Roth / 403b Allocation

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Topic Author
Posts: 24
Joined: Sun Jun 03, 2012 10:09 am

Roth / 403b Allocation

Post by mlobur » Sun Apr 14, 2019 5:10 pm

Emergency funds: 6 months
Debt: 43 months remaining on a 10 year fixed mortgage at 2.75%
Tax Filing Status: Married Filing Jointly
Tax Rate: 11.09% Federal, 3.65% State
State of Residence: NJ
Age: Both 47
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 30-40% of stocks
Current Portfolio: Low 6 figures
Annual Teacher Pension: Approx: 100K at 56 yo
109k at 58 yo
118k at 60 yo
We also are eligible to collect SS

Current retirement assets

His Roth IRA at Vanguard
16% Vanguard Total Stock Market
9% Vanguard Total International Stock Market
10.5% Vanguard Total Bond Market
4.7% Vanguard Total International Bond Market

His 403b at Security Benefits DirectInvest
6.5% Vanguard Total Stock Market
5.5% Vanguard Total International Stock Market

Her Roth IRA at Vanguard
29% Vanguard Target Date 2030

Her 403b at Security Benefits DirectInvest
5.5% Vanguard Total Stock Market
3.7% Vanguard Total International Stock Market
3.6% Vanguard Intermediate Term Bond Index

Her 403b (Non Contributing )
5% Vanguard Target Date 2030


New annual Contributions
$4k no match to his 403b
$4k no match to her 403b
$6k to his Roth Ira
$6k to her Roth Ira

Available funds

Funds available in his and her 403b
Vanguard® 500 Index
Vanguard® Total Stock Market Index
Janus Henderson Growth and Income
Vanguard® Growth Index
Mid Janus Henderson Mid Cap Value Federated Mid-Cap Index
Vanguard® Mid Cap Index
Invesco Mid Cap Growth
Small Dreyfus Smallcap Stock Index
Vanguard® Small Cap Index
T. Rowe Price Retirement 2010
T. Rowe Price Retirement 2020
T. Rowe Price Retirement 2030
T. Rowe Price Retirement 2040
T. Rowe Price Retirement 2050
T. Rowe Price Retirement 2060
Invesco Equity and Income
T. Rowe Price Retirement Balanced
Vanguard® Real Estate Index
Dreyfus International Stock Index
Vanguard® Total International Stock Index
PIMCO International Bond (U.S. Dollar-Hedged)
PIMCO Total Return
Vanguard® Intermediate Term Bond Index
JPMorgan U.S. Government Money Market

1. Currently I have a 70/30 split equities/bonds and also 70/30 domestic / international. Also, my balance is 75%/25% Roth to 403b. My 403b contributions will be increasing over the next few years and eventually I will have to make a decision based off the rule of thumb that you want your Roths to contain equities given everything else is equal.

My question is, which of these allocations would be best to optimize Roth growth without limiting diversification?

Option 1: Just leave it the way it is

Option 2:
Total US Stock Market 49%
Total International Stock Market 21%
Total International Bond Market 9%

Intermediate Term Bond Index 21%

Option 3:
Total US Stock Market 49%
Total International Stock Market 21%

Intermediate Term Bond Index 30%

I can buy Total Stock Market and Total International Stock Market in my 403B and/or Total Intermediate Term Bond or Total Bond Market in my Roth to rebalance. I am leaning towards option 3 but would like to hear other opinions.


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David Jay
Posts: 7308
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Roth / 403b Allocation

Post by David Jay » Mon Apr 15, 2019 8:01 am

Most here suggest that you set AA for your entire portfolio, not account-by-account. In this way you can optimize the use of each account (for instance, putting all your bonds in tax-deferred). There is a Wiki on asset placement: ... _placement

If you don’t read the whole thing (you should...), scrolldown to the brightly colored arrows for a quick concept.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Posts: 154
Joined: Fri Jun 29, 2018 4:31 pm

Re: Roth / 403b Allocation

Post by carmonkie » Mon Apr 15, 2019 1:10 pm

Treat all your accounts as one.
Put all bonds on 403(b), this account will grow slower and will be taxed at ordinary income. It could be that all her 403(b) is Bonds, then fill-up the bonds allocation on your 403(b). Once you are all set, set the equities using the remaining space of your 403(b) and the Roth accounts. You want funds that are expected to appreciate faster in your Roth accounts as those will grow tax free.

I am US bias, and I do not own any International Bonds, but Vanguard is allocating some % to the Target Funds so there is that. You need to decide if International Bonds are for you.

Your are well on your way to a simple 3-4 fund portfolio...

Topic Author
Posts: 24
Joined: Sun Jun 03, 2012 10:09 am

Re: Roth / 403b Allocation

Post by mlobur » Mon Apr 15, 2019 5:35 pm

Thank you for your responses.

I do treat my accounts as one. I have a 4 fund portfolio spread out over 2 accounts. I use an Excel spreadsheet to track my current allocation compared to my desired 70/30 split.

I guess the question I have really boils down to, does the added diversification of holding Total International Bond and Total Bond Market in my Roth( because that is the only account I can buy them) outweigh the tax benefit of allowing my Roth space to expand the greatest by holding only stocks in it?

thanks again,

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