10 years to retirement - Vanguard Target Retirement

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Stockyards
Posts: 1
Joined: Fri Nov 24, 2017 12:06 pm
Location: Chicago

10 years to retirement - Vanguard Target Retirement

Post by Stockyards » Fri Nov 24, 2017 12:28 pm

Below is some background information.
Emergency funds: 6 month - separate checking account - earns 0%
Debt: No mortgage, current rent is $1,300. I have Renters Insurance. I Pay the credit card balance each month( I never pay interest).
Tax Filing Status: Single
Tax bracket: 28%
Effective Tax Rate: 22% Federal, 4% State
State of Residence: IL
Age: 50
Desired Asset allocation : 78% stocks / 22% bonds
Desired International allocation: 30%
Current total portfolio : $800 K
$300K out of $ 800K in checking account earning 0.5% ( to pay cash for condo. Live in apartment today)
Current retirement assets
Zero accounts in taxable category for Retirement. I have saved $300 K sitting in a checking for a condo purchase.
401k Tax Advantage
24.5 % Vanguard Retirement Target 2035 Trust 1 (expense ratio 0.07%) $ 125K
Company match: Matches 100% of my contribution up to first 1%, than 50% of my contribution up to 6%
RollOver 401K from Previous employer held at Vanguard
62.7 % Vanguard Target Retirement 2035 (VTTHX ) (expense ratio 0.15%) $ 320K
IRA Vanguard
1.57 % Vanguard Target Retirement 2035 (VTTHX ) (expense ratio 0.15%) $ 8K

IRA Schwab
2.35 % Schwab Money Market (SWMXX) $ 12K
IRA Roth Schwab
3.5 % Schwab Money Market (SWMXX) $ 18K
Former employer 401K kept at Prudential
4.5 % Dryden S&P 500 Index (expense ratio 0.09%) $ 23K
0.78 % International Growth/Artisan Partners Fund (ARTIX) ( expense ratio 0.79%) $ 4K

New annual Contributions
Already invested $24,000 max in Company 401k Vanguard Retirement Target 2035 Trust l
Available Funds available in 401(k)
Vanguard Extended Mkt Index Fund Institutional Shares (VIEIX) (expense ratio 0.06%)
Vanguard International Index Fund Institutional Plus Shares (VIIIX) (expense ratio 0.02%)
Vanguard Total International Stock Index Inter'l Institution Shares (VTSNX) (exp ratio 0.09%)
Vanguard Total Bond Mkt Index Institution Shares (VBTIX) (expense ratio 0.04%)
Vanguard Wellington Fund Admiral ( VWENX) (expense ratio 0.16%)
Vanguard PRIME CAP Admiral (VPMAX) (expense ratio 0.33%)
T.Rowe Price Mid Cap Growth Fund ( RPTIX) (expense ratio 0.63%)
T.Rowe Price Small Cap ( OTllX) (expense ratio 0.75%)
Dodge & Cox Fund ( DODGX) (expense ratio 0.52%)
American Funds Euro Pacific Growth Fund ( RERGX) (expense ratio 0.5%)
Loomis Sayler Core Fixed Income C shares (expense ratio 0.35%)
Questions:
1. I am 50 years old and pondering the idea of retirement at 60 -61 yrs old. If the market were to crash 40%, I am prepared to stay the course. By the year 2030, my asset allocation of the target fund should rebalance near 50% Stock 50% Bonds. I do not plan to touch my Social Security until 70yrs old ( an easy 8% return to hold it until 70 yrs old). Question: Should I roll the $320K into my current company 401K plan which is the Vanguard Retirement Target 2035 Trust l that has a lower expense ratio of 0.07% or keep is separate like it is today in an outside IRA?
2. The funds I have outside my 401K I would like to develop a strategy. Any ideas' perhaps moving these accounts into a Roth?
F.E.A.R. (False Evidence Appearing Real )

krow36
Posts: 1426
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: 10 years to retirement - Vanguard Target Retirement

Post by krow36 » Fri Nov 24, 2017 5:58 pm

Stockyards, welcome to the forum! You've done a good job of investing for retirement. Is there a reason that the Schwab IRAs are in MM funds and not invested at your desired asset allocation? Are you contributing to a deductible IRA or to a backdoor Roth IRA? Given your present income tax rate, I would wait for retirement before converting any of your tIRAs to Roth IRAs. Why not move the old 401k at Prudential to your current 401k?

retiredjg
Posts: 30781
Joined: Thu Jan 10, 2008 12:56 pm

Re: 10 years to retirement - Vanguard Target Retirement

Post by retiredjg » Sat Nov 25, 2017 9:03 am

Stockyards wrote:
Fri Nov 24, 2017 12:28 pm
Question: Should I roll the $320K into my current company 401K plan which is the Vanguard Retirement Target 2035 Trust l that has a lower expense ratio of 0.07% or keep is separate like it is today in an outside IRA?
Your choice. The higher ER costs you $256 a year. If having the money in a rollover IRA offers you some flexibility you don't have otherwise, you might be willing to pay that extra $256 a year.

If not, I see no harm in rolling it to the 401k if you believe you will be working there a long time and that the plan will not change significantly. If the plan does change for the worse, many will allow you to roll out what you rolled in. You might want to find out before doing it.

It might also be possible to roll all the accounts (except the Roth IRA) into the current 401k. This assumes all the accounts contain only pre-tax money. You cannot roll non-deductible contributions into the 401k.



2. The funds I have outside my 401K I would like to develop a strategy. Any ideas' perhaps moving these accounts into a Roth?
You could consolidate all those extra accounts (except the Roth) into one, but I would not convert to Roth at your current tax rate.

TravelforFun
Posts: 888
Joined: Tue Dec 04, 2012 11:05 pm

Re: 10 years to retirement - Vanguard Target Retirement

Post by TravelforFun » Sat Nov 25, 2017 10:41 am

1) You should continue to keep the $320K in the IRA since you would have better control and much more investing flexibility.

2) The time to transfer to a Roth is after you retire (you said at age 60 or 61) and before RMD.

TravelforFun

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