Parental portfolio: help simplify and tune up

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Ultralight Hiker
Posts: 25
Joined: Mon Jun 04, 2012 8:04 pm

Parental portfolio: help simplify and tune up

Post by Ultralight Hiker » Sat Dec 30, 2017 9:22 am

Hello Everyone,

I am a long-time reader of the Boglehead forums, and want to thank everyone who posts on these forums for helping people straighten out their finances.

I’m writing on behalf of my retired parents, who have asked me to help them tune up and simplify their investments. First the good news: Over the past 10 years or so, my parents have moved most of their investment to Vanguard, and have just a few remaining legacy holdings. Financially they are in good shape for retirement.

There are, however, a few areas that could be tightened up:
1. Their holdings are complex (many Vanguard accounts, and within each a large number of funds).
2. With 26% of their holdings in cash, their portfolio may not weather inflation very well.
3. Investments may not be placed in a tax-efficient manner (need input on this).
4. Their target asset allocation may be overly conservative considering that most of their income comes from pensions and social security. They use their investments primarily for contributions to grandkid 529 and charitable donations.

What is the best way to move to a simpler portfolio with less cash?

Here are the essentials…

Emergency fund: $0
Debt: $0
Tax Filing Status: Married filing jointly
Tax Brackets: 25% federal, 5.1% MA
State of Residence: MA
Age: mid 70s
Current Asset Allocation: 38% stocks/36% bonds/26% cash
Desired Asset Allocation: 45% stocks/45% bonds/10% cash
International Allocation: 30% of stocks
Size of portfolio: $4,000,000 split 50/50 between taxable and tax-advantaged accounts.
In addition, they receive $100,000 annually from social security and pension income, which covers living expenses.

Current retirement Assets

His Vanguard Traditional IRA (1% of total)
1% VG Large-Cap Index Fund Admiral (VLCAX) (.06)
.1% VG Prime MM (VMMXX) (.16)

His Vanguard SEP IRA (43% of total)
6.2% VG Core Bond Fund Admiral (VCOBX) (.15)
0.5% VG Emerging Markets Stock Index Admiral (VEMAX) (.14)
2.4% VG European Stock Index (VEUSX) (.10)
2.9% VG FTSE Social Index Fund (VFTSX) (.20)
3.2% VG Prime MM Fund (VMMXX) (.16)
1.3% VG Short-Term Bond Index Fund (VBIRX) (.07)
1.4% VG Small Cap Value Index Fund (VSIAX) (.05)
9.8% VG Total Bond Market Index Fund (VBTLX) (.05)
2.7% VG Total Int’l Bond Index Fund (VTABX) (.12)
4.2% VG Total International Stock Index (VTIAX) (.11)
4.1% VG Total Stock Market Index Fund (VTSAX) (.04)
1.5% VG Short Term Corp Bond ETF (VCSH) (.07)
1.6% Ford Motor Company (F)
0.7% General Electric (GE)
0.1% VG Federal Money Mkt (VMFXX) (.11)

Her Vanguard Traditional IRA (7% of total)
1.2% VG Core Bond Fund (VCOBX) (.15%)
0.6% VG Prime MM Fund (VMMXX)(.16%)
0.4% VG Short-Term Bond Index Fund (VBIRX) (.07%)
1.8% VG Total Bond Market Index Fund (.05%) (VBTLX)
0.7% VG Total Int’l Bond Index Fund (VTABX) (.12%)
1.2% VG Total International Stock Index (VTIAX) (.11%)
1.0% VG Total Stock Market Index Fund (VTSAX) (.04%)
0.1% VG Federal Money Mkt (VMFXX) (.11)

His and Her Vanguard Taxable (9% of total)
1.1% VG High-Yield Corporate Fund Investor Shares (VWEHX) (.23), $0 gain
1.9% VG Intermediate-Term Bond Index Fund (VBILX) (.07), $1000 loss
2.0% VG Prime MM Fund (VMMXX)(.16),
1.6% VG Total International Stock Index (VTIAX) (.11), $13,000 gain
2.3% VG Total Stock Market Index Fund (VTSAX) (.04), $21,000 gain
0.4% VG Federal Money Mkt (VMFXX) (.11)

His Vanguard Taxable (6% of total)
1% VG Dividend Appreciation Index Fund (VDADX) (.08), $10,000 gain
1% VG Prime MM Fund (VMMXX)(.16)
.7% VG Total Stock Market Index Fund (VTSAX) (.04), $6000 gain
1.7% American Funds American Balanced Fund Class A (ABALX) (.6), $24,000 gain
0.3% General Electric Company (GE) $3400 gain
0.9% VG Federal Money Mkt (VMFXX) (.11)

Her Vanguard Taxable #1 (17% of total)
1% VG Dividend Appreciation Index Fund (VDADX) (.08), $8000 gain
1% VG Federal MM Fund (.11)
.7% VG FTSE Social Index Fund (VFTSX) (.20), $7000 gain
1.3% VG High-Yield Corporate Fund (VWEAX)(.13)
1.4% VG Intermediate-Term Bond Index (VBILX), $1000 loss
6.4% VG Prime MM Fund (VMMXX)(.16%)
1% VG Total Bond Market (VBTLX) (.05%), $0 gain
2.8% VG Total Stock Market Index Fund (VTSAX) (.04%), $29,000 gain
1.5% Verizon (VZ)

Her Vanguard Taxable #2 (2% of total)
0.4% VG FTSE Social Index (VFTSX) (.20), $4000 gain
0.4% VG Massachusetts Tax Exempt (VMATX) (.15), $0 gain
0.1% VG Prime MM (VMMXX) (.16)
1.1% VG Total Stock Mkt Index (VTSAX) (.04), $25000 gain

Annuities (8% of total)
4.1% Axa Guaranteed Interest Account, 3%
4.3% New York Life Preferred Fixed Annuity, 3%

His Hartford Life Insurance (4% of total) ($179,229 payable upon death, $146,387 cash out value)
1.5% Total Return Bond (ITBIX) (.61)
1% Dividend & Growth (HDGIX) (.83)
0.8% Disciplined Equity (HIAGX) (.78)
0.2% Global Growth Fund (HIALX) (.82)

Her Hartford Life Insurance (2% of total) ($103,354 payable upon death, $64,310 cash out value)
0.7% Total Return Bond (ITBIX) (.61)
0.4% Dividend & Growth (HDGIX) (.83)
0.4% Disciplined Equity (HIAGX) (.78)
0.1% Global Growth Fund (HIALX) (.82)

BIG QUESTION:

What is the easiest, most tax-efficient manner to move to a simpler portfolio and a 45/45/10 allocation?

RELATED QUESTIONS:

Aside from the “big 3” (Total Bond/Total Stock/Total Int’l Stock), would any of the funds or individual company stocks in the Vanguard accounts be worth keeping or add any additional diversification benefit?

Would it be worth it from a tax-efficiency perspective to fill the tax-advantaged space up with bonds, and move stocks to taxable?

What’s the best thing to do with the expensive funds in the Hartford life insurance products? Convert to cash, and buy the equivalent stocks in Vanguard taxable?

What about the other legacy stocks and funds in the taxable accounts?

Is the target asset allocation 45/45/10 still overly conservative given that their investments are not used for living expenses, only 529 donations to grandkids and charity?

Many thanks for your help!
Last edited by Ultralight Hiker on Sat Dec 30, 2017 1:25 pm, edited 3 times in total.

pennywise
Posts: 356
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Re: Parental portfolio: help with a hot mess

Post by pennywise » Sat Dec 30, 2017 9:56 am

Respectfully, this doesn't look like a hot mess situation: your parents have $4 million in investments in Vanguard low-expense accounts, no debt and a secure income of $100k that covers their financial needs.

No doubt others will drill in for specific suggestions but frankly why not just leave it all alone? Seems to be a case of churning around for the sake of someone (OP's) need to do so rather than a pressing need for change.

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Parental portfolio: help with a hot mess

Post by livesoft » Sat Dec 30, 2017 10:02 am

1. Turn OFF all automatic distribution reinvestment in taxable accounts. It's too late for 2017, but 2018 is a new year.

2. For each account, edit your post to sum up the percentage IN THE ACCOUNT, so we don't have to. Leave the individual percentages alone.

3. For each position in the taxable accounts, show how much unrealized capital gains are there. I don't suppose the funds in taxable accounts are set up to use Cost Basis Method of Specific Identification, but that Cost Basis Method will give investors the most tax benefits.

4. I doubt they have any positions in taxable (except GE) with unrealized losses, but they should sell them next week. This will be problematic for funds in taxable that use Average Cost Basis.

5. They should sell funds with low unrealized gains (such as the bond funds) in taxable next week.

6. They should do everything possible in 2018 to get into the 0% LTCG tax bracket in order to help clean up this mess. If they only have about $2MM in taxable, it should be easy to do. I think this portfolio could turn out to have no ongoing income taxes if set up properly.
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Lafder
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Re: Parental portfolio: help with a hot mess

Post by Lafder » Sat Dec 30, 2017 10:03 am

Oh my, all of those tiny % holdings make my head spin. But how nice to have low expenses!

It is semantics, but also an important point: consider their cash taxable holdings as their emergency fund. Take that # and see how many months expenses it is and talk to your parents about how many months of expenses they want to have cash. It seems they prefer a lot or they would not be in this situation :) That amount can be used to make an emergency fund and the "extra" beyond the months expenses they want to keep cash, can be invested according to plan.

Is there a reason to have his, her, our taxable ? I know VG allows TOD/POD on single owner accounts and not joint, so that may be a reason not to combine his or hers with ours since it makes inheritance simpler.

I would consider KISS and move all retirement accounts to all in one funds. Then with the taxable holdings, set dividends not to reinvest and they can use that money as their first place to get if they need "extra". Are there gains on all taxable holdings? It may not be worth paying capital gains tax to simplify the taxable holdings at this point.

Sorry this is not a complete answer, just a few ideas to simplify :)

lafder

whanaumark
Posts: 46
Joined: Tue Mar 14, 2017 1:15 pm

Re: Parental portfolio: help with a hot mess

Post by whanaumark » Sat Dec 30, 2017 10:23 am

Ultralight Hiker wrote:
Sat Dec 30, 2017 9:22 am

BIG QUESTION:

What is the easiest, most tax-efficient manner to move to a simpler portfolio and a 45/45/10 allocation?

RELATED QUESTIONS:

Aside from the “big 3” (Total Bond/Total Stock/Total Int’l Stock), would any of the funds or individual company stocks in the Vanguard accounts be worth keeping or add any additional diversification benefit?

Would it be worth it from a tax-efficiency perspective to fill the tax-advantaged space up with bonds, and move stocks to taxable?

What’s the best thing to do with the expensive funds in the Hartford life insurance products? Convert to cash, and buy the equivalent stocks in Vanguard taxable?

What about the other legacy stocks and funds in the taxable accounts?

Is the target asset allocation 45/45/10 still overly conservative given that their investments are not used for living expenses, only 529 donations to grandkids and charity?

Many thanks for your help!
Check out https://www.bogleheads.org/wiki/Tax-eff ... _placement, it will answer many of the questions.

As for moving to the new placement, a couple of strategies/ideas come to mind

0. Stop any dividend reinvestment for unwanted taxable funds immediately (so as to remove the problem of short term capital gains)
1. Sell anything unwanted in taxable that is at a loss (certain lots of GE ?)
2. Since they give to charity, consider setting up a donor advised fund and gifting in taxable funds which they do not want.
Use the deduction against any capital gains taxes.
3. Use this calculator to see if switching to lower cost funds is advantageous over 20 years. Since the cost basis will reset for heirs, it may not make sense to do the switch.
https://www.betterment.com/resources/in ... -benefits/

Is the target asset allocation 45/45/10 still overly conservative given that their investments are not used for living expenses, only 529 donations to grandkids and charity?


Given that current living expenses are well covered, potentially yes it is conservative. From a cash perspective they are receiving ~100k in dividends and interest to go with the pensions and SS, so having 400k on hand seems like quite a bit.

How about adopting a bucket of money approach ?

If one divides the portfolio into two parts, one for the 'future' (grandkids etc) and 'present', holding a 50/50 equity bond portfolio in the 'present' portfolio (of say 3 million) allows them to spend an additional $130k with 100% portfolio survivability over 20 years (according to cfiresim).

The future portfolio can be entirely in equities. Doing this approach yields about 60/40 equity/bond portfolio, which many feel is a good portfolio for all seasons.

Ultralight Hiker
Posts: 25
Joined: Mon Jun 04, 2012 8:04 pm

Re: Parental portfolio: help with a hot mess

Post by Ultralight Hiker » Sat Dec 30, 2017 1:35 pm

Everyone -- Thanks for the suggestions! This gives us a lot to chew on.
livesoft wrote:
Sat Dec 30, 2017 10:02 am
6. They should do everything possible in 2018 to get into the 0% LTCG tax bracket in order to help clean up this mess. If they only have about $2MM in taxable, it should be easy to do. I think this portfolio could turn out to have no ongoing income taxes if set up properly.
Livesoft - I added the info you requested on gains/losses. Your other suggestions should be easy to implement. Could you please elaborate on how to do this given the gains/losses I have added to the original post? Taxable uses Average Cost Basis.

Many thanks,
UlH

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Parental portfolio: help simplify and tune up

Post by livesoft » Sat Dec 30, 2017 1:53 pm

So using Zpacks stuff?

I'd sell everything in taxable with a loss or no gain on Tuesday. Can you summarize what those would be? I think it would only be bond funds and MM funds.

You can buy Vanguard Total Stock Market index fund with the money. Set the Cost Basis Method to "Specific Identification" if you can.

What percentage of the portfolio would that be? You can sell the exact same amount of US equities in one of the tax-advantaged accounts.
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livesoft
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Re: Parental portfolio: help simplify and tune up

Post by livesoft » Sat Dec 30, 2017 2:13 pm

Ultralight Hiker wrote:
Sat Dec 30, 2017 9:22 am
[...]
His and Her Vanguard Taxable (9% of total)
1.1% VG High-Yield Corporate Fund Investor Shares (VWEHX) (.23), $0 gain
1.9% VG Intermediate-Term Bond Index Fund (VBILX) (.07), $1000 loss
2.0% VG Prime MM Fund (VMMXX)(.16),

1.6% VG Total International Stock Index (VTIAX) (.11), $13,000 gain
2.3% VG Total Stock Market Index Fund (VTSAX) (.04), $21,000 gain
0.4% VG Federal Money Mkt (VMFXX) (.11)

His Vanguard Taxable (6% of total)
1% VG Dividend Appreciation Index Fund (VDADX) (.08), $10,000 gain
1% VG Prime MM Fund (VMMXX)(.16)
.7% VG Total Stock Market Index Fund (VTSAX) (.04), $6000 gain
1.7% American Funds American Balanced Fund Class A (ABALX) (.6), $24,000 gain
0.3% General Electric Company (GE) $3400 gain
0.9% VG Federal Money Mkt (VMFXX) (.11)

Her Vanguard Taxable #1 (17% of total)
1% VG Dividend Appreciation Index Fund (VDADX) (.08), $8000 gain
1% VG Federal MM Fund (.11)
.7% VG FTSE Social Index Fund (VFTSX) (.20), $7000 gain
1.3% VG High-Yield Corporate Fund (VWEAX)(.13)
1.4% VG Intermediate-Term Bond Index (VBILX), $1000 loss
6.4% VG Prime MM Fund (VMMXX)(.16%)
1% VG Total Bond Market (VBTLX) (.05%), $0 gain
2.8% VG Total Stock Market Index Fund (VTSAX) (.04%), $29,000 gain
1.5% Verizon (VZ)

Her Vanguard Taxable #2 (2% of total)
0.4% VG FTSE Social Index (VFTSX) (.20), $4000 gain
0.4% VG Massachusetts Tax Exempt (VMATX) (.15), $0 gain
0.1% VG Prime MM (VMMXX) (.16)

1.1% VG Total Stock Mkt Index (VTSAX) (.04), $25000 gain
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livesoft
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Re: Parental portfolio: help simplify and tune up

Post by livesoft » Sat Dec 30, 2017 2:14 pm

Do your parents have a Donor-Advised Fund? Do they make charitable contributions?
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Ultralight Hiker
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Thanks everyone

Post by Ultralight Hiker » Tue Jan 02, 2018 11:32 am

Many thanks with the suggestions for the tuneup! I have relayed the suggestions to my parents, and they will adopt many of them.

Pennywise – thanks for pointing out that my parents are fundamentally in good shape.

Lafder – My parents will be excluding short-term cash from their asset allocation. Thanks for the suggestion.

Whanaumark – sounds like selling some of the high cost funds is not worth it at this point. The bucket of money approach is a good suggestion.

Livesoft – Thanks for the advice on Spec ID. I don’t have any z-packs gear. I like Hammock Gear, Tarptent, and ULA!

Whanaumark and Livesoft – Yes, my parents have a donor advised fund (not included in asset allocation). Good suggestion.

If people have other suggestions, I'm all ears!

Cruz
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Re: Parental portfolio: help with a hot mess

Post by Cruz » Tue Jan 02, 2018 11:59 am

livesoft wrote:
Sat Dec 30, 2017 10:02 am
1. Turn OFF all automatic distribution reinvestment in taxable accounts. It's too late for 2017, but 2018 is a new year.

2. For each account, edit your post to sum up the percentage IN THE ACCOUNT, so we don't have to. Leave the individual percentages alone.

3. For each position in the taxable accounts, show how much unrealized capital gains are there. I don't suppose the funds in taxable accounts are set up to use Cost Basis Method of Specific Identification, but that Cost Basis Method will give investors the most tax benefits.

4. I doubt they have any positions in taxable (except GE) with unrealized losses, but they should sell them next week. This will be problematic for funds in taxable that use Average Cost Basis.

5. They should sell funds with low unrealized gains (such as the bond funds) in taxable next week.

6. They should do everything possible in 2018 to get into the 0% LTCG tax bracket in order to help clean up this mess. If they only have about $2MM in taxable, it should be easy to do. I think this portfolio could turn out to have no ongoing income taxes if set up properly.
Why do you advise turning off auto reinvestment in taxable accounts? Should both dividends and capital gains not be reinvested?

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Parental portfolio: help with a hot mess

Post by livesoft » Tue Jan 02, 2018 12:04 pm

nsisson wrote:
Tue Jan 02, 2018 11:59 am
Why do you advise turning off auto reinvestment in taxable accounts? Should both dividends and capital gains not be reinvested?
I wrote this today when I answered the same question:
livesoft wrote:
Tue Jan 02, 2018 10:12 am
Niam wrote:
Tue Jan 02, 2018 12:05 am
livesoft: Can you please expand on this for me? I have distributions automatically reinvest in all my accounts because otherwise I'd invariably have hundreds of dollars out of the market for months just sitting around. Is the thinking here that it makes it much tougher to deal with capital gain/tax issues? If so, I get that, but isn't the marginal loss there made up for the marginal gain in having the dividend money reinvested in the market for someone who is not routinely tracking that stuff?
I understand that you are doing this as a convenience. Brokers will track your contributions and reinvestments for you, so the bookkeeping is not the issue that many investors whined about in the old days.

I have seen posted many times people who haven't looked in years at their portfolios and then come to forum asking, "My portfolio is now so out of balance now, but I do not want to sell anything because I will get hit with capital gains taxes. What do I do?" It is this kind of question that my advice is trying to head off before it ever arises. I think this is what you guessed.

There is also a behavioral finance aspect of this. As you noted, some people don't want to pay attention or cannot pay attention. Or they do not want the responsibility of making decisions of what to buy or when to buy. It gives them anxiety. Or they worry about their self-control. Will they be too worried to reinvest manually? Will they have fear that whatever they buy will drop even more?

Also if one is going to practice tax-loss harvesting in the future, then knowledge of what was recently purchased is helpful.

So one has to make their own decision. For low-value accounts I would guess automatic reinvesting in a taxable account is fine. But the OP's account will be large when they are set and be getting larger. I think they should start off on the right path from the very start to avoid hassles that they do not foresee yet, but are coming.

As for forgetting to reinvest and having hundreds of dollars sitting around, that's kind of weird to me because it probably also means that one forgets to pay their monthly bills unless they are paid automatically for them.
See also: https://www.bogleheads.org/wiki/Reinves ... le_account

And yes, I recommend not automatically reinvesting distributions which means both dividends and capital gains distributions, but use them for rebalancing and reinvest manually. It is likely that by reinvesting, one buys shares in the same fund that produced the distributions, so my suggestion is not "don't buy shares in the fund that paid the distribution." Get it?
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Ultralight Hiker
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Getting to 0% LTCG

Post by Ultralight Hiker » Fri Jan 05, 2018 12:22 pm

A quick follow-up...
livesoft wrote:
Sat Dec 30, 2017 10:02 am
6. They should do everything possible in 2018 to get into the 0% LTCG tax bracket in order to help clean up this mess. If they only have about $2MM in taxable, it should be easy to do. I think this portfolio could turn out to have no ongoing income taxes if set up properly.
As described earlier in this thread, my parents have a pension income of $100,000 plus take whatever the RMD is (probably ~$70,000). Under the new tax law they will likely take the standard deduction. To my understanding, this keeps them squarely in the 15% long term capital gains bracket.

Question #1: Given their income it is feasible to get to 0% LTCG? Even if they manage to shift bonds to tax-deferred accounts it seems like they will have too high income.

Question #2: Would a Roth Conversion be appropriate in their age and situation? They currently have all Trad IRA.

Thanks, and apologies if my understanding of tax laws is shaky.
UlH

livesoft
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Re: Parental portfolio: help simplify and tune up

Post by livesoft » Fri Jan 05, 2018 12:24 pm

They can donate a ton of money to charity. They should look into bunching deductions. They don't seem to need the money. But you are right, maybe they cannot get their income as low as others with $100,000 jobs and a big portfolio.

Roth conversions at this stage are probably only helpful to the top of a tax bracket, but I cannot be sure.
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Ultralight Hiker
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Understanding accountant advice? And what to do with insurance product?

Post by Ultralight Hiker » Fri Jan 12, 2018 1:55 pm

Thanks everyone, particularly Livesoft, for the advice. My parents are greatly appreciative and so am I. Two more followup questions...

1. My parents' accountant is telling them to balance the amount $ in each spouse's taxable accounts. He said "estate tax purposes" but didn't explain. This is making it a little trickier to get to the allocation they want. I'm confused -- surviving spouse inherits accounts tax-free, right? Does anyone understand the rationale for this advice?

2. The following life insurance policy can be cashed out or kept until death. Strangely, the death benefit doesn't depend on the balance in the account. It's fixed at the number below. Would it be better for parents to keep these policies or sell and then invest in similar Vanguard funds? The funds will not be needed any time soon, so it's an investment question.

His Hartford Life Insurance (4% of total) ($179,229 payable upon death, $146,387 cash out value)
1.5% Total Return Bond (ITBIX) (.61)
1% Dividend & Growth (HDGIX) (.83)
0.8% Disciplined Equity (HIAGX) (.78)
0.2% Global Growth Fund (HIALX) (.82)

Her Hartford Life Insurance (2% of total) ($103,354 payable upon death, $64,310 cash out value)
0.7% Total Return Bond (ITBIX) (.61)
0.4% Dividend & Growth (HDGIX) (.83)
0.4% Disciplined Equity (HIAGX) (.78)
0.1% Global Growth Fund (HIALX) (.82)

Much appreciated! -ULH

cas
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Re: Parental portfolio: help simplify and tune up

Post by cas » Fri Jan 12, 2018 4:15 pm

This isn't really what you asked, but I had a couple of thoughts reading this thread:

1. Are you and/or your parents familiar with IRMAA (Income Related Medicare Adjustment Amount) and how it works? Their premiums for Medicare Part B and Part D (if they use Pt D rather than having employer-based retiree health insurance) go up once certain income thresholds are passed. (IRMAA isn't an IRS tax, so it doesn't show up on the 1040 tax return. It is deducted from their SS checks. If it is owed, they would get a letter in November or December telling them what it would be for the next year.)

Given what you said ($100,000 pension + SS, SS would almost certainly be 85% taxable, $70,000 RMDs, dividends and interest from taxable) I'm guessing they are almost certainly over the first IRMAA threshold of $170,000 (for MFJ). Not sure where they would be relative to the second threshold.

Anyway, at their income level IRMAA is probably something you want to brush up on before you start considering buying/selling in taxable. If they are just a bit over an IRMAA threshold and they donate to charities, they might want to look into whether QCDs (Qualified Charitable Distributions) from their IRAs might drop their MAGI enough to drop below the closest IRMAA threshold.

For more information:
"Medicare Premiums: Rules For Higher-Income Beneficiaries" https://www.ssa.gov/pubs/EN-05-10536.pdf (except this pamphlet is for 2017 and has incorrect IRMAA brackets listed on p. 5. The middle brackets shifted significantly for 2018 and after.)

This pamphlet seems to show the 2018 IRMAA brackets (but doesn't give much of an explanation about IRMAA aside from listing the brackets): "2018 Medicare Costs" https://www.medicare.gov/Pubs/pdf/11579 ... -Costs.pdf


2. May your parents live long and well, but - given the size and complexity of their portfolio - have you discussed who they would want to oversee their investments, RMDs, taxes, etc. if one or both of them was unable to? I mention this mostly because Vanguard is somewhat infamous for refusing to accept durable Power-of-Attorney documents (if your parents have them), which apparently catches a lot of people by surprise. In general (short of complete incapacitation, probably certified by one or more doctors ... I haven't read the form), they require their own Agent Authorization form to be filled out/notarized with notarized witness signatures by a couple of people, IIRC. Or, for the taxable accounts (but not the IRAs), titling the accounts in the name of a revocable trust with co-trustees or a successor trustee would work. (Estate planning lawyer would be needed to draw up good revocable trust documents.) Either way, it is something that is better thought about while everyone is reasonably healthy and there isn't time pressure.

Ultralight Hiker
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Re: Parental portfolio: help simplify and tune up

Post by Ultralight Hiker » Sat Jan 13, 2018 5:36 pm

cas wrote:
Fri Jan 12, 2018 4:15 pm
This isn't really what you asked, but I had a couple of thoughts reading this thread:
Cas - thanks very much for your comments. I will pass them along to my parents.

-ULH

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