You're right that tax rules for IRAs are no excuse to delay rebalancing. Get off your <expletive> and get it done.
aida2003 wrote:The same applies to RIRA: all money is tax-free when withdrawn and doesn't matter which shares are sold.
No. The rules governing withdrawals from Roth IRAs are rather messy, and depend on your age, the time elapsed since your first contribution, the total dollar amount you have contributed, yadda, yadda, yadda. But these rules don't interact with fund selection or trading, only *when* contributions and conversions were made and *how much*.
An easier rule to remember is that if you wait until age 59.5, then it's all tax free.
Investors do tax loss harvesting in taxable accounts. What about tax related strategies in retirement accounts like 401k, Roth IRA, and traditional IRA? I'm not talking about what asset classes to keep in which accounts.
An example involving Roth conversions is what I would call "recharacterization arbitrage".
Say you plan to do a $10K Roth conversion in 2013. Instead, you convert $20K:
$10K worth of short bonds
$10K worth of small cap value.
Then in 2014, you see how these two investments have turned out. If SCV has done its thing and outperformed, you leave it in the Roth and recharacterize the short bonds back to your trad IRA. If SCV has tanked, then you recharacterize it.
Either way the net tax cost is the same, but recharacterization offers you the ability to profit from hindsight: no matter what the market does, you get to pick the option that leaves a greater fraction of your portfolio in the Roth.