Regarding distributions and rebalancing, some people refer to a "settlement account" where they are directing their distributions for use in future rebalancing. Is this "settlement account" an additional account -- some kind of cash reserve account? -- where you direct interest, dividends, etc.?DO NOT use the funds' automatic dividend reinvestment option in your taxable account.
Use fund/ETF dividend income from the funds/ETFs just as you would new savings: to rebalance, i.e., to put into the fund(s) that are lagging per your AA.
Over time your funds will grow out of sync. You can always rebalance within your tax deferred accounts with no tax penalty. In your taxable accounts, assuming you are still accumulating new money, you should be adding money to the funds that are lagging. All dividends should be directed to the underperforming fund. That's really it. Pick a date once a year that you want to rebalance and go for it.
Take your dividends in cash (every quarter from the equity funds, every month from the bond funds) and use the cash to buy underweighted assets. That should be all the rebalancing you will ever need to do. Also for tax efficiency, only sell purchases with losses.
Rebalancing your total portfolio once a year is acceptable. Make sure your turn off automatic reinvestments in taxable. Send the dividends to your settlement account and manually reinvest when and where desired.
I'm also seeing some advice against automatic reinvesting. I'd like to know more about how different distribution types should be handled in both a taxable account, and in a Roth, to make future rebalancing simple?
Do some people take their distributions as income? Do other people reinvest automatically?
I will have small opening accounts to start (one taxable, one Roth) and am in 10-12% tax bracket. Starting slow but want to develop some good habits up front.