Overwhelmed by the transition to Vanguard from active management

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MsBuz
Posts: 7
Joined: Thu Oct 22, 2015 7:04 pm

Overwhelmed by the transition to Vanguard from active management

Post by MsBuz » Wed Oct 04, 2017 10:18 am

Emergency funds: Yes
Debt: Mortgage - 35%LTV - 3.25%
Tax Filing Status: Married Filing Jointly
Tax Rate: 28% Federal
State of Residence: FL
Age: Him 45 - Her 41
Desired Asset allocation: 75% stocks / 25% bonds
Desired International allocation: 30% of stocks

Current total portfolio: low six-figures

Current retirement assets

His 401k
4% fund name (DRIWX)

Her 401k
2% fund name (VTSAX)

His Self Directed IRA
-2 pieces of real estate

************ Accounts below are held in a actively managed brokerage firm @ 1% AUM *******************

Taxable
66% (mostly Muni Bonds)


His Roth IRA
6% (individual stocks)

Her Roth IRA
4% (individual stocks)

His SIMPLE IRA
15% (individual stocks)

Her SIMPLE IRA
2% (individual stocks)

Her tIRA
.5% (individual stocks)

Her tIRA
.5% (individual stocks)


Contributions

New annual Contributions
$40 His 401k
$20 Her 401k
$5500 his tIRA
$5500 her tIRA
$10 taxable
*****************************************************************************************


We have decided to make the switch from active management to passive at Vanguard.

Questions:
1. We want to do a Backdoor Roth. After we both roll our SIMPLE IRA's into our current 401k. Does His Self Directed IRA still subject us to prorata rules? If so, if we just created a Backdoor Roth for her (after SIMPLE conversion) are we not subject to prorata rules?

2. We are planning to move our accounts to Vanguard "in-kind". Our largest account (taxable) has approx 25-30 different positions ... some equities, mostly muni bonds (per our advisor). We have limited investment knowledge so I'm not completely sure how to describe the exact holdings. We are not sure the best route to liquidate the holdings. (Our taxable account is in a corporate name so Vanguard does not offer personal advisory services on those accounts)

3. We would love to here any advice on do's / don'ts or suggestions in this process. A bit overwhelmed by the process and don't want to make any big mistakes.

dbr
Posts: 24132
Joined: Sun Mar 04, 2007 9:50 am

Re: Overwhelmed by the transition to Vanguard from active management

Post by dbr » Wed Oct 04, 2017 10:24 am

MsBuz wrote:
Wed Oct 04, 2017 10:18 am

2. We are planning to move our accounts to Vanguard "in-kind". Our largest account (taxable) has approx 25-30 different positions ... some equities, mostly muni bonds (per our advisor). We have limited investment knowledge so I'm not completely sure how to describe the exact holdings. We are not sure the best route to liquidate the holdings. (Our taxable account is in a corporate name so Vanguard does not offer personal advisory services on those accounts)

At some point you should probably post what those holdings are and see what suggestions might be made. It could be the muni's should just continue to be held -- or not. Liquidating individual equities is an issue of capital gains taxes, so the information needed is the current amount of unrealized gain.

mhalley
Posts: 5188
Joined: Tue Nov 20, 2007 6:02 am

Re: Overwhelmed by the transition to Vanguard from active management

Post by mhalley » Wed Oct 04, 2017 11:00 am

These are INDIVIDUAL retirement accounts, so what one spouse has does not affect the other one. So if he has prorated restrictions due to a simple IRA, she does not, therefore she can do the backdoor Roth.
At the 28% bracket, munis in taxable make sense. If you have had them for a while, they are probably paying a better yield than you can get right now, so I would probably keep them till maturity.
As to the stocks, it is ok to keep some stocks if you love them, say 10% of equities. Otherwise sell any losers, then sell gainers up to the amount to counter the capital losses. Then sell the remaining stocks you don’t love, up to the amount of capital gains you don’t mind paying this year, then repeat next year. If there is not a huge amount of cap gains, then just sell them all at once.
If you have limited knowledge at this point, read the wiki and the forum, put the money in the iras in a target retirement or life strategy fund with the asset allocation you desire, then rebalance into your desired portfolio after you have become woke.

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