Rolling over tIRA and re-balancing taxable account

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worthit
Posts: 34
Joined: Tue Jun 19, 2018 2:10 pm

Rolling over tIRA and re-balancing taxable account

Post by worthit » Wed Jul 11, 2018 12:09 am

Hello forum:

I have a couple of questions regarding roll over of a tIRA (to pursue a backdoor Roth) and also re-balancing a taxable brokerage account to reflect the 3 fund lazy strategy. I am looking for some guidance and would appreciate any and all feedback.

1. I would like to roll over my tIRA (non-deductible). The options are

a) my employer's 401k that has a few good VG funds with low ER along with few other non VG funds but with higher ERs.

b) into my solo 401k at a brokerage where I would have access to a larger selection of funds and ETFs. Several are no fee, no commission funds including some Vangauard funds. This direct roll over can either be in kind or cash.

What are the pros and cons of each of these options. I recognize roll overs into 401ks don't have any current tax implications. But are there things I need to consider or be aware off before I execute either of these options?

2. I would like to rebalance my taxable brokerage account of ~1MM that currently has an unrealized gain of about ~40% accumulated over a period of more than a decade. 100% equities. My naive thinking was to begin by selling few of the underperforming equities and then gradually move over to those equities that have gained substantially over the years (to minimize capital gains) and sell them over a period of time while replenishing the account with appropriate VG funds as outlined in the 3 fund wiki. The fear of a substantial tax bill (currently at 32%) makes me wonder if I should even bother to do anything with this account. By the way, this money is not part of the retirement plan and hope it continues to be. So what are my options?

a) Do the re-belancing and take the possible tax hit?

b) Leave it for the heirs as the step-up in basis will benefit them.

Thank you all, in advance.

mhalley
Posts: 6014
Joined: Tue Nov 20, 2007 6:02 am

Re: Rolling over tIRA and re-balancing taxable account

Post by mhalley » Wed Jul 11, 2018 12:25 am

I would roll it into the solo 401k. That way you always have control. Many companies have changed 401k plans for the worse, going from a good plan to a bad plan.
I wouldn’t pay taxes to rebalance. I would rebalance by adding bonds to tax deferred, and even to taxable. There will be a downturn at some point that might allow for rebalancing.

worthit
Posts: 34
Joined: Tue Jun 19, 2018 2:10 pm

Re: Rolling over tIRA and re-balancing taxable account

Post by worthit » Wed Jul 11, 2018 12:59 am

Thank you, mhalley. That was my conundrum as well with regards to my tIRA roll over i.e to be not able to control should things change with my employer/employment. Besides, that account has ~35% of unrealized gains, so not sure it would be worth it to roll into my employer's 401k which obviously will not be in kind.

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