Need help with allocations in retirement portfolios

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Topic Author
pollux
Posts: 9
Joined: Wed Sep 21, 2011 6:52 pm

Need help with allocations in retirement portfolios

Post by pollux » Thu Jul 11, 2019 3:39 pm

Emergency funds: yes (3 to 6 months), in different HYSA.
Non retirement Accounts:529 plans for both kids, Vanguard brokerage accounts, foreign accounts
Debt:
- mortgage (initial) $539,600 30 years at 4% rate ; current principal balance is around $511,400. We try to add a little extra payment each month (usually between $300 and $400).


Tax Filing Status: married, 2 children as dependants
Tax Rate: 22% federal, 5% (state) + 3.2% (county)
State of Residence: MD
My Age: 38
Husband Age: 34
Desired Asset allocation: 80% stocks /20% bonds
Desired International Allocation: 25%

Size of current portofolio: about 500k

Notes:
- we both have the same employer, so same 401k options
- our 401k accounts are a mix of pre-tax 401k and Roth 401k. The compagny (Empower Retirement) website does not allow me to view the allocation per fund and per account (pre-tax or Roth), so I've put everythin under "401k".
- until now we had a lot of daycare expenses. Our older kid is starting school in September, so we'll have a little bit more money to invest and/or put in the mortgage. Our youngest still has 2 more years of daycare before starting school.


Current retirement assets

My 401k at Empower Retirement
24.5% JPMorgan SmartRetirement® 2055 A (JFFAX) (0.88%)
1.7% Ivy Small Cap Growth N (IRGFX) (0.89%)
0.7% Victory Sycamore Established Value R6 (VEVRX) (0.57%)
10.6% American Funds American Mutual R6 (RMFGX) (0.30%)
0.4% Invesco Equity and Income R6 (IEIFX) (0.39%)
Company match : 4%

My Roth IRA at Vanguard
2.2% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) (0.05%)
1.9% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) (0.11%)
7.5% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04 %)

My Rollover IRA at Vanguard
2.1% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) (0.05%)
1.7% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) (0.11%)
6.9% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04 %)


Husband 401k at Empower Retirement
11.7% JPMorgan SmartRetirement® 2055 A (JFFAX) (0.88%)
0.5% American Beacon Zebra Small Cap Eq Inst (AZSIX) (0.90%)
1.3% Ivy Small Cap Growth N (IRGFX) (0.89%)
2.8% Victory Sycamore Established Value R6 (VEVRX) (0.57%)
5.7% American Funds American Mutual R6 (RMFGX) (0.30%)
7.2% American Funds Washington Mutual R6 (RWMGX) (0.27%)
Company match : 4%

Husband Roth IRA at Vanguard
5.0% Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX) (0.08%)
5.6% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04 %)

Contributions

New annual Contributions
$19,000 my 401k + $4,500 employer match
$6,000 my Roth IRA

$19,000 husband 401k + $4,000 employer match
$6,000 husband Roth IRA

Available funds (for both 401k)
Asset Allocation
JPMorgan SmartRetirement Income A (JSRAX) (0.73%)
JPMorgan SmartRetirement 2020 A (JTTAX) (0.81%)
JPMorgan SmartRetirement 2025 A (JNSAX) (0.85%)
JPMorgan SmartRetirement 2030 A (JSMAX) (0.86%)
JPMorgan SmartRetirement 2035 A (SRJAX) (0.87%)
JPMorgan SmartRetirement 2040 A (SMTAX) (0.88%)
JPMorgan SmartRetirement 2045 A (JSAAX) (0.89%)
JPMorgan SmartRetirement 2050 A (JTSAX) (0.88%)
JPMorgan SmartRetirement 2055 A (JFFAX) (0.88%)

International Funds
American Funds EuroPacific Gr R6 (RERGX) (0.49%)
American Funds New World R6 (RNWGX) (0.62%)
Calamos Global Equity I (CIGEX) (1.15%)
Vanguard Total Intl Stock Index Admiral (VTIAX) (0.11%)

Small Cap Funds
American Beacon Zebra Small Cap Eq Inst (AZSIX) (0.90%)
Ivy Small Cap Growth N (IRGFX) (0.89 %)
Vanguard Small Cap Growth Index Admiral (VSGAX) (0.07%)

Mid Cap Funds
JPMorgan Mid Cap Growth R6 (JMGMX) (0.74%)
Vanguard Mid Cap Index Fund - Admiral (VIMAX) (0.05%)
Victory Sycamore Established Value R6 (VEVRX) (0.57%)

Large Cap Funds
American Funds American Mutual R6 (RMFGX) (0.30%)
American Funds Washington Mutual R6 (RWMGX) (0.27%)
Calvert US Large Cap Core Rspnb Idx I (CISIX) (0.24%)
T. Rowe Price Growth Stock I (PRUFX) (0.52%)
Vanguard 500 Index Admiral (VFIAX) (0.04%)

Balanced Funds
Invesco Equity and Income R6 (IEIFX) (0.39%)

Bond Funds
PIMCO Low Duration Instl (PTLDX) (0.46%)
PIMCO Real Return A (PRTNX) (1.28%)
PIMCO Total Return A (PTTAX) (0.89%)
Western Asset Mortgage Backed Sec IS (LMBSX) (0.56%)

Questions:
1. I need help to reallocate our investements to achieve our goal : 80% stocks /20% bonds with 25% of international stocks.

2. Any advice is welcome !

Thank you !
Last edited by pollux on Thu Jul 11, 2019 8:18 pm, edited 1 time in total.

Tdubs
Posts: 603
Joined: Tue Apr 24, 2018 7:50 pm

Re: Need help with allocations in retirement portfolios

Post by Tdubs » Thu Jul 11, 2019 4:15 pm

I don't know anything about the funds you have in your 401k. Why have you picked them rather than the low cost VG options?

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Peter Foley
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Location: Lake Wobegon

Re: Need help with allocations in retirement portfolios

Post by Peter Foley » Thu Jul 11, 2019 4:24 pm

If you use your IRA allocations as a guide, you could just use those same Vanguard funds in the 401k. Do keep in mind that positions of less than 5% do not add much diversification and are not large enough to impact the overall return of your portfolio.

Most individuals who post here would recommend not holding bonds in a Roth if you have room in your 401k or other tax deferred account. That has been my recommendation as well.

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Duckie
Posts: 6673
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Re: Need help with allocations in retirement portfolios

Post by Duckie » Thu Jul 11, 2019 6:47 pm

pollux wrote:My Age: 38
Husband Age: 34
Desired Asset allocation: 80% stocks /20% bonds
20% bonds is a little low for your ages. I'd be 25-30%.
Desired International Allocation: 25%
This is reasonable.
our 401k accounts are a mix of pre-tax 401k and Roth 401k. The compagny (Empower Retirement) website does not allow me to view the allocation per fund and per account (pre-tax or Roth), so I've put everythin under "401k".
Do your 401k plans allow you to have different assets in pre-tax and Roth, i.e. can you put all your bonds in pre-tax and just stocks in Roth or are they mixed?

Will your 401k plans take incoming rollover from TIRAs?
New annual Contributions
$19,000 my 401k + $4,500 employer match
$6,000 my Roth IRA

$18,000 husband 401k + $4,000 employer match
$6,000 husband Roth IRA
Why is husband's 401k contribution $18K instead of $19K? Is that a typo or something else?
Available funds (for both 401k)
The best options are:
  • Vanguard 500 Index (VFIAX) (0.04%) -- Large caps, 80% of US stocks
  • Vanguard Total Intl Stock Index (VTIAX) (0.11%) -- Complete international stocks
  • PIMCO Low Duration (PTLDX) (0.46%) -- Short-term US bonds
I need help to reallocate our investements to achieve our goal : 80% stocks /20% bonds with 25% of international stocks.
The following example has an AA of 80% stocks, 20% bonds, with 25% of stocks in international. That breaks down to 60% US stocks, 20% international stocks, and 20% bonds. You could have:

My 401k at Empower -- 38%
8% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)
20% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
10% (PTLDX) PIMCO Low Duration Fund Institutional Class (0.46%)

Husband's 401k at Empower -- 29%
29% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)

My Rollover IRA at Vanguard -- 10%
10% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05%)

My Roth IRA at Vanguard -- 12%
12% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Husband's Roth IRA at Vanguard -- 11%
11% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

My comments:
  • This has only stocks in the Roth IRAs because in general it's better to put assets with higher expected growth (stocks) in Roth accounts and assets with lower expected growth (bonds) in pre-tax accounts. That's because you've already paid the taxes in the Roth accounts so future growth is tax-free.
  • This has Total Bond in the rollover IRA because it's a more complete, cheaper bond option than the cheapest 401k bond option.
  • This has US stocks, international stocks, and bonds in "My 401k" because that account will be used for all rebalancing, at least for now.
Just some possibilities.

Topic Author
pollux
Posts: 9
Joined: Wed Sep 21, 2011 6:52 pm

Re: Need help with allocations in retirement portfolios

Post by pollux » Thu Jul 11, 2019 7:53 pm

Tdubs wrote:
Thu Jul 11, 2019 4:15 pm
I don't know anything about the funds you have in your 401k. Why have you picked them rather than the low cost VG options?
The low cost Vanguard options were recently added.
When we started with the company, there were less funds options in the 401k. Some funds were replaced etc. I started with a simple portfolio, but after a few plan changes, I got overwhelmed with all the changes, so I started to invest in the target date fund.

Since the Vanguard were recently added, I thought this would be a good opportunity to redefine our goals and re-allocate assets to match them.

Topic Author
pollux
Posts: 9
Joined: Wed Sep 21, 2011 6:52 pm

Re: Need help with allocations in retirement portfolios

Post by pollux » Thu Jul 11, 2019 8:18 pm

Duckie wrote:
Thu Jul 11, 2019 6:47 pm
pollux wrote:My Age: 38
Husband Age: 34
Desired Asset allocation: 80% stocks /20% bonds
20% bonds is a little low for your ages. I'd be 25-30%.
The reason is that we started late. We started working in the US under visas (we're not US citizens) that did not allow us to have access to 401k and Roth IRAs. As soon as we got our H1-b visas, we started to invest in 401k and Roth. So we got a little bit more aggressive. We're now permanent resident and on the path to citizenship (and are planning on staying in the US).
Desired International Allocation: 25%
This is reasonable.
Great !
our 401k accounts are a mix of pre-tax 401k and Roth 401k. The compagny (Empower Retirement) website does not allow me to view the allocation per fund and per account (pre-tax or Roth), so I've put everythin under "401k".
Do your 401k plans allow you to have different assets in pre-tax and Roth, i.e. can you put all your bonds in pre-tax and just stocks in Roth or are they mixed?
we cannot chose the asset allocation per account. We can only choose the contribution rate (as a % of our gross income) for each account and the fund allocation. So we can't pick with fund is going pre-tax and which one is going Roth. Right now we're doing 2/3 pre-tax, 1/3 Roth 401k. We were not sure how to allocate pre-tax vs Roth, so we picked the 2/3 - 1/3 ratio to diversify the accounts.

Will your 401k plans take incoming rollover from TIRAs?
I don't know - should I find out ? Do you have any suggestion if this is an option ?
New annual Contributions
$19,000 my 401k + $4,500 employer match
$6,000 my Roth IRA

$18,000 husband 401k + $4,000 employer match
$6,000 husband Roth IRA
Why is husband's 401k contribution $18K instead of $19K? Is that a typo or something else?
yes it's a typo - I'll fix it in the original post.
Available funds (for both 401k)
The best options are:
  • Vanguard 500 Index (VFIAX) (0.04%) -- Large caps, 80% of US stocks
  • Vanguard Total Intl Stock Index (VTIAX) (0.11%) -- Complete international stocks
  • PIMCO Low Duration (PTLDX) (0.46%) -- Short-term US bonds
I need help to reallocate our investements to achieve our goal : 80% stocks /20% bonds with 25% of international stocks.
The following example has an AA of 80% stocks, 20% bonds, with 25% of stocks in international. That breaks down to 60% US stocks, 20% international stocks, and 20% bonds. You could have:

My 401k at Empower -- 38%
8% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)
20% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
10% (PTLDX) PIMCO Low Duration Fund Institutional Class (0.46%)

Husband's 401k at Empower -- 29%
29% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)

My Rollover IRA at Vanguard -- 10%
10% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05%)

My Roth IRA at Vanguard -- 12%
12% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Husband's Roth IRA at Vanguard -- 11%
11% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
Thank you, that is really helpful.

My comments:
  • This has only stocks in the Roth IRAs because in general it's better to put assets with higher expected growth (stocks) in Roth accounts and assets with lower expected growth (bonds) in pre-tax accounts. That's because you've already paid the taxes in the Roth accounts so future growth is tax-free.
  • This has Total Bond in the rollover IRA because it's a more complete, cheaper bond option than the cheapest 401k bond option.
  • This has US stocks, international stocks, and bonds in "My 401k" because that account will be used for all rebalancing, at least for now.
Just some possibilities.
Again, this is really helpful, I'm going to look into all you said.

lakpr
Posts: 1849
Joined: Fri Mar 18, 2011 9:59 am

Re: Need help with allocations in retirement portfolios

Post by lakpr » Thu Jul 11, 2019 11:02 pm

pollux,
pollux wrote:
Thu Jul 11, 2019 3:39 pm
Tax Rate: 22% federal, 5% (state) + 3.2% (county)[/b]
At a combined tax rate of 30.2%, I highly discourage you from contributing anything to the Roth 401k at all. Make everything pre-tax contributions! If you are on path to citizenship and staying in this country, at the time of retirement you have the option of moving to a state with no income tax, or at least to a neighboring state with a lower overall tax.
pollux wrote:
Thu Jul 11, 2019 8:18 pm
we cannot chose the asset allocation per account. We can only choose the contribution rate (as a % of our gross income) for each account and the fund allocation. So we can't pick with fund is going pre-tax and which one is going Roth. Right now we're doing 2/3 pre-tax, 1/3 Roth 401k. We were not sure how to allocate pre-tax vs Roth, so we picked the 2/3 - 1/3 ratio to diversify the accounts.
Can you try logging into the retirement portal for your 401k plan, and attempt as if you are trying to transfer money from an existing fund to a different fund? Do you see any button or option to choose the contributions by asset type?

My own MegaCorp plan also does not display how much is in my Roth 401k vs my traditional 401k. But, there is a link for me to exchange from one fund to another, and once I click it, right below the list of funds I am invested in there is a link where I can choose the money by contribution type: my pre-tax, my Roth, my employer match, my after-tax, etc. I choose "my Roth 401k" option, and in the next screen it would tell me how much I have available in what funds. At this time I cancel everything ...

Bit of a pain to find out how much money in each account, and I was wondering if that's the case with your 401k provider's portal as well ...

Topic Author
pollux
Posts: 9
Joined: Wed Sep 21, 2011 6:52 pm

Re: Need help with allocations in retirement portfolios

Post by pollux » Fri Jul 12, 2019 8:21 am

lakpr wrote:
Thu Jul 11, 2019 11:02 pm
pollux,
pollux wrote:
Thu Jul 11, 2019 3:39 pm
Tax Rate: 22% federal, 5% (state) + 3.2% (county)[/b]
At a combined tax rate of 30.2%, I highly discourage you from contributing anything to the Roth 401k at all. Make everything pre-tax contributions! If you are on path to citizenship and staying in this country, at the time of retirement you have the option of moving to a state with no income tax, or at least to a neighboring state with a lower overall tax.
Thank you, I was wondering if that was a good idea to contribute to the Roth 401k. I'll consider moving everything to pre-tax 401k.
Just to make things clear - you would still recommend contributing to the Roth IRA (as long as we're eligible) ?
pollux wrote:
Thu Jul 11, 2019 8:18 pm
we cannot chose the asset allocation per account. We can only choose the contribution rate (as a % of our gross income) for each account and the fund allocation. So we can't pick with fund is going pre-tax and which one is going Roth. Right now we're doing 2/3 pre-tax, 1/3 Roth 401k. We were not sure how to allocate pre-tax vs Roth, so we picked the 2/3 - 1/3 ratio to diversify the accounts.
Can you try logging into the retirement portal for your 401k plan, and attempt as if you are trying to transfer money from an existing fund to a different fund? Do you see any button or option to choose the contributions by asset type?

My own MegaCorp plan also does not display how much is in my Roth 401k vs my traditional 401k. But, there is a link for me to exchange from one fund to another, and once I click it, right below the list of funds I am invested in there is a link where I can choose the money by contribution type: my pre-tax, my Roth, my employer match, my after-tax, etc. I choose "my Roth 401k" option, and in the next screen it would tell me how much I have available in what funds. At this time I cancel everything ...

Bit of a pain to find out how much money in each account, and I was wondering if that's the case with your 401k provider's portal as well ...
I just tried, and no, I don't see the allocation per account, I just see the overall assets allocation.
There is another "view" where I can see my total balance per account (but I don't see the detail of the assets). It is a pain, I've contacted Empower to get the information, they keep answering with wrong/useless instructions on how to find that on the website.
I think I can see for each account a part of the contribution and dividend history - but no more that 3 years in the past. So I cannot get the full picture.

Thank you for all the advice !

lakpr
Posts: 1849
Joined: Fri Mar 18, 2011 9:59 am

Re: Need help with allocations in retirement portfolios

Post by lakpr » Fri Jul 12, 2019 9:28 am

pollux wrote:
Fri Jul 12, 2019 8:21 am
Thank you, I was wondering if that was a good idea to contribute to the Roth 401k. I'll consider moving everything to pre-tax 401k.
Just to make things clear - you would still recommend contributing to the Roth IRA (as long as we're eligible) ?
Yes I do. By virtue of participating in the workplace plan, you are not allowed to contribute to a traditional IRA; actually to correctly rephrase that, you can contribute to a traditional IRA but you do not get tax deduction on the contribution. Not unless you are in the 12% bracket. So it is either contribute to Roth IRA or contribute on a non-deductible basis to a traditional IRA or not contribute at all. Quite clearly, fully contributing to Roth IRA while you are eligible to do so is the best alternative. If your income is more than $203k, then you will go with the second alternative (contribute to non-deductible tIRA, then do Roth conversions, aka Backdoor Roth).
pollux wrote:
Fri Jul 12, 2019 8:21 am
I just tried, and no, I don't see the allocation per account, I just see the overall assets allocation.
There is another "view" where I can see my total balance per account (but I don't see the detail of the assets). It is a pain, I've contacted Empower to get the information, they keep answering with wrong/useless instructions on how to find that on the website.
I think I can see for each account a part of the contribution and dividend history - but no more that 3 years in the past. So I cannot get the full picture.
Sorry to hear that. Complain to Empower that hiding these details do not let you do efficient tax planning; as you may want to do Roth conversions towards year end and that their website is preventing it. In fact this was the exact reason why I called my plan administrator and bitched about it, then the rep showed me the workaround.

Topic Author
pollux
Posts: 9
Joined: Wed Sep 21, 2011 6:52 pm

Re: Need help with allocations in retirement portfolios

Post by pollux » Fri Jul 12, 2019 10:33 am

So if my target is something like what Duckie suggested :
My 401k at Empower -- 38%
8% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)
20% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
10% (PTLDX) PIMCO Low Duration Fund Institutional Class (0.46%)

Husband's 401k at Empower -- 29%
29% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)

My Rollover IRA at Vanguard -- 10%
10% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05%)

My Roth IRA at Vanguard -- 12%
12% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Husband's Roth IRA at Vanguard -- 11%
11% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
Here are my next steps to achieve that - let me know if I'm correct :)
1. Exchange whatever is not VBTLX in my Rollover to VBTLX
2. Exchange whatever is not VTSAX in my Vanguard Roth to VTSAX
3. Exchange whatever is not VTSAX in my husband Vanguard Roth to VTSAX
4. Re-allocate everything in my husband 401k to VFIAX
5. Re-allocate everything in my 401k to VFIAX (21%), VTIAX (53%), PTLDX (26%)

Future contributions :
My Rollover - no contributions
My Vanguard Roth : 100% in VTSAX
My husband Roth : 100% in VTSAX
My husband 401k : 100% in VFIAX
My 401 k : this is where I'm not sure - looks like we already got the US stocks covered in the other accounts - so should I just do 50% VTIAX and 50% PTLDX ?

How often do you all suggest to re-balance ? every 3 months ?

lakpr
Posts: 1849
Joined: Fri Mar 18, 2011 9:59 am

Re: Need help with allocations in retirement portfolios

Post by lakpr » Fri Jul 12, 2019 11:09 am

Once an year, or if the ratio of stocks to bonds goes more than 5% out of whack.

Personally, I did not and don’t care to rebalance between domestic and international stocks. But that is up to you.

My target allocation is 70:30. Back in December, due to steep downturn in the equities market, it fell to 63:37, and I sold bonds to buy equities to rebalance. Now along with the new contributions and roaring stock market that returned 18% and counting, just two weeks ago the balance shifted to 81:19, then I rebalanced back to 70:30.

Just keep an eye, if the asset allocation drifts more than 5% off your target, rebalance. Or at least watching if it hits your rebalance trigger, if it does not self correct and drifts further higher or further lower, then rebalance.

I let the allocation drift beyond 75:25 before I actually rebalanced.

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Duckie
Posts: 6673
Joined: Thu Mar 08, 2007 2:55 pm

Re: Need help with allocations in retirement portfolios

Post by Duckie » Fri Jul 12, 2019 4:39 pm

pollux wrote:
Duckie wrote:Will your 401k plans take incoming rollover from TIRAs?
I don't know - should I find out ? Do you have any suggestion if this is an option?
It's not an issue now but if, in the future, your income becomes too high to contribute to your Roth IRAs directly, then you can use the Backdoor Roth method. In order to do that without triggering the dreaded pro-rata rule you need to "hide" your rollover IRA by moving it into your 401k.
So if my target is something like what Duckie suggested :
<snip>
Here are my next steps to achieve that - let me know if I'm correct :)
1. Exchange whatever is not VBTLX in my Rollover to VBTLX
2. Exchange whatever is not VTSAX in my Vanguard Roth to VTSAX
3. Exchange whatever is not VTSAX in my husband Vanguard Roth to VTSAX
4. Re-allocate everything in my husband 401k to VFIAX
5. Re-allocate everything in my 401k to VFIAX (21%), VTIAX (53%), PTLDX (26%)
You are correct.
Future contributions :
My Rollover - no contributions
My Vanguard Roth : 100% in VTSAX
My husband Roth : 100% in VTSAX
My husband 401k : 100% in VFIAX
My 401 k : this is where I'm not sure - looks like we already got the US stocks covered in the other accounts - so should I just do 50% VTIAX and 50% PTLDX ?
That will work.
How often do you all suggest to re-balance? every 3 months?
Once or twice a year is fine.

Topic Author
pollux
Posts: 9
Joined: Wed Sep 21, 2011 6:52 pm

Re: Need help with allocations in retirement portfolios

Post by pollux » Mon Jul 15, 2019 8:18 am

Thanks again to all that helped - everything looks simpler now :)

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Need help with allocations in retirement portfolios

Post by livesoft » Mon Jul 15, 2019 8:32 am

I really like the advice Duckie has given and only have one thing to add:

Since it appears that you must use the same contribution allocation to the 401(k) and Roth 401(k) when you contribute, I suggest that you don't contribute to both at the same time. You could instead explore whether the following would work:

1. Part of the year only contribute to 401(k) and have all contribution go to bond fund.
2. The other part of the year only contribute to Roth 401(k) and have all contribution go to stock funds.

I also realize that any company matching will go to traditional 401(k) and not Roth 401(k). Nevertheless, could you make an exchange in only your Roth 401(k) or only your traditional 401(k)? That way you could exchange any bond funds in Roth 401(k) into stocks funds.

Or your spouse could have only one of the types of 401(k) and you could have the alternate type of 401(k).

Or you don't need a Roth 401(k) at all and could be 100% traditional 401(k) going forward.

Maybe some of what I have just suggested has already been suggested in this thread. I must admit I only scanned all the previous responses.
Wiki This signature message sponsored by sscritic: Learn to fish.

Topic Author
pollux
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Joined: Wed Sep 21, 2011 6:52 pm

Re: Need help with allocations in retirement portfolios

Post by pollux » Mon Jul 15, 2019 2:50 pm

livesoft wrote:
Mon Jul 15, 2019 8:32 am
I really like the advice Duckie has given and only have one thing to add:

Since it appears that you must use the same contribution allocation to the 401(k) and Roth 401(k) when you contribute, I suggest that you don't contribute to both at the same time. You could instead explore whether the following would work:

1. Part of the year only contribute to 401(k) and have all contribution go to bond fund.
2. The other part of the year only contribute to Roth 401(k) and have all contribution go to stock funds.
I think that could work yes, but I'm not sure how the assets would be distributed after a rebalance.
I took the advice to stop contributing to the Roth 401k - so all the future contributions are going to the pre-tax.

On a side note, now that I have transferred all the assets to VFIAX, VTIAX and PTLDX, I got a Transfer Confirmation letter where I can finally see how much I had for each asset per account.

I also realize that any company matching will go to traditional 401(k) and not Roth 401(k). Nevertheless, could you make an exchange in only your Roth 401(k) or only your traditional 401(k)? That way you could exchange any bond funds in Roth 401(k) into stocks funds.
I cannot choose (at least not on the web interface). I haven't tried to call to see if I can do more complex things by phone.

Or your spouse could have only one of the types of 401(k) and you could have the alternate type of 401(k).

Or you don't need a Roth 401(k) at all and could be 100% traditional 401(k) going forward.
Yes that was our conclusion (stop contributing to Roth 401k) :)
Maybe some of what I have just suggested has already been suggested in this thread. I must admit I only scanned all the previous responses.
Thank you for taking the time to answer !

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