How do you manage rebalancing funds in multiple retirement accounts?

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saver1
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How do you manage rebalancing funds in multiple retirement accounts?

Post by saver1 » Mon Jan 13, 2020 9:08 pm

How do you simplify or easily manage rebalancing between multiple retirement accounts since they are supposed to be viewed as one big portfolio? Suppose you have three or four retirement accounts between you and your wife (401k, Roth IRA's and Traditional IRA's). Is there a simple way to do this?

livesoft
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by livesoft » Mon Jan 13, 2020 9:11 pm

My simple way is to have 3 of the 4 accounts have one single fund in them. There is nothing to do in those 3 accounts at all.

The 4th account is the largest one and it has one fund of each asset class that I want. I simply rebalance in that one single account taking into account all 4 accounts.

I actually don't even do any math or use a spreadsheet because I can use: viewtopic.php?t=150267

And more recently, in small* tax-advantaged accounts like an HSA or inherited IRA I just put a target retirement of LifeStrategy fund as the single fund don't even bother with including them in any portfolio asset allocation determinations since they already have an asset allocation close enough to what I want.

*By small, these accounts have less than 0.5% of our total portfolio value in them.
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celia
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by celia » Mon Jan 13, 2020 9:18 pm

Having three or four retirement accounts is not a problem. In fact, a married couple should probably have a minimum of four, each person having a tax-deferred account and a Roth.

What you can do is list all your funds and their values (assuming you are already invested according to your desired Asset Allocation) or the funds and values you want to own after the re-balancing is done and order them by the fund's tax-efficiency. Then follow the guidance provided on the Tax-efficient Fund Placement wiki page. This is more for placing the funds in the best location but you can also use it for re-balancing if you list what your "rebalanced" assets would look like instead of using what you currently have.
Last edited by celia on Mon Jan 13, 2020 9:25 pm, edited 1 time in total.

Triple digit golfer
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Triple digit golfer » Mon Jan 13, 2020 9:20 pm

If possible, have an account that holds all of the asset types.

If not possible, have one account that holds two and another that holds another 2, with one overlapped.

An example of the latter, using a 3 fund portfolio, desired allocation 33/33/33.

401k
$30 Fund 1
$22 Fund 2

Roth IRA
$11 Fund 2
$37 Fund 3

Exchange $3 of Fund 2 for Fund 1 in 401k.
Exchange $4 of Fund 3 for Fund 2 in Roth IRA.

Jack FFR1846
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Jack FFR1846 » Mon Jan 13, 2020 9:31 pm

I've got 10 accounts between my wife and myself. One (the biggest) holds my 3 funds. The rest each hold 1. Rebalancing means looking at my spread sheet, which calculates percentages of each asset class. I make one set of "sell dollars to buy another fund" and I'm done. Never takes more than 15 minutes a year.
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vipertom1970
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by vipertom1970 » Mon Jan 13, 2020 9:47 pm

and make sure you don't rebalance in taxable brokerage and get hit with capital gains. I usually rebalance in my roll over IRA.

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WoodSpinner
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by WoodSpinner » Mon Jan 13, 2020 10:58 pm

OP,

I wrote some VB scripts in Excel to help my wife manage rebalancing. Works pretty well and aligns with the WIKI on fund placement.

You can view more info here.

Let me know what you think....

WoodSpinner

Bama12
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Bama12 » Mon Jan 13, 2020 11:00 pm

I don't rebalance. I just buy more or less.

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Stef
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Stef » Tue Jan 14, 2020 12:44 am

I use a selfmade Excel spreadsheet with realtime quotes, because I have different funds in taxable and tax-deffered accounts. So I get a overview of all my assets including total AA and total regional weights.

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GerryL
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by GerryL » Tue Jan 14, 2020 2:49 am

Vanguard has a what-if tool that you can use to see how moving $$$ around in your accounts will affect the AA. Includes a stock analysis (domestic and international) and a bond analysis. I play around with that before moving money into the settlement account of my IRA in preparation for taking my RMD.
This works for me since all of my accounts are in Vanguard. No 401k.

onourway
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by onourway » Tue Jan 14, 2020 5:34 am

As usual, Livesoft has the simple, straightforward answer.

I will add that while we use the same method he suggests, I haven’t actually found the need to rebalance anything in years. We continue to buy new assets at an AA that is a little bit more conservative than our current actual AA as a way of automating our transition to that more conservative AA, and even with the 20% drop of 2018, our overall AA didn’t vary by enough to trigger the need to rebalance.

bikechuck
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by bikechuck » Tue Jan 14, 2020 1:18 pm

Bama12 wrote:
Mon Jan 13, 2020 11:00 pm
I don't rebalance. I just buy more or less.
Your approach works if you are still in the accumulation phase but will not work very well if you are in the de-accumulation phase. I keep a spreadsheet and rebalance by 1) Withdrawing from funds that are creeping up and throwing my allocation off 2) Selling and repurchasing equities or bonds in the index funds in the IRA or 401K of my choice. This is easier if you own both equities and fixed income in each of your IRAs.

I do need a simple spreadsheet to monitor my overall allocation across my accounts but that took an hour or so several years ago and is still serving me well.

I am working on consolidating and simplifying my holdings because my wife might struggle with this after I am out of the picture and I think that she will be better off managing this herself when the time comes rather than paying someone an AUM fee.

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Taylor Larimore
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Taylor Larimore » Tue Jan 14, 2020 1:32 pm

Jack FFR1846 wrote:
Mon Jan 13, 2020 9:31 pm
I've got 10 accounts between my wife and myself. One (the biggest) holds my 3 funds. The rest each hold 1. Rebalancing means looking at my spread sheet, which calculates percentages of each asset class. I make one set of "sell dollars to buy another fund" and I'm done. Never takes more than 15 minutes a year.
Jack FFR1846:

Holding 10 accounts and 12 funds for a husband and wife seems unnecessarily complex.

If you will post your entire financial situation in the format below, we may be able to help you consolidate and simplify your portfolio.

ASKING PORTFOLIO QUESTIONS

Please read my "Simplicity" link below.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Basic investing is simple — a sensible allocation among stocks, bonds, and cash reserves; a diversified selection of middle-of-the-road, high-grade securities; a careful balancing of risk, return, and (once again) cost."

"Simplicity is the master key to financial success." -- Jack Bogle

3funder
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by 3funder » Tue Jan 14, 2020 2:24 pm

Bama12 wrote:
Mon Jan 13, 2020 11:00 pm
I don't rebalance. I just buy more or less.
+1

livesoft
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by livesoft » Tue Jan 14, 2020 3:03 pm

Taylor Larimore wrote:
Tue Jan 14, 2020 1:32 pm
Holding 10 accounts and 12 funds for a husband and wife seems unnecessarily complex.
We have
Joint taxable
His inherited IRA
Her inherited IRA
His Roth IRA
Her Roth IRA
His 401(k)
Her 401(k)
Her traditional IRA
His HSA
Her HSA
His 403(b)

So that's 11 accounts that I don't think can be reduced at the moment, but suggestions to reduce them are welcome. We had two 529 plans ... one for each child, but just finished off the last one this week.
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GerryL
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by GerryL » Tue Jan 14, 2020 3:37 pm

livesoft wrote:
Tue Jan 14, 2020 3:03 pm
Taylor Larimore wrote:
Tue Jan 14, 2020 1:32 pm
Holding 10 accounts and 12 funds for a husband and wife seems unnecessarily complex.
We have
Joint taxable
His inherited IRA
Her inherited IRA
His Roth IRA
Her Roth IRA
His 401(k)
Her 401(k)
Her traditional IRA
His HSA
Her HSA
His 403(b)

So that's 11 accounts that I don't think can be reduced at the moment, but suggestions to reduce them are welcome. We had two 529 plans ... one for each child, but just finished off the last one this week.
Those multiple funds listed here are understandable (and what I assumed for a married couple). What could be addressed is the number of different funds.

livesoft
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by livesoft » Tue Jan 14, 2020 3:42 pm

GerryL wrote:
Tue Jan 14, 2020 3:37 pm
Those multiple funds listed here are understandable (and what I assumed for a married couple). What could be addressed is the number of different funds.
Indeed, yes.

Consider "captive accounts" such as the 401(k)s, the 403(b)s, and even employer-associated HSAs. Those accounts may have only a limited selection of funds to choose from. One may not be able to purchase VBTLX or VTSAX in those at all. Do some tax-loss harvesting in the taxable account and other funds get added as well.

One can strive for simplicity, but the reality is often that a 3-fund portfolio is simply not achievable.
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Triple digit golfer
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Triple digit golfer » Tue Jan 14, 2020 3:45 pm

GerryL wrote:
Tue Jan 14, 2020 3:37 pm
livesoft wrote:
Tue Jan 14, 2020 3:03 pm
Taylor Larimore wrote:
Tue Jan 14, 2020 1:32 pm
Holding 10 accounts and 12 funds for a husband and wife seems unnecessarily complex.
We have
Joint taxable
His inherited IRA
Her inherited IRA
His Roth IRA
Her Roth IRA
His 401(k)
Her 401(k)
Her traditional IRA
His HSA
Her HSA
His 403(b)

So that's 11 accounts that I don't think can be reduced at the moment, but suggestions to reduce them are welcome. We had two 529 plans ... one for each child, but just finished off the last one this week.
Those multiple funds listed here are understandable (and what I assumed for a married couple). What could be addressed is the number of different funds.
I won't speak for Jack, but I took his post to mean that he holds 3 unique funds, but many are duplicated because he has multiple accounts.

Jack FFR1846
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Jack FFR1846 » Tue Jan 14, 2020 4:03 pm

Taylor Larimore wrote:
Tue Jan 14, 2020 1:32 pm

Holding 10 accounts and 12 funds for a husband and wife seems unnecessarily complex.

If you will post your entire financial situation in the format below, we may be able to help you consolidate and simplify your portfolio.

ASKING PORTFOLIO QUESTIONS

Please read my "Simplicity" link below.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Basic investing is simple — a sensible allocation among stocks, bonds, and cash reserves; a diversified selection of middle-of-the-road, high-grade securities; a careful balancing of risk, return, and (once again) cost."

I am certainly open to improvement. Thank you for the offer, Taylor.
Last edited by Jack FFR1846 on Wed Jan 15, 2020 8:36 am, edited 1 time in total.
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Topic Author
saver1
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by saver1 » Tue Jan 14, 2020 4:24 pm

Thank you all for the replies so far. Keep them coming. It's great to read all the different perspectives.

So far, I like livesoft's suggestion of keeping only one fund in the smaller accounts and having all the funds in the largest account to do the rebalancing.

@WoodSpinner - I took a quick look at your spreadsheet. Looks like a nice and easy way to figure out rebalancing. I will take a more in depth look of it when I get a chance.

carmonkie
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by carmonkie » Tue Jan 14, 2020 5:07 pm

We have a taxable, Roth, 401(k), HSA. HSA is a simple 3 fund matching our AA.

For the others, I combined all the holdings in M* portfolio so that the same fund that we have across multiple accounts looks like one big one. M* gives me a snapshot on the % allocation of each fund so I just buy what is low based on the % column. Right now I am -2% bonds.

I am buying mainly bonds in my 401(k) and funding my Roth with Sm-Cap and REITs. Once I am done with the Roth, I will re-set my 401(k) to match the AA. I should be getting the employer match in a big lump sum soon which will go mainly to Bonds.

We are in accumulating phase. I guess like someone below said, I buy what is off and play with my 401(k) fund direction as needed for the bond part. The REIT is only in my Roth so I over-fund it so that it will do what will do through the year until the next Roth contribution.

Not an exact science, but works ok for us.

Allan Roth
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Allan Roth » Tue Jan 14, 2020 7:06 pm

I must admit that I have more accounts than I'd like - taxable personal, taxable trusts, tax-deferred and tax-free. I always rebalance to my total target which happens to be 45% equities (30% US / 15% int'l). I set up a matrix on MS Excel looking at the funds and the types of accounts so I get both the asset allocation and asset location right. I'm all for simplicity but taxes and estate planning can make things complex. Really wish we had a simple tax code.

Triple digit golfer
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by Triple digit golfer » Tue Jan 14, 2020 7:13 pm

Allan Roth wrote:
Tue Jan 14, 2020 7:06 pm
I must admit that I have more accounts than I'd like - taxable personal, taxable trusts, tax-deferred and tax-free. I always rebalance to my total target which happens to be 45% equities (30% US / 15% int'l). I set up a matrix on MS Excel looking at the funds and the types of accounts so I get both the asset allocation and asset location right. I'm all for simplicity but taxes and estate planning can make things complex. Really wish we had a simple tax code.
In a 3 fund portfolio that spans multiple accounts, as long as bonds are in tax deferred, in your opinion does it matter much where Total Stock and Total International reside amongst tax deferred, tax free, and taxable?

WhiteMaxima
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by WhiteMaxima » Tue Jan 14, 2020 7:19 pm

automatic re-balance annually.

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grabiner
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Re: How do you manage rebalancing funds in multiple retirement accounts?

Post by grabiner » Tue Jan 14, 2020 10:33 pm

The way I do it is to put everything in a spreadsheet. When I need to rebalance, I find out what is overweighted, and move the appropriate amount on the spreadsheet to get as close as possible to the target allocation, then make the necessary transactions. (If the overweighted fund is only in a taxable account, I won't sell it unless it gets way off, but I will use that fund to donate to charity, and invest taxable dividends and new money in other taxable funds.)

For example, when I rebalanced last week, I was overweighted in US stock and underweighted in bonds (both because the US stock market outperformed the bond market and because I increase my bond allocation every year). I have a US stock fund and a bond fund in my employer plan, so I sold some of that fund to buy the right amount of bonds. If I had instead been overweighted in real estate, I would have sold a REIT fund in my IRA to buy a US stock fund, and then sold a US stock fund in my employer plan to buy a bond fund.
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