Need some help with allocation?

No. Many energy stocks aren't in the S&P 500. In addition, there is the additional knowledge that crude oil is becoming more expensive to find, making already found reserves more valuable. So, it makes sense to be overweight in energy.

No. I am suggesting that some sectors should be overweight, but not to the point of generating excessive risk.

No. I don't believe the market is efficient. If a company doesn't have assets and isn't making money, don't buy it even if it is in an index.

-- Ron

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I knew Roth IRA contributions could be withdrawn for any reason, but I didn't know that deductible IRA monies could be withdrawn for education purposes. Does this include contributions and earnings? Any tax penalties at all? Surely you would have to pay income taxes on what you take out (assuming it was a deductible IRA), correct? I just want to make sure I'm not missing anything.

Mike

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Tax at one's regular marginal rate. Just no 10% penalty. The tax treatment of a 529 more resembles a Roth, post-tax money in, all growth tax free if used for College. (Tax and 10% penalty if not) Joe

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"Higher education expenses. Even if you are under age 59½, if you paid expenses for higher education during the year, part (or all) of any distribution may not be subject to the 10% additional tax. The part not subject to the tax is generally the amount that is not more than the qualified higher education expenses (defined later) for the year for education furnished at an eligible educational institution (defined later). The education must be for you, your spouse, or the children or grandchildren of you or your spouse. "

I searched for word education in the pub and this was third or fourth hit.

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Does XLE contain all energy stocks?

You may be right, but I agree with Sandra, 10% - 20% is a big chunk of the OP's portfolio.

So then if the OP shouldn't buy an index, how then does he match market cap percentages? Are you suggesting that the OP buy a whole series of ETFs to approximate the total stock market sans financials? How many ETFs would this require him to manage?

-Will

william dot trice at ngc dot com

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However, you can take distributions from your IRAs for qualified higher education expenses without having to pay the 10% additional tax. You may owe income tax on at least part of the amount distributed, but you may not have to pay the 10% additional tax. ... Qualified education expenses. For purposes of the 10% additional tax, these expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance.

Yes - you pay income taxes, but not early-distribution penalties.

Most folks should be maximizing all IRA and 401k plans before putting anything into education-specific savings. (note the "most" - that's not "all" folks. Just a lot more than are currently doing so now.)

That said, 529s have an additional advantage over IRAs - if you're concerned with estate planning, contributions to 529s are considered completed gifts and are outside of one's estate. This may be of more interest to wealthier folks and/or grandparents, but it's worth noting.

529's also offer state tax deductions in many states. So the contributions do not get deducted at federal level, but some 529's do offer state tax deductions.

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A couple of people have pointed you to Pub 590. Also note that while there are deductible IRA contributions and non-deductible IRA contributions, there is no such thing as a deductible IRA.

Dave

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This is a very important point. When one takes a distribution from a taxable IRA account, one usually owes taxes on it. The amount of that distribution which is taxable depends on whether the contributions which funded your IRA - not that particular account, but the sum of all of your IRA accounts - were deductible.

Example:

Contribute $2000 to a traditional IRA, but do not deduct it.

Rollover $10000 from a 401k into another IRA account.

Both accounts double in value. You now have two IRA accounts whose total value is $24000.

Now, pull $1000 out of the smaller account (for anything - to pay college expenses for your kid, as regular retirement income, whatever). Your "basis" for that $1000 is based on the ratio of the deductible contributions you've made versus your total IRA amount: $2000/$24000 = 0.08333, so multiply that by the $1000 you took as a distribution to get $167 of the distribution is not taxed, but the remaining $833 is taxed.

It makes no difference that the accounts were kept separate.