Help with advice on portfolio

[bkm2996]

Hi, I am a newbie to this forum. I have been following the forum for over a month. I am married, wife worked for 8 months this year. Here is our current breakdown.

Emergency Fund: 6 months in savings accounts.
Debt: $360k mortgage. No other debt.
Tax Filing Status: Married Filing Jointly. Children are 4 and 3yrs.
Tax Rate: 25% Federal, 5.75% VA State
State of Residence: Virginia
Age: 35 (me), 31(wife)
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 50% of stocks

Total Portfolio: Mid 6 figures

Current retirement assets

Taxable (30.5% of total)
30.5% cash

His 401(k)s (34% of total)
Started contributing this pay period to current employer 401(k) plan.
34% His Principal 401(k) Past Employer
I cannot find the ticker symbols.
1.8% American Century/Montag & Caldwell LargeCap Growth II Separate Account (ER: 1.04)
13.9% Principal Global Investors LargeCap S&P 500 Index Separate Account (ER: 0.31)
1.7% TS&W / HerndonLargeCap Value I Separate Account (ER: 0.93)
3.2% AllianceBern / CCI / Brown SmallCap Growth I Separate Account (ER: 1.25)
10.8% Principal Global Investors SmallCap S&P 600 Index Separate Account (ER: 0.31)
1.4% Principal Global Investors Diversified International Separate Account (ER: 1.06)
1.2% Principal Global Investors International Equity Index Separate Account (ER: 0.55)
Principal Global Investors Money Market Sep Acc (ER: 0.56)
Guaranteed Interest Account 5 year (ER: 0.65)
Edge Asset Management, Inc. Government & High Quality Bond Sep Acc(ER: 0.56)
PIMCO Core Plus Bond I Separate Account (ER: 0.73)
Principal LifeTime Strategic Income Separate Account (ER: 0.78)
Principal LifeTime 2010 Separate Account (ER: 0.85)
Principal LifeTime 2020 Separate Account (ER: 0.90)
Principal LifeTime 2030 Separate Account (ER: 0.92)
Principal LifeTime 2040 Separate Account (ER: 0.94)
Principal LifeTime 2050 Separate Account (ER: 0.95)
DFA/Vaughan Nelson/LA Capital SmallCap Value II Separate Account (ER: 1.27)
Principal Global Investors MidCap S&P 400 Index Separate Account (ER: 0.31)
Turner / Jacobs Levy MidCap Growth III Separate Account (ER: 1.13)
Principal Global Investors/DFA International SmallCap Separate Account (ER: 1.46)

His Roth IRA at Principal Funds (3.5% of total)
0.8% Diversified International (PIIJX) (ER: 1.38)
1.0% Midcap Blend (PMBJX) (ER: 1.1)
0.9% Largecap Growth I (PLGJX) (ER: 1.14)
0.8% S A M Balanced Portfolio (PSAJX) (ER: 1.3)

Her 403(b) (28.5% of total)
23.5% Her Fidelity 403(b) Past Employer
6.0% FID FREEDOM 2015 (FFVFX) (ER: 0.6)
5.9% FID FREEDOM 2030 (FFFEX) (ER: 0.71)
5.8% FID FREEDOM 2040 (FFFFX) (ER: 0.75)
5.8% FID FREEDOM 2050 (FFFHX) (ER: 0.77)
Fidelity 130/30 Large Cap Fund (FOTTX) (ER: 1.97)
Fidelity Blue Chip Growth Fund (FBGRX) (ER: 0.90)
Fidelity Blue Chip Value Fund (FBCVX) (ER: 0.77)
Fidelity Capital Appreciation Fund (FDCAX) (ER: 0.96)
Fidelity Contrafund (FCNTX) (ER: 0.81)
Fidelity Disciplined Equity Fund (FDEQX) (ER: 0.54)
Fidelity Dividend Growth Fund (FDGFX) (ER: 0.93)
Fidelity Equity Dividend Income Fund (FEQTX) (ER: 0.68)
Fidelity Equity-Income Fund (FEQIX) (ER: 0.68)
Fidelity Export and Multinational Fund (FEXPX) (ER: 0.82)
Fidelity Fund (FFIDX) (ER: 0.58)
Fidelity Fifty (FFTYX) (ER: 0.94)
Fidelity Focused Stock Fund (FTQGX) (ER: 0.93)
Fidelity Four-in-One Index Fund (FFNOX) (ER: 0.23)
Fidelity Growth & Income Portfolio (FGRIX) (ER: 0.71)
Fidelity Growth Company Fund (FDGRX) (ER: 0.84)
Fidelity Growth Discovery Fund (FDSVX) (ER: 0.81)
Fidelity Independence Fund (FDFFX) (ER: 0.70)
Fidelity Large Cap Growth Fund (FSLGX) (ER: 0.88)
Fidelity Large Cap Stock Fund (FLCSX) (ER: 1.03)
Fidelity Large Cap Core Enhanced Index Fund (FLCEX) (ER: 0.46)
Fidelity Large Cap Growth Enhanced Index Fund (FLGEX) (ER: 0.47)
Fidelity Large Cap Value Enhanced Index Fund (FLVEX) (ER: 0.47)
Fidelity Magellan Fund (FMAGX) (ER: 0.55)
Fidelity Mega Cap Stock Fund (FGRTX) (ER: 0.76)
Fidelity Nasdaq Composite Index Fund (FNCMX) (ER: 0.59)
Fidelity New Millennium Fund (FMILX) (ER: 1.00)
Fidelity OTC Portfolio (FOCPX) (ER: 0.91)
Select Consumer Discretionary Portfolio (FSCPX) (ER: 0.89)
Select Consumer Staples Portfolio (FDFAX) (ER: 0.83)
Select Industrial Equipment Portfolio (FSCGX) (ER: 0.84)
Select Industrials Portfolio (FCYIX) (ER: 0.87)
Select Leisure Portfolio (FDLSX) (ER: 0.86)
Select Retailing Portfolio (FSRPX) (ER: 0.90)
Fidelity Stock Selector All Cap Fund (FDSSX) (ER: 0.73)
Fidelity Stock Selector Large Cap Value Fund (FSLVX) (ER: 0.57)
Fidelity Trend Fund (FTRNX) (ER: 0.90)
Fidelity Value Discovery Fund (FVDFX) (ER: 0.90)
Strategic Advisers Core Multi-Manager Fund (FLAUX) (ER: 1.11)
Strategic Advisers Growth Multi-Manager Fund (FMELX) (ER: 0.92)
Strategic Advisers Value Multi-Manager Fund (FKMOX) (ER: 1.64)
Spartan 500 Index Fund - Fidelity Advantage Class (FUSVX) (ER: 0.07)
Spartan Total Market Index Fund - Fidelity Advantage Class (FSTVX) (ER: 0.07)
Fidelity Growth Strategies Fund (FDEGX) (ER: 0.79)
Fidelity Leveraged Company Stock Fund (FLVCX) (ER: 0.86)
Fidelity Low-Priced Stock Fund (FLPSX) (ER: 0.88)
Fidelity Mid Cap Enhanced Index Fund (FMEIX) (ER: 0.63)
Fidelity Mid Cap Growth Fund (FSMGX) (ER: 0.79)
Fidelity Mid-Cap Stock Fund (FMCSX) (ER: 0.86)
Fidelity Mid Cap Value Fund (FSMVX) (ER: 0.88)
Select Air Transportation Portfolio (FSAIX) (ER: 0.96)
Select Automotive Portfolio (FSAVX) (ER: 0.90)
Select Chemicals Portfolio (FSCHX) (ER: 0.85)
Select Construction and Housing Portfolio (FSHOX) (ER: 0.96)
Select Defense and Aerospace Portfolio (FSDAX) (ER: 0.86)
Select Environment and Alternative Energy Portfolio (FSLEX) (ER: 1.01)
Select IT Services Portfolio (FBSOX) (ER: 0.91)
Select Transportation Portfolio (FSRFX) (ER: 0.88)
Fidelity Stock Selector Mid Cap Fund (FSSMX) (ER: 0.69)
Fidelity Value Strategies Fund (FSLSX) (ER: 0.88)
Fidelity Value Fund (FDVLX) (ER: 0.68)
Spartan Extended Market Index Fund - Fidelity Advantage Class (FSEVX) (ER: 0.07)
Spartan Mid Cap Index Fund - Fidelity Advantage Class (FSCKX) (ER: 0.22)
Fidelity Small Cap Discovery Fund (FSCRX) (ER: 1.07)
Fidelity Small Cap Enhanced Index Fund (FCPEX) (ER: 0.76)
Fidelity Small Cap Growth Fund (FCPGX) (ER: 1.03)
Fidelity Small Cap Stock Fund (FSLCX) (ER: 1.12)
Fidelity Small Cap Value Fund (FCPVX) (ER: 1.13)
Fidelity Stock Selector Small Cap Fund (FDSCX) (ER: 1.07)
Strategic Advisers Small-Mid Cap Multi-Manager Fund (FNAPX) (ER: 1.48)
Spartan Small Cap Index Fund - Fidelity Advantage Class (FSSVX) (ER: 0.30)
Fidelity Canada Fund (FICDX) (ER: 0.77)
Fidelity China Region Fund (FHKCX) (ER: 1.04)
Fidelity Diversified International Fund (FDIVX) (ER: 1.01)
Fidelity Emerging Europe, Middle East, Africa (EMEA) Fund (FEMEX) (ER: 1.37)
Fidelity Emerging Markets Discovery Fund (FEDDX) (ER: 3.07)
Fidelity Emerging Asia Fund (FSEAX) (ER: 0.94)
Fidelity Emerging Markets Fund (FEMKX) (ER: 1.09)
Fidelity Europe Capital Appreciation Fund (FECAX) (ER: 0.95)
Fidelity Europe Fund (FIEUX) (ER: 0.83)
Fidelity Global Equity Income Fund (FGILX) (ER: 2.18)
Fidelity International Capital Appreciation Fund (FIVFX) (ER: 1.22)
Fidelity International Discovery Fund (FIGRX) (ER: 1.01)
Fidelity International Enhanced Index Fund (FIENX) (ER: 0.63)
Fidelity International Growth Fund (FIGFX) (ER: 1.28)
Fidelity International Small Cap Opportunities Fund (FSCOX) (ER: 1.47)
Fidelity International Small Cap Fund (FISMX) (ER: 1.36)
Fidelity International Value Fund (FIVLX) (ER: 1.13)
Fidelity Japan Smaller Companies Fund (FJSCX) (ER: 1.05)
Fidelity Japan Fund (FJPNX) (ER: 1.09)
Fidelity Latin America Fund (FLATX) (ER: 1.02)
Fidelity Nordic Fund (FNORX) (ER: 1.08)
Fidelity Overseas Fund (FOSFX) (ER: 0.69)
Fidelity Pacific Basin Fund (FPBFX) (ER: 1.28)
Fidelity Total Emerging Markets Fund (FTEMX) (ER: 1.60)
Fidelity Total International Equity Fund (FTIEX) (ER: 1.16)
Fidelity Worldwide Fund (FWWFX) (ER: 1.11)
Spartan Emerging Markets Index Fund - Fidelity Advantage Class (FPMAX) (ER: 0.35)
Spartan Global ex U.S. Index Fund - Fidelity Advantage Class (FSGDX) (ER: 0.28)
Spartan International Index Fund - Fidelity Advantage Class (FSIVX) (ER: 0.17)
Fidelity Global Commodity Stock Fund (FFGCX) (ER: 1.10)
Fidelity International Real Estate Fund (FIREX) (ER: 1.19)
Fidelity Real Estate Income Fund (FRIFX) (ER: 0.90)
Fidelity Real Estate Investment Portfolio (FRESX) (ER: 0.84)
Select Banking Portfolio (FSRBX) (ER: 0.88)
Select Biotechnology Portfolio (FBIOX) (ER: 0.83)
Select Brokerage and Investment Management Portfolio (FSLBX) (ER: 1.52)
Select Communications Equipment Portfolio (FSDCX) (ER: 0.90)
Select Computers Portfolio (FDCPX) (ER: 0.86)
Select Consumer Finance Portfolio (FSVLX) (ER: 0.95)
Select Electronics Portfolio (FSELX) (ER: 0.84)
Select Energy Service Portfolio (FSESX) (ER: 0.82)
Select Energy Portfolio (FSENX) (ER: 0.83)
Select Financial Services Portfolio (FIDSX) (ER: 0.90)
Select Gold Portfolio (FSAGX) (ER: 0.90)
Select Health Care Portfolio (FSPHX) (ER: 0.80)
Select Insurance Portfolio (FSPCX) (ER: 0.89)
Select Materials Portfolio (FSDPX) (ER: 0.85)
Select Medical Equipment and Systems Portfolio (FSMEX) (ER: 0.84)
Select Medical Delivery Portfolio (FSHCX) (ER: 0.86)
Select Multimedia Portfolio (FBMPX) (ER: 0.90)
Select Natural Gas Portfolio (FSNGX) (ER: 0.86)
Select Natural Resources Portfolio (FNARX) (ER: 0.84)
Select Pharmaceuticals Portfolio (FPHAX) (ER: 0.89)
Select Software and Computer Services Portfolio (FSCSX) (ER: 0.82)
Select Technology Portfolio (FSPTX) (ER: 0.82)
Select Telecommunications Portfolio (FSTCX) (ER: 0.90)
Select Utilities Portfolio (FSUTX) (ER: 0.86)
Select Wireless Portfolio (FWRLX) (ER: 0.90)
Fidelity Telecom and Utilities Fund (FIUIX) (ER: 0.75)
Spartan Real Estate Index Fund - Fidelity Advantage Class (FSRVX) (ER: 0.20)
Strategic Advisers Emerging Markets Fund of Funds (FLILX) (ER: 1.98)
Strategic Advisers International Multi-Manager Fund (FMJDX) (ER: 1.33)
Fidelity Asset Manager 50% (FASMX) (ER: 0.70)
Fidelity Asset Manager 85% (FAMRX) (ER: 0.82)
Fidelity Strategic Dividend & Income Fund (FSDIX) (ER: 0.84)
Fidelity Convertible Securities Fund (FCVSX) (ER: 0.61)
Fidelity Asset Manager 20% (FASIX) (ER: 0.54)
Fidelity Asset Manager 30% (FTANX) (ER: 0.59)
Fidelity Asset Manager 40% (FFANX) (ER: 0.59)
Fidelity Asset Manager 60% (FSANX) (ER: 0.78)
Fidelity Asset Manager 70% (FASGX) (ER: 0.77)
Fidelity Balanced Fund (FBALX) (ER: 0.60)
Fidelity Freedom Income Fund (FFFAX) (ER: 0.44)
Fidelity Global Balanced Fund (FGBLX) (ER: 1.04)
Fidelity Global Strategies Fund (FDYSX) (ER: 1.21)
Fidelity Puritan Fund (FPURX) (ER: 0.59)
Fidelity Strategic Real Return Fund (FSRRX) (ER: 0.75)
Fidelity Capital & Income Fund (FAGIX) (ER: 0.77)
Fidelity Conservative Income Bond Fund (FCONX) (ER: 0.40)
Fidelity Corporate Bond Fund (FCBFX) (ER: 0.45)
Fidelity Floating Rate High Income Fund (FFRHX) (ER: 0.71)
Fidelity Global High Income Fund (FGHNX) (ER: 1.07)
Fidelity Global Bond Fund (FGBFX) (ER: 1.31)
Fidelity GNMA Fund (FGMNX) (ER: 0.45)
Fidelity High Income Fund (SPHIX) (ER: 0.76)
Fidelity Inflation-Protected Bond Fund (FINPX) (ER: 0.45)
Fidelity Institutional Short-Intermediate Government Fund (FFXSX) (ER: 0.45)
Fidelity Intermediate Bond Fund (FTHRX) (ER: 0.45)
Fidelity International Bond Fund (FINUX) (ER: 1.40)
Fidelity Intermediate Government Income Fund (FSTGX) (ER: 0.45)
Fidelity Investment Grade Bond Fund (FBNDX) (ER: 0.45)
Fidelity Mortgage Securities Fund (FMSFX) (ER: 0.45)
Fidelity New Markets Income Fund (FNMIX) (ER: 0.87)
Fidelity Short-Term Bond Fund (FSHBX) (ER: 0.45)
Fidelity Strategic Income Fund (FSICX) (ER: 0.70)
Fidelity Total Bond Fund (FTBFX) (ER: 0.45)
Fidelity Ultra-Short Bond Fund (FUSFX) (ER: 0.45)
Fidelity Government Income Fund (FGOVX) (ER: 0.45)
Strategic Advisers Core Income Multi-Manager Fund (FWHBX) (ER: 0.98)
Strategic Advisers Income Opportunities Fund of Funds (FSADX) (ER: 3.08)
Spartan Inflation-Protected Bond Index Fund - Fidelity Advantage Class (FSIYX) (ER: 0.10)
Spartan Intermediate Treasury Bond Index Fund - Fidelity Advantage Class (FIBAX) (ER: 0.10)
Spartan Long-Term Treasury Bond Index Fund - Fidelity Advantage Class (FLBAX) (ER: 0.10)
Spartan Short-Term Treasury Bond Index Fund - Fidelity Advantage Class (FSBAX) (ER: 0.10)
Spartan U.S. Bond Index Fund - Fidelity Advantage Class (FSITX) (ER: 0.17)
Fidelity Cash Reserves (FDRXX) (ER: 0.37)
Fidelity Government Money Market Fund (SPAXX) (ER: 0.42)
Fidelity Money Market Fund (SPRXX) (ER: 0.42)
Fidelity Money Market Trust Retirement Government Money Market Portfolio (FGMXX) (ER: 0.42)
Fidelity Money Market Trust Retirement Money Market Portfolio (FRTXX) (ER: 0.42)
Select Money Market Portfolio (FSLXX) (ER: 0.30)
Fidelity U.S. Government Reserves (FGRXX) (ER: 0.33)
Fidelity U.S. Treasury Money Market Fund (FDLXX) (ER: 0.42)

5% Her TIAA-CREF 403(b) Past Employer
1.4% TIAA Traditional
0.3% CREF Growth (ER: 0.47)
0.3% CREF Stock (ER: 0.49)
0.3% TIAA-CREF International Equity Fund - Retirement Class (TRERX) (ER: 0.78)
0.2% TIAA-CREF International Equity Index Fund - Retirement Class (TRIEX) (ER: 0.34)
1.3% CREF Money Market (ER: 0.42)
0.6% TIAA-CREF Lifecycle 2030 Fund - Retirement Class (TCLNX) (ER: 0.9)
0.5% TIAA-CREF Lifecycle 2020 Fund - Retirement Class (TCLTX) (ER: 0.87)
0.1% TIAA-CREF Lifecycle 2045 Fund - Retirement Class (TTFRX) (ER: 0.97)

Her Roth IRA at Principal Funds (3.5% of total)
1.0% Midcap Blend (PMBJX) (ER: 1.1)
0.8% Largecap Growth II (PPLJX) (ER: 1.44)
0.9% Real Estate Securities (PREJX) (ER: 1.33)
0.8% S A M Conservative Growth Portfolio (PCGJX) (ER: 1.4)

Contributions

Current Year Annual Contributions
$17k his 401k in previous and current employer (employer match 4%)
$0k her 401k/403b
$5k his Roth IRA - unsure
$5k her Roth IRA - unsure

Available funds

Funds available in his Ascensus 401(k) Current Employer
Invesco Select Companies Fund R (ATIRX) (ER: 1.53)
AllianceBern Large Cap Growth R (ABPRX) (ER: 1.56)
American Century LIVESTRONG 2020 R (ARBRX) (ER: 0.71)
American Century LIVESTRONG 2025 R (ARWRX) (ER: 0.71)
American Century LIVESTRONG 2030 R (ARCRX) (ER: 0.71)
American Century LIVESTRONG 2040 R (ARDRX) (ER: 0.71)
American Century LIVESTRONG 2050 R (ARFWX) (ER: 0.71)
BlackRock Eqty Dividend R (MRDVX) (ER: 1.32)
BlackRock S&P 500 Index A (MDSRX) (ER: 0.56)
Columbia Real Estate Eqty R (CRSRX) (ER: 1.52)
Columbia Seligman Comm and InformationR2 (SCIRX) (ER: 1.63)
Eaton Vance Atlanta Cap SMID-Cap R (ERSMX) (ER: 1.63)
Invesco Balanced-Risk Allocation R (ABRRX) (ER: 1.58)
Invesco Equally-Weighted S&P 500 A (VADAX) (ER: 0.60)
Invesco Intl Growth Eqty R (AIERX) (ER: 1.64)
Janus Triton Retirement (JGMRX) (ER: 1.45)
John Hancock Income Fund Class R1 (JSTRX) (ER: 1.21)
MFS Utilities Fund R3 (MMUHX) (ER: 1.04)
Oppenheimer Rising Dividends Fund N (ONRDX) (ER: 1.43)
Oppenheimer Developing Markets Fund N (ODVNX) (ER: 1.70)
Oppenheimer Gold And Spec Minerals N (OGMNX) (ER: 1.49)
Oppenheimer International Bond Fund N (OIBNX) (ER: 1.41)
Oppenheimer Intl Diversified N (OIDNX) (ER: 1.69)
PIMCO Total Return Fund A (PTTAX) (ER: 0.85)
Perkins Mid Cap Value Fund Retirement (JDPRX) (ER: 1.50)
Prudential Short-Term Corporate Bond A (PBSMX) (ER: 0.77)

Questions
1. My wife worked for 8 months this year and was not eligible for employer sponsored retirement plan. What options do we have to invest in her pretax retirement savings?

2. I need to consolidate my portfolio. My current 401(k) accepts rollovers. Should I transfer/rollover to either my current 401(l) or to an IRA at Vanguard? If I go with Vanguard, what funds should I pick (with regard to my desired asset allocation)?

3. I would like to move our Roth IRA from Principal to Vanguard. What funds should I pick (with regard to my desired asset allocation)?

4. If possible, I will contribute the maximum to Roth IRA this year. I could also contribute to a post-tax IRA. If I open a post-tax IRA, can I move the amount immediately to Roth IRA (like next day)?

Thank you for taking the time to look and comment.
bkm2996

[retiredjg]

Welcome to the forum!

Tax Rate: 27% Federal (approx), 5.4% VA State

What we need is your marginal tax bracket. Compare your taxable income (line 43 of Form 1040) to this chart. You should be able to fine a similar chart for your state.

Age: 35 (me), 31(wife)
Desired Asset allocation: 85% stocks / 15% bonds

I would suggest you consider 80% stocks and 20% bonds for two reasons. The 15% bonds is getting pretty aggressive for your age. Many people believe that all portfolios need at least 20% or 25% bonds.

Current Year Annual Contributions
$17k his 401k in previous and current employer (employer match 4%)
$0k her 401k/403b
$5k his Roth IRA - unsure
$5k her Roth IRA - unsure

Why are you unsure about the Roth IRAs? Is it because you don't know if you'll have the money or because you think you might be over the limit?

1. My wife worked for 8 months this year and was not eligible for employer sponsored retirement plan. What options do we have to invest in her pretax retirement savings?

Which pretax retirement savings do you mean?

2. I need to consolidate my portfolio. My current 401(k) accepts rollovers. Should I transfer/rollover to either my current 401(l) or to an IRA at Vanguard? If I go with Vanguard, what funds should I pick (with regard to my desired asset allocation)?

This might depend on whether you are planning or interested in doing a back door contribution to a Roth IRA.

3. I would like to move our Roth IRA from Principal to Vanguard. What funds should I pick (with regard to my desired asset allocation)?

We'll get back to this when some other questions are answered.

4. If possible, I will contribute the maximum to Roth IRA this year. I could also contribute to a post-tax IRA. If I open a post-tax IRA, can I move the amount immediately to Roth IRA (like next day)?

It sounds like you might be planning to contribute to both a Roth IRA and a tIRA. You can only contribute a total of $5,500 (per person) to one or both of those types of IRAs.

If you are eligible to contribute directly to Roth IRA, that is the easiest approach. However, with a 27% tax rate (?) reported above, it seems unlikely that you can contribute directly to Roth IRA. You could do the back door approach (tIRA converted to Roth IRA), but that will be a bad idea if you move your old 401k money to an IRA.

So let's get the tax rate straight and also your eligibility for Roth IRA and her eligibility for either deductible contributions to tIRA or Roth IRA.

[bkm2996]

retiredjg thank you for taking time to review my portfolio. I am sorry for a late reply. I have made changes in the initial post to reflect the Federal and VA state marginal tax bracket. Your suggestion of 80% stocks and 20% bonds makes sense. I made this change.

Why are you unsure about the Roth IRAs? Is it because you don't know if you'll have the money or because you think you might be over the limit?

I am unsure of Roth as I think we might be over the limit. We made contributions to Roth IRA last couple of years. I would like to continue with the contributions if possible.

Which pretax retirement savings do you mean?

Other than employer sponsored 401k/403b and tIRA, I am not aware of pretax retirement savings. I appreciate any advice on this.

This might depend on whether you are planning or interested in doing a back door contribution to a Roth IRA.

I contribute maximum to my 401k. If I am not over the limit, I want to contribute maximum to Roth IRA. I would also like to put money in tIRA, which I would want to convert to Roth IRA. Yes, I am interested in doing a back door contribution to Roth IRA if not now, at least in the future. Can you let me know what route I should be taking in my Question 2?

We'll get back to this when some other questions are answered.

I hope I have answered your questions. Can you give me an insight to my Question 3?

It sounds like you might be planning to contribute to both a Roth IRA and a tIRA. You can only contribute a total of $5,500 (per person) to one or both of those types of IRAs.

I was not aware of total contribution to IRAs. Thank you for bringing this to my attention.

So let's get the tax rate straight and also your eligibility for Roth IRA and her eligibility for either deductible contributions to tIRA or Roth IRA.[/quote]

[ruralavalon]

Welcome to the forum .

Its good to see that you are debt free other than the mortgage.

I contribute maximum to my 401k. If I am not over the limit, I want to contribute maximum to Roth IRA. I would also like to put money in tIRA, which I would want to convert to Roth IRA. Yes, I am interested in doing a back door contribution to Roth IRA if not now, at least in the future. Can you let me know what route I should be taking in my Question 2?

You indicate your combined tax rate is nearly 31% ("25% Federal (approx), 5.75% VA State"), which is relatively high, so it ts more likely that you will be in a lower tax bracket on retirement. That would argue against using a Roth. What is your marginal federal tax rate? Please see -- http://www.moneychimp.com/features/tax_brackets.htm .

Also, your investment choices in the new 401k are relatively poor (except for BlackRock S&P 500 Index A (MDSRX) (ER: 0.56) ). So that fact argues in favor of rolling over the old 401k into an IRA rather than putting it into the new 401k (even though that ruins the benefit to doing a back door Roth later). Wiki article link: Backdoor Roth IRA .

I don't want to try to make the decision for you, I only suggest that this may deserve some more thought.

[bkm2996]

ruralavalon thank you for your comments.

You indicate your combined tax rate is nearly 31% ("25% Federal (approx), 5.75% VA State"), which is relatively high, so it ts more likely that you will be in a lower tax bracket on retirement. That would argue against using a Roth. What is your marginal federal tax rate? Please see -- http://www.moneychimp.com/features/tax_brackets.htm .

I updated my initial post after comments from retiredjg. Our marginal federal tax rate is 25%.

Also, your investment choices in the new 401k are relatively poor (except for BlackRock S&P 500 Index A (MDSRX) (ER: 0.56) ). So that fact argues in favor of rolling over the old 401k into an IRA rather than putting it into the new 401k (even though that ruins the benefit to doing a back door Roth later). Wiki article link: Backdoor Roth IRA .

I totally agree with the investment choices in my new 401k. I would roll my old 401k with Vanguard.

I don't want to try to make the decision for you, I only suggest that this may deserve some more thought.

I was thinking all these days and finally decided to ask for help here. I am happy getting answers that make more sense.

Happy Holidays.

[retiredjg]

Do you mind if we go over that federal rate just one more time?

The reason I'm asking is that you originally had 27%. When people have a number like that it is usually an effective rate, not a marginal rate. But an effective rate of 27% made me expect a marginal rate of probably 33%, maybe higher. But you are saying marginal ratel of 25%, meaning your taxable income (not your total income) is between $70,700 and $142,700. Does that sound right?

[retiredjg]

It is unclear if your wife worked 8 months and then quit or is still working. If she is still working, will she be eligible for any kind of plan at work in the future? If so, when?

[bkm2996]

Do you mind if we go over that federal rate just one more time?
The reason I'm asking is that you originally had 27%. When people have a number like that it is usually an effective rate, not a marginal rate. But an effective rate of 27% made me expect a marginal rate of probably 33%, maybe higher. But you are saying marginal ratel of 25%, meaning your taxable income (not your total income) is between $70,700 and $142,700. Does that sound right?

retiredjg, our 2011 taxable income was between 69,000 and 139,350. Our effective federal tax rate is 25%. My initial effective tax calculation was wrong. Sorry for all the confusion.
Our 2012 taxable income will be between 142,700 and 217,450. Wife could not participate in 401k plan.

It is unclear if your wife worked 8 months and then quit or is still working. If she is still working, will she be eligible for any kind of plan at work in the future? If so, when?

My wife worked for 8 months this year. Due to health reasons, she had to quit work. During her 8 months, she was not eligible for employer sponsored 401k plan. Her health is much better now. She will start working sometime next year (2013).

[retiredjg]

bkm, here's the problem I'm having with figuring out what might be best for your situation.

If you are in the 25% bracket, you and your spouse can probably contribute directly to Roth IRA. There would be no need for using the back door contribution method. If you will continue to be in this situation throughout your careers, there is no need to preserve your ability to use the back door. In that case, it would be best to roll your old plans into traditional IRA for more and lower cost choices.

However, if income is likely to go up a lot - big promotions, wife going back to work (if she is not currently working), etc. - you might drift out of range to contribute directly to Roth IRA and need to use the back door (if it even still exists). In that case, you might want to preserve your ability to use the back door. Moving your current old plans to tIRA might interfere with that.

It would be helpful to know if you expect to have a similar salary (with ordinary raises) for your career or if you expect family income to increase significantly over the years.

It would also be helpful to know just how close you are to being out of range to contribute directly to Roth IRA. Right now, your modified AGI would have to be over $173k to be in a position to have direct Roth IRA contributions limited or eliminated.

It would also be helpful to know if there is are better choices in Her Fidelity 403b. At the very least, her old plans can be combined into one and it might be the better one.

As for yours, your new 401k is OK (not great, not terrible). You could roll your old one into the new one and be OK. Or you could roll it to tIRA now for lower costs and if necessary, roll it into your current 401k in the future if you have need to use the back door method for Roth IRA contributions.

I see you have just posted something. I'll go ahead and post this anyway.

[retiredjg]

retiredjg, our 2011 taxable income was between 69,000 and 139,350. Our effective federal tax rate is 25%. My initial effective tax calculation was wrong. Sorry for all the confusion.

There is still confusion.

If your 2011 taxable income was between 69,000 and 139,340 your tax bracket was 25%. Your effective tax rate would have been more in the range of 14% or 16% depending on how you calculate it.

Our 2012 taxable income will be between 142,700 and 217,450.

Ok. This puts you into the 28% tax bracket for 2012. That puts a different light on things. And it might put you out of range for direct Roth IRA contributions for 2012. I'm assuming you have not yet made your 2012 Roth IRA contributions?

[Peter Foley]

I'll just add a thumbs up to the advice given by retired jg. I would add that with the relatively poor choices you have in your new 401k, the best strategy to adopt is to choose the low cost option there and build around it in accounts that have more flexibility. The move to Vanguard with your old 401k will provide such flexibility. As you approach some of this you might want to simplify as well. Positions of less than 5% really don't add much diversity nor affect overall performance. This speaks to some consolidation in your wife's 403b accounts. For example, you might want to consider using the TIAA-CREF account for your international allocation because you have a low cost option there.
If you decide to take on the task of managing your asset allocation and rebalancing, you should look for index funds instead of FREEDOM funds in her Fidelity account. If that is not possible, you could consolidate into the 2015 which has the lowest cost.
You seem inclined to continue to fund your Roth. I think that is a wise approach to one's overall retirement savings plan.

[retiredjg]

Is the cash in taxable for retirement or some other goal?

[ruralavalon]

Sorry for all the questions .

In "Her Fidelity 403(b) Past Employer", are there any Spartan funds offered as investment choices? If so, could you please list the Spartan funds offered (names, tickers, expense ratios) in that old 403b?

In your old 401k at Principal, you list "Principal Global Investors International Equity Index Separate Account (ER: 0.55)". In the plan materials does it state which index that separate account tracks?

[bkm2996]

Sorry for a very late reply. I have been busy with family visits and holidays

Ok. This puts you into the 28% tax bracket for 2012. That puts a different light on things. And it might put you out of range for direct Roth IRA contributions for 2012. I'm assuming you have not yet made your 2012 Roth IRA contributions?

Yes, we have not yet made our Roth IRA contributions for 2012. We will do it once we figure our taxes.

Is the cash in taxable for retirement or some other goal?

Currently the cash is for retirement purposes only. If we buy another home, we might put it as down payment. We are not thinking of buying a new home.

I'll just add a thumbs up to the advice given by retired jg. I would add that with the relatively poor choices you have in your new 401k, the best strategy to adopt is to choose the low cost option there and build around it in accounts that have more flexibility. The move to Vanguard with your old 401k will provide such flexibility. As you approach some of this you might want to simplify as well. Positions of less than 5% really don't add much diversity nor affect overall performance.

I am thinking the same. I am thinking of moving my old 401k to Vanguard.

This speaks to some consolidation in your wife's 403b accounts. For example, you might want to consider using the TIAA-CREF account for your international allocation because you have a low cost option there.

Are you referring to her TIAA-CREF International Equity Index Fund - Retirement Class (TRIEX) (ER: 0.34)?

If you decide to take on the task of managing your asset allocation and rebalancing, you should look for index funds instead of FREEDOM funds in her Fidelity account. If that is not possible, you could consolidate into the 2015 which has the lowest cost.

There are no index funds offered in her Fidelity account. I am thinking to move her old 401k/403b to Vanguard. Do you think I should do that.

You seem inclined to continue to fund your Roth. I think that is a wise approach to one's overall retirement savings plan.

Yes, we are very much interested in Roth IRA contributions. We met with a financial planner and he suggested having 30% cash, 40% in pretax savings and 30% in posttax savings.

In "Her Fidelity 403(b) Past Employer", are there any Spartan funds offered as investment choices? If so, could you please list the Spartan funds offered (names, tickers, expense ratios) in that old 403b?

There are no Spartan funds offered in her Fidelity account.

In your old 401k at Principal, you list "Principal Global Investors International Equity Index Separate Account (ER: 0.55)". In the plan materials does it state which index that separate account tracks?

From the website http://www.principal.com/InvestmentProf ... tail=false, the fund invests in securities held by MSCI EAFE Index.

[retiredjg]

bkm, welcome back.

Since it appears you will be in the 28% tax bracket for 2012 (and later), you may or may not be able to contribute directly to Roth IRA. Do you know yet?

You seem to want to continue using Roth IRA in the future, so some decisions need to be made before we can go any further.

1) Would you rather have your old 401k in a tIRA at Vanguard or would you rather preserve your option to use the back door to contribute to Roth IRA?

2) Would your spouse rather have her old plans moved to a tIRA at Vanguard or would she rather preserve her option to use the back door to contribute to Roth IRA?

The decision can be the same for each of you or different.


In your case, your new 401k is just OK. It's not wonderful, it's not terrible. You could roll your old 401k into your new 401k and keep your option for doing back door Roth IRA contributions in the future. Or you could leave the money in the old 401k and keep your option for doing back door Roth IRA contributions in the future. To help answer this, we need the list of things available in your old 401k. Actually, we only need to know what bonds are available there so just list those if you want. Be sure to include the expense ratios and any other additional expenses they might charge. Put this in your original post using the edit button.

For your wife, we need to know what funds are available in her Old 403b at Fidelity, name, ticker and expense ratio. You say there are no index funds available. Is there a bond fund available in the range of .4% to .5%? I think we can guess about what is available at her old TIAA-CREFF plan so you don't need to look that one up. Put this in your original post using the edit button.

[ruralavalon]

It looks like the choices in his old 401k may be better than those in his new 401k. For example his old 401k offers --
Principal Global Investors LargeCap S&P 500 Index Separate Account (ER: 0.31)
Principal Global Investors SmallCap S&P 600 Index Separate Account (ER: 0.31)
Principal Global Investors International Equity Index Separate Account (ER: 0.55)

Please do list (names & expenses ratios) any low or moderate cost bond choices offered in his old 401k.

[retiredjg]

It looks like the choices in his old 401k may be better than those in his new 401k. For example his old 401k offers --
Principal Global Investors LargeCap S&P 500 Index Separate Account (ER: 0.31)
Principal Global Investors SmallCap S&P 600 Index Separate Account (ER: 0.31)
Principal Global Investors International Equity Index Separate Account (ER: 0.55)

Please do list (names & expenses ratios) any low or moderate cost bond choices offered in his old 401k.

I'm thinking the same thing, but would like to know what the bond choices are - it might be PIMCO at .85% or something along that line! I'm not particularly interested in the International fund since it is an EAFE fund, but I suppose it would do in a pinch.

I think our problem is going to be on her side of the portfolio....but maybe not.

[bkm2996]

bkm, welcome back.

Since it appears you will be in the 28% tax bracket for 2012 (and later), you may or may not be able to contribute directly to Roth IRA. Do you know yet?

We have not yet made our Roth IRA contributions. We are going to figure it when we file our taxes next month.

1) Would you rather have your old 401k in a tIRA at Vanguard or would you rather preserve your option to use the back door to contribute to Roth IRA?

I would leave my old 401k and have the back door contribution to Roth IRA.

2) Would your spouse rather have her old plans moved to a tIRA at Vanguard or would she rather preserve her option to use the back door to contribute to Roth IRA?

I would leave her 401k/403b and have the back door contribution to Roth IRA.

Please do list (names & expenses ratios) any low or moderate cost bond choices offered in his old 401k.

I have updated the fund choices available at our Principal and Fidelity accounts with our previous employers in the original post.

I was wrong about the fund choices in my wife's 403b Fidelity account. It was my ignorance. There are around 200 funds available that we could invest in. I have updated the funds in the original post.

Let me know if you need further information and thanks for your advice/help.

[retiredjg]

Thanks for the update. That makes things clear for Her side and somewhat clear for your side.

I'll suggest that you keep your old 401k intact (but maybe with different funds) because the expenses are somewhat better than your current 401k. And I'll suggest that your wife should roll her TIAA -CREF plan into Her Old Fido 403b which is excellent. She might not be able to take out the small percentage she has in Traditional - it depends. It might have to come out over 10 years. If so, just set it up and do it.

Here's an idea. You would exchange everything you currently have to what is below and then maintain it with contributions.

Taxable 30.5%
30.5% Vanguard Total International Index

His Current 401k 0%
0% BlackRock S&P 500 Index A (MDSRX) (ER: 0.56)
0% PIMCO Total Return Fund A (PTTAX) (ER: 0.85)

His Old 401k 34%
27% Principal Global Investors LargeCap S&P 500 Index Separate Account (ER: 0.31)
7% Principal Global Investors SmallCap S&P 600 Index Separate Account (ER: 0.31)
(roughly equals the total stock market)

His Roth IRA 3.5%
3.5% Vanguard Total International Index

Her Old Fido 403b and Her Old TIAA CREF Plans 28.5%
8.5% Spartan Total Stock Market Index .07%
20% Spartan US Bond Index .17%

Her Roth IRA 3.5%
3.5% Vanguard Total International Index

This idea is 80% stocks and 20% bonds with 47% of the bonds in international. When you make your IRA contributions for 2012, that should get your international up to near your desired 50% of stocks. The portfolio is tax efficient (the International fund in taxable is tax-efficient and also eligible for the foreign tax credit) and low cost.

I put all the bonds (for now) in Her Old 403b because they are the lowest cost bonds you have available. As you rebalance, you can exchange the TSM in that account to the Spartan US Bond index - eventually that account will be only 1 fund. At that point, you 'll need to start putting bonds in His current 401k.

For the first year, put all His 401k contributions into the 500 Index fund and exchange stocks to bonds in Her Fido 403b, trying to keep your stock to bond ratio at about 80/20. At some point, direct some of the contributions to His 401k to bonds if needed.

Keep your international allocation up to target using more contributions to IRA/Roth IRA. If it is too much, put some in a Total Stock Market Fund (or bonds to reduce using the costly PIMCO fund in His 401k).

Regarding the 500 Index (large cap) and 600 Index (small cap) funds. I set it up at about 80% large cap and 20% small cap. That's a guestimate of something close to the total stock market. As you add more 500 index to His 401k, you can exchange some 500 Index to 600 Index in His Old 401k to keep the ratio about right. Or you can not worry about it and add on some small cap or extended market index somewhere in a future year.

It is hard to be any more specific at this point since you don't know when your wife will be going back to work and if she will have a 401k/403b available. This idea will get you a little consolidated and started in the right direction. And if you have need for back door Roth IRA contributions, you will both be able to do that since there are no tIRAs to get in the way.

[bkm2996]

Here's an idea. You would exchange everything you currently have to what is below and then maintain it with contributions.

Taxable 30.5%
30.5% Vanguard Total International Index

His Current 401k 0%
0% BlackRock S&P 500 Index A (MDSRX) (ER: 0.56)
0% PIMCO Total Return Fund A (PTTAX) (ER: 0.85)

His Old 401k 34%
27% Principal Global Investors LargeCap S&P 500 Index Separate Account (ER: 0.31)
7% Principal Global Investors SmallCap S&P 600 Index Separate Account (ER: 0.31)
(roughly equals the total stock market)

His Roth IRA 3.5%
3.5% Vanguard Total International Index

Her Old Fido 403b and Her Old TIAA CREF Plans 28.5%
8.5% Spartan Total Stock Market Index .07%
20% Spartan US Bond Index .17%

Her Roth IRA 3.5%
3.5% Vanguard Total International Index

I sincerely appreciate your efforts in giving a very wonderful advice regarding our portfolio. I am going to follow this and start the process today. I have one question though. You suggest the 30.5% taxable cash be put in Vanguard Total International Index. Currently my cash is in various savings accounts. How can I invest in the index fund? Sorry if its a dumb question.

You put 0% for the 2 funds selected in his 401k. What would be the percentage contribution split (70/30; 80/20)?

[Duckie]

You suggest the 30.5% taxable cash be put in Vanguard Total International Index. Currently my cash is in various savings accounts. How can I invest in the index fund? Sorry if its a dumb question.

You open a taxable account at Vanguard. Once it's set up and you have the account number you get checks from the savings accounts. You either send those checks directly to Vanguard or deposit them in a checking account and send one big check. Or am I misunderstanding the question?

You put 0% for the 2 funds selected in his 401k. What would be the percentage contribution split (70/30; 80/20)?

You put 100% into the 500 Index fund until the Spartan US Bond Index in the Old Fido plan becomes less than 20% of the portfolio. Then start buying Total Return in His current 401k. To start make it 95% 500 Index, 5% Total Return. When you rebalance, US Bond Index plus Total Return should add up to 20%.

[retiredjg]

You suggest the 30.5% taxable cash be put in Vanguard Total International Index. Currently my cash is in various savings accounts. How can I invest in the index fund?

You said that money is for retirement, so I invested it in the best fund to use in your taxable account. You would do that by moving the money to Vanguard as Duckie said. If you have reasons you want to leave all that in cash, we need to start over and do something else. However, I can't think of any reason to have that much money sitting in cash. Your emergency fund can be cash, a house down-payment can be cash, but retirement money needs to be invested.

You put 0% for the 2 funds selected in his 401k. What would be the percentage contribution split (70/30; 80/20)?

I put 0% because it appears the account is empty right now. If there is money in there, we need to fix that.

For your contributions, take another look at this:

I put all the bonds (for now) in Her Old 403b because they are the lowest cost bonds you have available. As you rebalance, you can exchange the TSM in that account to the Spartan US Bond index - eventually that account will be only 1 fund. At that point, you 'll need to start putting bonds in His current 401k.

For the first year, put all His 401k contributions into the 500 Index fund and exchange stocks to bonds in Her Fido 403b, trying to keep your stock to bond ratio at about 80/20. At some point, direct some of the contributions to His 401k to bonds if needed.

Keep your international allocation up to target using more contributions to IRA/Roth IRA. If it is too much, put some in a Total Stock Market Fund (or bonds to reduce using the costly PIMCO fund in His 401k).

Let me know if this does not make more sense. We might need to go over it again.

[bkm2996]

You open a taxable account at Vanguard. Once it's set up and you have the account number you get checks from the savings accounts. You either send those checks directly to Vanguard or deposit them in a checking account and send one big check. Or am I misunderstanding the question?

You answered my question.

You put 0% for the 2 funds selected in his 401k. What would be the percentage contribution split (70/30; 80/20)?

You put 100% into the 500 Index fund until the Spartan US Bond Index in the Old Fido plan becomes less than 20% of the portfolio. Then start buying Total Return in His current 401k. To start make it 95% 500 Index, 5% Total Return. When you rebalance, US Bond Index plus Total Return should add up to 20%.[/quote]
Thank you for the explanation.

You said that money is for retirement, so I invested it in the best fund to use in your taxable account. You would do that by moving the money to Vanguard as Duckie said. If you have reasons you want to leave all that in cash, we need to start over and do something else. However, I can't think of any reason to have that much money sitting in cash. Your emergency fund can be cash, a house down-payment can be cash, but retirement money needs to be invested.

The cash in the taxable account is our emergency fund + down payment for house(not sure when) + retirement. As you suggested, I am going to keep the emergency funds as cash and move the other money in Vanguard Total International Index.

I put 0% because it appears the account is empty right now. If there is money in there, we need to fix that.

There was around $2k money that I moved to the BlackRock S&P 500 Index A (MDSRX). All new contributions this year are going to that fund.

For your contributions, take another look at this:

I put all the bonds (for now) in Her Old 403b because they are the lowest cost bonds you have available. As you rebalance, you can exchange the TSM in that account to the Spartan US Bond index - eventually that account will be only 1 fund. At that point, you 'll need to start putting bonds in His current 401k.

For the first year, put all His 401k contributions into the 500 Index fund and exchange stocks to bonds in Her Fido 403b, trying to keep your stock to bond ratio at about 80/20. At some point, direct some of the contributions to His 401k to bonds if needed.

Keep your international allocation up to target using more contributions to IRA/Roth IRA. If it is too much, put some in a Total Stock Market Fund (or bonds to reduce using the costly PIMCO fund in His 401k).

Let me know if this does not make more sense. We might need to go over it again.

I did not read this properly earlier. What you and Duckie say makes sense now. I appreciate your answers.

[retiredjg]

[The cash in the taxable account is our emergency fund + down payment for house(not sure when) + retirement. As you suggested, I am going to keep the emergency funds as cash and move the other money in Vanguard Total International Index.

You can do this, but when/if you decide you are near ready for another home, you should move money from stocks to something safe like money market. If you don't , if the market crashes, you can't have your new home because the money will have simply disappeared and won't be back for several years (assuming it comes back at all).

When you move money from international stocks to money market, you will have to exchange US stocks to International stocks in some other account.

There was around $2k money that I moved to the BlackRock S&P 500 Index A (MDSRX). All new contributions this year are going to that fund.

Since your portfolio is mid 6 figures, this is a small amount, so I wont go back and change all the percentages.

[Peter Foley]

In response to your question regarding international, I was looking at the available fund with the lowest expenses. Since you have posted a revised list of funds available you might also consider:
Spartan Emerging Markets Index Fund - Fidelity Advantage Class (FPMAX) (ER: 0.35)
Spartan Global ex U.S. Index Fund - Fidelity Advantage Class (FSGDX) (ER: 0.28)

I generally favor more simplification than many others (that doesn't mean I'm right, it is just a bias based on the fact that with most married couples, one person has more interest than the other - if something should happen to that person, could the survivor manage the complex portfolio).