Rebalancing and tax management questions

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Topic Author
InTheMidwest
Posts: 24
Joined: Mon Jul 12, 2021 10:19 am

Rebalancing and tax management questions

Post by InTheMidwest »

Our portfolio is approx 30% taxable accounts with VG. Our 401Ks/Roths (the remaining 70% of the portfolio) are with TIAA via our employer. We don't hold individual stocks. Retired 2022, age 65 looking to tip VG towards conservative and decrease taxes. We should have joined this group decades ago but did not and that is water under the bridge. Our present holdings are Admirals in:
VWENX Wellington 40%
VWIAX Wellesley 9%
VTIAX Tot Int Stock index 6%
VTWNX Target Retirement 2020 (ugh)11%
VSTCX Strategic Sm Cap Equity 8%
VWIUX Inter-Term Tax Exempt 9%
VHCIX Health Care Index 4%
VFIJX GNMA 4%
VMRXX Cash Res Fed MM 9%
We've been humming on an automatic reinvestment strategy.
Questions: 1. Realizing the problem with TDFs in taxable accounts we will stop reinvestments into VTWNX. Should we consider getting out of VTWNX altogether? 2. Our largest holding is VWENX, should we also stop its auto reinvestments and place the dividends into VWIUX instead? 3. VWIUX seems like a reasonable conservative, tax efficient fund. But, if not, what is? We're not greedy and, at this point are ok with 6% returns as long as inflation does not suck the life out of all us.

Enjoying the expertise in this group. Thank you in advance.
rhubarbpie
Posts: 82
Joined: Mon May 03, 2021 9:18 am

Re: Rebalancing and tax management questions

Post by rhubarbpie »

What do you want to move toward? Are there decent fixed income and bond funds available in the TIAA options?

I'd think turning off automatic dividend reinvestments is a good start. You could look into selling the target date fund over time, depending on your tax situation.
Topic Author
InTheMidwest
Posts: 24
Joined: Mon Jul 12, 2021 10:19 am

Re: Rebalancing and tax management questions

Post by InTheMidwest »

rhubarbpie wrote: Fri Jan 28, 2022 7:31 pm What do you want to move toward? Are there decent fixed income and bond funds available in the TIAA options?

I'd think turning off automatic dividend reinvestments is a good start. You could look into selling the target date fund over time, depending on your tax situation.
Thanks. Probs 50:50 VG allocation. TIAA is no more diverse than VG. Thinking Interm Term Tax Exempt as we already have the fund or is there a better VG bond fund?
tomsense76
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Re: Rebalancing and tax management questions

Post by tomsense76 »

Tax-exempt bonds really only make sense if you are in high tax bracket. What is your income tax bracket? Do you have state income taxes and if so which state?
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grabiner
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Re: Rebalancing and tax management questions

Post by grabiner »

tomsense76 wrote: Fri Jan 28, 2022 8:13 pm Tax-exempt bonds really only make sense if you are in high tax bracket. What is your income tax bracket? Do you have state income taxes and if so which state?
And conversely, the taxable bonds in the Target Retirement fund don't make sense if you are in a high tax bracket. If you do get rid of the fund, you'll want to hold either all munis or all taxable bonds in your taxable account.
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Topic Author
InTheMidwest
Posts: 24
Joined: Mon Jul 12, 2021 10:19 am

Re: Rebalancing and tax management questions

Post by InTheMidwest »

tomsense76 wrote: Fri Jan 28, 2022 8:13 pm Tax-exempt bonds really only make sense if you are in high tax bracket. What is your income tax bracket? Do you have state income taxes and if so which state?
We are InTheMidwest with state income tax; and yes, in a bracket where we would like to lower our taxable events.
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