Simplifying Investment Life

[tindel]

I'm struggling with how to handle my investments. I currently have 10 different accounts with 4 different institutions. Managing all of this is exhausting. This doesn't even include my checking and credit card accounts (another 6 accounts over 4 additional institutions). I'm wanting to simplify some of this - I'm starting to go crazy every month balancing out all of the accounts. I figure the first thing to do is close out my 401k's with my old employer.

Old Employer
t401k
r401k
Separate company contributed 401k

Current Employer
t401k
HSA

Treasury Direct
Only me for now, but will also probably grow to include spouse as well.

Bank
Taxable Account
rIRA
tIRA
spouse's tIRA

So my strategy here will be to move my old employer's funds to my banks retirement accounts. That will eliminate 3 funds. But there's a problem. I will then have money in my tIRA so as I get further salary-wise, I will likely have to make backdoor contributions. If I understand correctly, I will need to zero out my tIRA to be able to do 100% backdoor Roth contributions. The good news is that, last I checked (last year), my current company 401k would accept rollovers from tIRA accounts. So I think I'm okay moving my tIRA to my company t401k. This will also eliminate my tIRA because I can no longer make contributions to my tIRA due to IRS phaseouts.

Does this seem reasonable? All of my accounts have excellent investment options so that's much less of a concern to me than simplifying my life.

I am thinking of closing out my accounts at old company in succession instead of all at once in an effort to try to dollar cost average the transactions and reduce the amount of money not currently in the market. Thoughts on this?

Is there a way to simplify my investment accounts further?

[123]

It's not unusual for a couple to have a lot of accounts and to not be able to reduce the count since each account is a distinct tax entity. Doesn't look like you've hit the issue of inherited IRAs yet, you may have more accounts down the road.

We've got a lot of accounts and I've found the easiest way to simplify is to reduce the count of investments in each account. You don't have to replicate your complete assets allocation within the context of each account, that would really be a nightmare.

Edited to add:
I've started to use a Vanguard LifeStrategy fund-of-funds in some accounts to simplify things. There are lots of options for fund-of-funds and if one is a good match for you it can be a good way to go. The expense ratio of Vanguard LifeStrategy is somewhat higher than if I did it myself with the component funds (based on my portfolio size) but I decided that the simplicity it added for my spouse if I'm not around was worth it.

[Duckie]

Does this seem reasonable?

Yes. Roll the pre-tax 401k and company contributed pre-tax 401k directly into your current pre-tax 401k. Don't bother with rolling to the TIRA first. Roll the Roth 401k into your Roth IRA. Roll the TIRA to your current pre-tax 401k.

I am thinking of closing out my accounts at old company in succession instead of all at once in an effort to try to dollar cost average the transactions and reduce the amount of money not currently in the market. Thoughts on this?

I'd do it one at a time, not because of dollar cost averaging but because the more moving parts, the more chance of a screw-up.

[tindel]

Great! Thanks for the quick responses!

Follow-up question. I don't think there's any tax implications here - particularly moving my tIRA to my current employer's t401k. I know I have to report it on my taxes, but I don't think I'm taxed.

We've got a lot of accounts and I've found the easiest way to simplify is to reduce the count of investments in each account. You don't have to replicate your complete assets allocation within the context of each account, that would really be a nightmare.

This is a good point. I tried to keep only one fund in each account a while back. I found it difficult to quickly know my asset allocation and then how to setup my automatic withdrawals to maintain my AA. Any tips here? I'm doing some things differently now so it may be easier than before.

[MrPotatoHead]

My opinion only, unless the 401K plan's offering are horrible it is foolhardy. You are forgoing a great deal of creditor asset protection. You may also be foregoing asset classes that are not available outside of a 401K plan such as a stable value fund. in the long term most employers will improve their 401k plans offering things like free investment counselling by third parties, low cost annuities, etc. Once you are out of the plan you will forgo an possible future enhancements and benefits for the sake of convenience. I understand the desire, but I would consider the possibility it is short sighted desire.

[MotoTrojan]

My opinion only, unless the 401K plan's offering are horrible it is foolhardy. You are forgoing a great deal of creditor asset protection. You may also be foregoing asset classes that are not available outside of a 401K plan such as a stable value fund. in the long term most employers will improve their 401k plans offering things like free investment counselling by third parties, low cost annuities, etc. Once you are out of the plan you will forgo an possible future enhancements and benefits for the sake of convenience. I understand the desire, but I would consider the possibility it is short sighted desire.

Even if transfered into current 401k?

[MrPotatoHead]

My opinion only, unless the 401K plan's offering are horrible it is foolhardy. You are forgoing a great deal of creditor asset protection. You may also be foregoing asset classes that are not available outside of a 401K plan such as a stable value fund. in the long term most employers will improve their 401k plans offering things like free investment counselling by third parties, low cost annuities, etc. Once you are out of the plan you will forgo an possible future enhancements and benefits for the sake of convenience. I understand the desire, but I would consider the possibility it is short sighted desire.

Even if transfered into current 401k?

You are correct. I missed the rollover of the tIRA back to a 401K. 100% my bad.

[Duckie]

I don't think there's any tax implications here - particularly moving my tIRA to my current employer's t401k. I know I have to report it on my taxes, but I don't think I'm taxed.

You are correct. You do have to report it but you're not taxed.

I tried to keep only one fund in each account a while back. I found it difficult to quickly know my asset allocation and then how to setup my automatic withdrawals to maintain my AA. Any tips here?

The smaller accounts could hold only one fund. The large 401k could hold three to five funds. This would be the account used for rebalancing. Avoid selling in taxable.

What exactly do you mean by "automatic withdrawals"?

[tindel]

What exactly do you mean by "automatic withdrawals"?

I mean how do I setup my automatic contributions (that are withdrawn from my paycheck each pay period) to maintain my AA?

For Example, say I have the following each with 100% in the described Asset Class
rIRA: 20% Stock
spouse tIRA: 10% Stock
HSA: 5% Stock
Treasury Direct: 5% Bond
Taxable: 5% Int'l

I want 60%/20%/20% Stock/Bond/Int'l how do I setup my automatic contributions to my company t401k?
t401k: 25% Stock/15% Bond/15% Int'l

I guess my contribution would then be 0.25/0.55=45.45% Stock 0.15/0.55 = 27.3% Int'l and Bonds. That does add up to 100% so I think that's the right calculation. Not terribly time consuming, but still takes a few minutes to figure out, but I can auto calculate it in Excel without too much trouble. It also becomes a bit more complicated in the fact that I prefer to hold whole market rather than just the S&P500 so I also have to have the extended market fund (my new 401k doesn't off whole market)

On another note:
In the spirit of @MrPotatoHead's post before, I decided to take a closer look at what was offered in my old employer 401k - and they offer in-plan Roth conversions on rollover eligible assets - essentially a mega backdoor Roth. I may want to do this in the future when I have lower income. My current company 401k does not offer this option.

I'm leaning towards making all of these changes. Waiting to convert my t401k someday in the future with a lower income will not give me the benefits that make the Roth conversion worth it (sitting for years and having untaxed growth). My gut says that I chose not to pay the taxes in the past, why would I want to do so now or in the future? I expect to be in the same (or lower) tax bracket when the funds were originally contributed (and for sure in a lower bracket than I'm in now).

Further thoughts? Am I thinking about this properly?

One last thought I may need to consider:
The new company plan does offer up to 5% of salary to be put in after-tax, but the SPD is unclear if you can mega backdoor Roth this amount or not. I'm guessing not.

[bradpevans]

What exactly do you mean by "automatic withdrawals"?

I mean how do I setup my automatic contributions (that are withdrawn from my paycheck each pay period) to maintain my AA?

For Example, say I have the following each with 100% in the described Asset Class
rIRA: 20% Stock
spouse tIRA: 10% Stock
HSA: 5% Stock
Treasury Direct: 5% Bond
Taxable: 5% Int'l

I want 60%/20%/20% Stock/Bond/Int'l how do I setup my automatic contributions to my company t401k?
t401k: 25% Stock/15% Bond/15% Int'l

I guess my contribution would then be 0.25/0.55=45.45% Stock 0.15/0.55 = 27.3% Int'l and Bonds. That does add up to 100% so I think that's the right calculation. Not terribly time consuming, but still takes a few minutes to figure out, but I can auto calculate it in Excel without too much trouble. It also becomes a bit more complicated in the fact that I prefer to hold whole market rather than just the S&P500 so I also have to have the extended market fund (my new 401k doesn't off whole market)

On another note:
In the spirit of @MrPotatoHead's post before, I decided to take a closer look at what was offered in my old employer 401k - and they offer in-plan Roth conversions on rollover eligible assets - essentially a mega backdoor Roth. I may want to do this in the future when I have lower income. My current company 401k does not offer this option.

I'm leaning towards making all of these changes. Waiting to convert my t401k someday in the future with a lower income will not give me the benefits that make the Roth conversion worth it (sitting for years and having untaxed growth). My gut says that I chose not to pay the taxes in the past, why would I want to do so now or in the future? I expect to be in the same (or lower) tax bracket when the funds were originally contributed (and for sure in a lower bracket than I'm in now).

Further thoughts? Am I thinking about this properly?

One last thought I may need to consider:
The new company plan does offer up to 5% of salary to be put in after-tax, but the SPD is unclear if you can mega backdoor Roth this amount or not. I'm guessing not.

On your last question. My plan allows after tax contribution. First they go into 401k Then I call to switch to Roth IRA. Costs me $20 and some phone time

[tindel]

On your last question. My plan allows after tax contribution. First they go into 401k Then I call to switch to Roth IRA. Costs me $20 and some phone time

I looked all over my SPD for something saying I could do the same and found nothing. I'm not saying they won't do it, but it's not in the SPD. Why else would you use after-tax space?

[bradpevans]

On your last question. My plan allows after tax contribution. First they go into 401k Then I call to switch to Roth IRA. Costs me $20 and some phone time

I looked all over my SPD for something saying I could do the same and found nothing. I'm not saying they won't do it, but it's not in the SPD. Why else would you use after-tax space?

In my case (50+), i did the 18500 + 6000 and i have more money i wish to invest

i could put it into brokerage account, gives flexibility and tax-loss harvest and *might* pull out at 0% Cap gains, or maybe 15%

Putting it into Roth, i have the five year rule (on PROFITS, not on contributions) and 59.5 isn't that far away.

My perspective: I've maxed my pre-tax contributions. After that i would rather have growth in Roth account rather than brokerage.

[Duckie]

I want 60%/20%/20% Stock/Bond/Int'l how do I setup my automatic contributions to my company t401k?
t401k: 25% Stock/15% Bond/15% Int'l

I guess my contribution would then be 0.25/0.55=45.45% Stock 0.15/0.55 = 27.3% Int'l and Bonds. That does add up to 100% so I think that's the right calculation. Not terribly time consuming, but still takes a few minutes to figure out, but I can auto calculate it in Excel without too much trouble. It also becomes a bit more complicated in the fact that I prefer to hold whole market rather than just the S&P500 so I also have to have the extended market fund (my new 401k doesn't off whole market)

You figured it right. When including Extended Market that makes your current contribution percentages 36% large cap US stocks, 10% mid/small cap US stocks, 27% international stocks, and 27% bonds. Once or twice a year you have to add up all the dollar amounts in each account and refigure the percentages. Then you can rebalance in the 401k to get things back in line.