Backdoor Roth and Asset Allocation

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Posts: 125
Joined: Sun Mar 08, 2015 5:33 pm

Backdoor Roth and Asset Allocation

Post by Generator515 »

Was reading some about doing backdoor Roth conversions on the first of the year for the full $6K. Currently my wife and I do $500 monthly to get the $6k by the end of each year. One contribution would certainly be easier.

I was wondering how you keep asset allocation in tact like this? We also contribute excess monthly cash to our taxable account on the same day as our Roth conversion monthly. When doing that we buy bonds in the IRA and then fill the rest and taslxable with domestic and international.

If we did one contribution would my monthly contributions (which change each month) then place bonds in taxable (intermediate treasury) or do you buy equity and rebalance?

Thanks in advance.
Posts: 41881
Joined: Thu Jan 10, 2008 12:56 pm

Re: Backdoor Roth and Asset Allocation

Post by retiredjg »

A $6k contribution to IRA/Roth IRA should not be large enough to throw off your stock to bond ratio unless you just started your portfolio in the last year or two. Just do it. If a rebalance is needed because of the contribution, just do that inside a tax-deferred account such as a 401k or an IRA.

The fact that you are asking this makes me wonder how close you are trying to stay to a certain stock to bond ratio. Are you allowing 5% wandering space both above and below your target?

It's kind of hard to visualize the problem or an answer to your questions without knowing what you have invested where.
Post Reply