid.
The lion kingdom would have let him use it for anything, as long as he kept up with the deed restrictions & the agriculture exemption, but there's probably another part of the deal like a minimum amount of time.
As long as it can't be sold, the cheapest option is making lemonade from lemons though. The cheapest option is a haunted cabin in the middle of nowhere, on .5 flood prone acres. Selling it & renting a tiny apartment would be a big win in the short term but definitely more in the long term.
At some point, the reward from continued working is going to be less than the losses to inflation. The lion kingdom lost much ground in the last 25 years from inflation when the same amount of money could have been made just by buying a house in 2000 & not working. The end game in this government's policy of subsidizing higher prices with falling wages, is to have no more incentive for anyone to work. That could be the point where housing pays out more than it costs while leaving enough left over for the short term.
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Had the college dorm dream again. Was navigating broken elevators, walking down a hallway looking for the room & pondering how the lion kingdom could afford a house but somehow chose to live in a college dorm to save money. It was packed with students wandering around, partying, wondering what a dirty old man was doing there.
That was preceded by dreaming about some software hack.
It might be triggered from recording Escenas & memories of living on the central coast. The lion kingdom will never be Larocha & lions are especially bad at mazurkas. She repeated a different section of the Mazurka but it wasn't indicated that way. The lion kingdom recorded the easier pieces after only 8 months. They weren't as polished as others, but there's not much to Escenas. It was written 7 years before his magnum opus Goyescas.
https://www.youtube.com/watch?v=s5G0dCAt56w
Fensome joins the dweeby corporate commander names like Esther. Mr. Fensome is probably a doctor, being in MA. The 3 namers convey status seeking more than the ones who keep their own name.
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