Rebalancing across multiple accounts with tax efficiency

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
brian.forney
Posts: 1
Joined: Sun Dec 08, 2013 7:35 pm

Rebalancing across multiple accounts with tax efficiency

Post by brian.forney »

I am looking for suggestions, code, or best practices on rebalancing. Specifically, I'm looking for suggestions on how to rebalancing to a global set of asset allocation targets across a set of investment accounts while making an effort to be tax efficient. My specific situation is rebalancing across a Rollover IRA, Roth IRA, and a non-tax advantaged account. Ideally, I would like to avoid putting funds that are high dividend into the the non-tax advantaged account and would like to be aware of capital gains in the non-tax advantaged when rebalancing. Any suggestions?

My current thinking is that this is a linear optimization problem with two constraints: 1) Funds cannot be transferred between accounts and 2) The asset allocation targets are achieved. Has anyone tried to build an algorithm - possibly using Octave or MATLAB or Excel or another software package to do this?

Thanks.
Texas hold em71
Posts: 595
Joined: Sat May 18, 2013 11:09 am

Re: Rebalancing across multiple accounts with tax efficiency

Post by Texas hold em71 »

No algorithm, just a relatively simple Excel spreadsheet. As I add assets to all accounts, I add to tax efficient funds in taxable and then rebalance in the tax deferred. At some point, I will run out of room in tax deferred to do so. At that point, I will rebalance with new contributions and sell for tax efficiency if needed. I have set everything up with specific id cost tracking to allow flexibility.
sambb
Posts: 3257
Joined: Sun Mar 10, 2013 3:31 pm

Re: Rebalancing across multiple accounts with tax efficiency

Post by sambb »

I dont understand why one would put bonds in the roth, as you would never pay taxes on that money, so wouldnt you want maximum growth from it, with a high stock percentage? Just food for thought.
User avatar
tyler_cracker
Posts: 311
Joined: Sat Dec 03, 2011 1:50 pm
Location: sending out the kicking team

Re: Rebalancing across multiple accounts with tax efficiency

Post by tyler_cracker »

sambb wrote:I dont understand why one would put bonds in the roth
http://thefinancebuff.com/stocks-or-bonds-in-roth.html

discusses some reasons.
longinvest
Posts: 5682
Joined: Sat Aug 11, 2012 8:44 am

Re: Rebalancing across multiple accounts with tax efficiency

Post by longinvest »

Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
Post Reply