biasion wrote:You should get out of wellesley because it is an active fund. It is index like but the incremental costs, trading costs, and overall allocation put you at more risk.
Costs don't put you at risk. Wellesley is not high cost in any case. You could do far worse than Wellesley.
biasion wrote:Keep 10% in Vanguard's total US, 10% total international or equivalent. These should be in taxable.
Since she'll pay no federal tax anyway, probably doesn't make any difference where you hold stocks. State tax may make a difference, but most states don't give favorable treatment to capital gains and dividends, while Treasurys are exempt from state tax, so the usual rule of thumb of stocks in taxable is probably turned on its head.
biasion wrote:1-2 years living expenses in the money market
This would appear to be the bulk of her funds, since she may have as few as 3 years' expenses.
biasion wrote:divide the remainder in half: half each in TIPS, half in intermediate treasuries.
I'm not sure either is appropriate for such a short time horizon. I recommend putting the bulk of her money in bank CDs that match up with her expected expenditures, e.g., first year's expenses in MM, second year's expenses in a one-year CD, third year's expenses in a two-year CD. It's more important that you focus on how you are going to cover her living costs when she runs out.
You could probably convert her entire TIRA to a Roth this year and pay no tax on the conversion. Again, state tax considerations may be deteminative. The only reason to do this would be for estate planning -- if she were to die in the near future (before exhausting her estate), an inherited Roth is superior to an inherited TIRA of the same dollar value.