Allocation (taxable and non-taxable accounts)


D

DanielleOM

I have been thinking more about allocation from an entire asset point of
view.

Now that I am closer to retirement age and unemployed, I am trying to do
a better job looking at allocation then I had previously done.

I recall reading that it's better to re-balance within non-taxable funds
to avoid generating taxes and fees.

I am now thinking of looking at the allocation of my entire portfolio
and for the purposes of calculating current allocation just ignoring if
they are in taxable or non-taxable accounts. Does that make sense?


Danielle
 
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R

Ron Peterson

I have been thinking more about allocation from an entire asset point of
view.
Now that I am closer to retirement age and unemployed, I am trying to do
a better job looking at allocation then I had previously done.
I recall reading that it's better to re-balance within non-taxable funds
to avoid generating taxes and fees.
I am now thinking of looking at the allocation of my entire portfolio
and for the purposes of calculating current allocation just ignoring if
they are in taxable or non-taxable accounts.  Does that make sense?
Try to maximize the amount that you will have in your Roth. Do Roth
conversions but limit the conversion size so that you aren't in a very
high tax bracket. And pay the tax for the conversion with taxable
holdings instead of out of your IRA or 401k.

It shouldn't matter too much as to how you do the balancing.
 
D

DanielleOM

Try to maximize the amount that you will have in your Roth. Do Roth
conversions but limit the conversion size so that you aren't in a very
high tax bracket. And pay the tax for the conversion with taxable
holdings instead of out of your IRA or 401k.

It shouldn't matter too much as to how you do the balancing.




This year I not had any income from employment. I thought that would
limit roth contributions to zero. Not sure if that affects roth
rollover. Right now my Roth only has TAVFX. I think I would want to
set up a new one.

Danielle
 
J

JoeTaxpayer

This year I not had any income from employment. I thought that would
limit roth contributions to zero. Not sure if that affects roth
rollover. Right now my Roth only has TAVFX. I think I would want to set
up a new one.
Depending what taxable income (from other sources) you have, a Roth
conversion may be ideal. Perhaps just enough to 'fill' the 10 or 15%
bracket. So long as you have the cash available to pay the tax in 2013,
and if you plan to be in a higher bracket in future years.
 
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Joined
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Converting to a Roth basically means changing the tax treatment in which your retirement savings are placed. So, instead of a Traditional IRA with a tax-deferral, Roth IRAs represent post-tax contributions. With Roth, it means undoing the deferral by paying tax on the accumulated earnings and on any savings contributions for which the person took a deduction, converting the funds into post-tax money.
 

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