Substituting broad portfolio with growth in taxable account?

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digitalchampion
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Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

\I'm sure this has been discussed but wanted to get the latest opinions. What's the general consensus on using market cap weighted growth in place of broad market indices. For example SCHG/VUG instead of VTI. Right now I'm running value/momentum factor portfolios in my IRA. While I've been thinking more about my taxable account, it's challenging to overlook the tax drag of funds like VTI/VXUS. When in a high income bracket, the drag seems like it can be .5%+ each year, with NIIT tax, ACA limitations, etc tacked on over time.

Thanks for sharing your thoughts here!
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

You can hold VUG in a taxable account and VTV, the value ETF, in a tax-advantaged account, which together will closely approximate VTI.
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digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

petulant wrote: Wed May 31, 2023 5:00 pm You can hold VUG in a taxable account and VTV, the value ETF, in a tax-advantaged account, which together will closely approximate VTI.
Due to account size differences I’d rather treat the taxable account completely separate. Over the long term can a lighter tilt like SCHG be expected to be in the ballpark? It’s some serious long term drag from those dividends during accumulation stage. In addition to ACA, it will cap Roth ladder conversions
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

digitalchampion wrote: Wed May 31, 2023 5:06 pm
petulant wrote: Wed May 31, 2023 5:00 pm You can hold VUG in a taxable account and VTV, the value ETF, in a tax-advantaged account, which together will closely approximate VTI.
Due to account size differences I’d rather treat the taxable account completely separate. Over the long term can a lighter tilt like SCHG be expected to be in the ballpark? It’s some serious long term drag from those dividends during accumulation stage. In addition to ACA, it will cap Roth ladder conversions
The tracking error might be large relative to the tax drag. I don't quite follow your idea that the tax drag is so significant. The highest federal rate applicable to qualified dividends and long-term capital gains is 20%, plus NIIT is 23.8%. State income tax rates might add another 5-6%; but to get much higher state rates (as in California), I suspect you'd be past an ACA cliff. If the all-in drag is 30% of dividends, then that's maybe 45 bps, which isn't that huge a difference on a total return of 7% or so per year (especially noting that dividends increase basis). Can you explain?
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digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

petulant wrote: Wed May 31, 2023 7:37 pm
digitalchampion wrote: Wed May 31, 2023 5:06 pm
petulant wrote: Wed May 31, 2023 5:00 pm You can hold VUG in a taxable account and VTV, the value ETF, in a tax-advantaged account, which together will closely approximate VTI.
Due to account size differences I’d rather treat the taxable account completely separate. Over the long term can a lighter tilt like SCHG be expected to be in the ballpark? It’s some serious long term drag from those dividends during accumulation stage. In addition to ACA, it will cap Roth ladder conversions
The tracking error might be large relative to the tax drag. I don't quite follow your idea that the tax drag is so significant. The highest federal rate applicable to qualified dividends and long-term capital gains is 20%, plus NIIT is 23.8%. State income tax rates might add another 5-6%; but to get much higher state rates (as in California), I suspect you'd be past an ACA cliff. If the all-in drag is 30% of dividends, then that's maybe 45 bps, which isn't that huge a difference on a total return of 7% or so per year (especially noting that dividends increase basis). Can you explain?
Yeah 50bps is a good approximation. Probably should account for unqualified dividends and yes places like CA as an accumulator, where you can get slapped with an extra 10%+.

Despite this sort of drag, you’d do blend? 50bps is like an active fund to me. Then I assume if the account is large enough from years of working high income jobs, you’d be still have unusually high dividends in the non working later years, preventing ACA and limiting Roth conversion ladders
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

digitalchampion wrote: Thu Jun 01, 2023 11:58 pm
petulant wrote: Wed May 31, 2023 7:37 pm
digitalchampion wrote: Wed May 31, 2023 5:06 pm
petulant wrote: Wed May 31, 2023 5:00 pm You can hold VUG in a taxable account and VTV, the value ETF, in a tax-advantaged account, which together will closely approximate VTI.
Due to account size differences I’d rather treat the taxable account completely separate. Over the long term can a lighter tilt like SCHG be expected to be in the ballpark? It’s some serious long term drag from those dividends during accumulation stage. In addition to ACA, it will cap Roth ladder conversions
The tracking error might be large relative to the tax drag. I don't quite follow your idea that the tax drag is so significant. The highest federal rate applicable to qualified dividends and long-term capital gains is 20%, plus NIIT is 23.8%. State income tax rates might add another 5-6%; but to get much higher state rates (as in California), I suspect you'd be past an ACA cliff. If the all-in drag is 30% of dividends, then that's maybe 45 bps, which isn't that huge a difference on a total return of 7% or so per year (especially noting that dividends increase basis). Can you explain?
Yeah 50bps is a good approximation. Probably should account for unqualified dividends and yes places like CA as an accumulator, where you can get slapped with an extra 10%+.

Despite this sort of drag, you’d do blend? 50bps is like an active fund to me. Then I assume if the account is large enough from years of working high income jobs, you’d be still have unusually high dividends in the non working later years, preventing ACA and limiting Roth conversion ladders
Just go back and look at historical data. Growth and value regularly end up 50 bps apart, and over 30-year periods value has often beaten growth by 50 bps. So the tracking error is a bigger issue than the tax drag at that point, especially when--as I say--the tax drag comes with an increased basis in newly bought shares.

Of course, there are other things you can do if there's a very specific plan to retire early, like putting it all in a Fidelity's low-cost annuity. But I don't think that's a good idea.

I don't understand how there could be such a need to prevent ACA subsidies and limit Roth conversions if there is so much money in the taxable account that you can't put VUG in the taxable account and VTV in an IRA.
comeinvest
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Re: Substituting broad portfolio with growth in taxable account?

Post by comeinvest »

petulant wrote: Fri Jun 02, 2023 6:51 am
digitalchampion wrote: Thu Jun 01, 2023 11:58 pm
petulant wrote: Wed May 31, 2023 7:37 pm
digitalchampion wrote: Wed May 31, 2023 5:06 pm
petulant wrote: Wed May 31, 2023 5:00 pm You can hold VUG in a taxable account and VTV, the value ETF, in a tax-advantaged account, which together will closely approximate VTI.
Due to account size differences I’d rather treat the taxable account completely separate. Over the long term can a lighter tilt like SCHG be expected to be in the ballpark? It’s some serious long term drag from those dividends during accumulation stage. In addition to ACA, it will cap Roth ladder conversions
The tracking error might be large relative to the tax drag. I don't quite follow your idea that the tax drag is so significant. The highest federal rate applicable to qualified dividends and long-term capital gains is 20%, plus NIIT is 23.8%. State income tax rates might add another 5-6%; but to get much higher state rates (as in California), I suspect you'd be past an ACA cliff. If the all-in drag is 30% of dividends, then that's maybe 45 bps, which isn't that huge a difference on a total return of 7% or so per year (especially noting that dividends increase basis). Can you explain?
Yeah 50bps is a good approximation. Probably should account for unqualified dividends and yes places like CA as an accumulator, where you can get slapped with an extra 10%+.

Despite this sort of drag, you’d do blend? 50bps is like an active fund to me. Then I assume if the account is large enough from years of working high income jobs, you’d be still have unusually high dividends in the non working later years, preventing ACA and limiting Roth conversion ladders
Just go back and look at historical data. Growth and value regularly end up 50 bps apart, and over 30-year periods value has often beaten growth by 50 bps. So the tracking error is a bigger issue than the tax drag at that point, especially when--as I say--the tax drag comes with an increased basis in newly bought shares.

Of course, there are other things you can do if there's a very specific plan to retire early, like putting it all in a Fidelity's low-cost annuity. But I don't think that's a good idea.

I don't understand how there could be such a need to prevent ACA subsidies and limit Roth conversions if there is so much money in the taxable account that you can't put VUG in the taxable account and VTV in an IRA.
The tax on dividends can be "lost" forever if you either can't or have no need to realize capital gains; of course that depends on the individual situation.
But my question to you: What is the problem with Growth and Value growing at a different pace in different account types? I would think the total portfolio value and the total tax drag are what matters. Clearly, sorting equities based on tax efficiency would result in a risk-free return, and which boglehead wouldn't like risk-free returns?
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

comeinvest wrote: Fri Jun 02, 2023 10:10 pm
petulant wrote: Fri Jun 02, 2023 6:51 am
digitalchampion wrote: Thu Jun 01, 2023 11:58 pm
petulant wrote: Wed May 31, 2023 7:37 pm
digitalchampion wrote: Wed May 31, 2023 5:06 pm

Due to account size differences I’d rather treat the taxable account completely separate. Over the long term can a lighter tilt like SCHG be expected to be in the ballpark? It’s some serious long term drag from those dividends during accumulation stage. In addition to ACA, it will cap Roth ladder conversions
The tracking error might be large relative to the tax drag. I don't quite follow your idea that the tax drag is so significant. The highest federal rate applicable to qualified dividends and long-term capital gains is 20%, plus NIIT is 23.8%. State income tax rates might add another 5-6%; but to get much higher state rates (as in California), I suspect you'd be past an ACA cliff. If the all-in drag is 30% of dividends, then that's maybe 45 bps, which isn't that huge a difference on a total return of 7% or so per year (especially noting that dividends increase basis). Can you explain?
Yeah 50bps is a good approximation. Probably should account for unqualified dividends and yes places like CA as an accumulator, where you can get slapped with an extra 10%+.

Despite this sort of drag, you’d do blend? 50bps is like an active fund to me. Then I assume if the account is large enough from years of working high income jobs, you’d be still have unusually high dividends in the non working later years, preventing ACA and limiting Roth conversion ladders
Just go back and look at historical data. Growth and value regularly end up 50 bps apart, and over 30-year periods value has often beaten growth by 50 bps. So the tracking error is a bigger issue than the tax drag at that point, especially when--as I say--the tax drag comes with an increased basis in newly bought shares.

Of course, there are other things you can do if there's a very specific plan to retire early, like putting it all in a Fidelity's low-cost annuity. But I don't think that's a good idea.

I don't understand how there could be such a need to prevent ACA subsidies and limit Roth conversions if there is so much money in the taxable account that you can't put VUG in the taxable account and VTV in an IRA.
The tax on dividends can be "lost" forever if you either can't or have no need to realize capital gains; of course that depends on the individual situation.
But my question to you: What is the problem with Growth and Value growing at a different pace in different account types? I would think the total portfolio value and the total tax drag are what matters. Clearly, sorting equities based on tax efficiency would result in a risk-free return, and which boglehead wouldn't like risk-free returns?
There's nothing wrong with them growing differently in different accounts. That's what I'm proposing: put the value in a tax-advantaged account and growth in the taxable account, and let them grow, and rebalance them a bit here and there where there's space. I understood OP to be proposing skipping holding them both and just holding VUG in taxable. So, like, $1M in VUG in a taxable account and $200,000 in VTI in a tax-advantaged account. That's what I'm saying creates a lot of tracking error; it would hitch him to VUG which might be off as much as 50 bps from the value fund and cause tracking error from VTI in the long run, which he might regret.
Topic Author
digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

petulant wrote: Sat Jun 03, 2023 7:19 am
comeinvest wrote: Fri Jun 02, 2023 10:10 pm The tax on dividends can be "lost" forever if you either can't or have no need to realize capital gains; of course that depends on the individual situation.
But my question to you: What is the problem with Growth and Value growing at a different pace in different account types? I would think the total portfolio value and the total tax drag are what matters. Clearly, sorting equities based on tax efficiency would result in a risk-free return, and which boglehead wouldn't like risk-free returns?
There's nothing wrong with them growing differently in different accounts. That's what I'm proposing: put the value in a tax-advantaged account and growth in the taxable account, and let them grow, and rebalance them a bit here and there where there's space. I understood OP to be proposing skipping holding them both and just holding VUG in taxable. So, like, $1M in VUG in a taxable account and $200,000 in VTI in a tax-advantaged account. That's what I'm saying creates a lot of tracking error; it would hitch him to VUG which might be off as much as 50 bps from the value fund and cause tracking error from VTI in the long run, which he might regret.
Yes that's what I meant, since you can't balance a portfolio that's heavily skewed towards taxable investments. I'm not sure of any good way around it. Are we concluding VUG would likely only be 50bps off on a given year or something much more dire? Because if so, your breakeven given the tax drag of VTI is around 50bps.
tibbitts
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Re: Substituting broad portfolio with growth in taxable account?

Post by tibbitts »

digitalchampion wrote: Wed May 31, 2023 4:31 pm When in a high income bracket, the drag seems like it can be .5%+ each year, with NIIT tax, ACA limitations, etc tacked on over time.
I was never in a high income bracket except as a result of Roth conversions, so I'm not qualified to comment, but just find it ironic to think in terms of NIIT and ACA limitations simultaneously.
Topic Author
digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

tibbitts wrote: Sat Jun 03, 2023 11:50 am
digitalchampion wrote: Wed May 31, 2023 4:31 pm When in a high income bracket, the drag seems like it can be .5%+ each year, with NIIT tax, ACA limitations, etc tacked on over time.
I was never in a high income bracket except as a result of Roth conversions, so I'm not qualified to comment, but just find it ironic to think in terms of NIIT and ACA limitations simultaneously.
They're related. Dividends on large taxable accounts can easily reach the NIIT threshold, healthcare is an addition drag for an early retiree, and then it limits your ability to do roth conversions at a reasonable tax bracket. All seem valid to me.
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

digitalchampion wrote: Sat Jun 03, 2023 11:44 am
petulant wrote: Sat Jun 03, 2023 7:19 am
comeinvest wrote: Fri Jun 02, 2023 10:10 pm The tax on dividends can be "lost" forever if you either can't or have no need to realize capital gains; of course that depends on the individual situation.
But my question to you: What is the problem with Growth and Value growing at a different pace in different account types? I would think the total portfolio value and the total tax drag are what matters. Clearly, sorting equities based on tax efficiency would result in a risk-free return, and which boglehead wouldn't like risk-free returns?
There's nothing wrong with them growing differently in different accounts. That's what I'm proposing: put the value in a tax-advantaged account and growth in the taxable account, and let them grow, and rebalance them a bit here and there where there's space. I understood OP to be proposing skipping holding them both and just holding VUG in taxable. So, like, $1M in VUG in a taxable account and $200,000 in VTI in a tax-advantaged account. That's what I'm saying creates a lot of tracking error; it would hitch him to VUG which might be off as much as 50 bps from the value fund and cause tracking error from VTI in the long run, which he might regret.
Yes that's what I meant, since you can't balance a portfolio that's heavily skewed towards taxable investments. I'm not sure of any good way around it. Are we concluding VUG would likely only be 50bps off on a given year or something much more dire? Because if so, your breakeven given the tax drag of VTI is around 50bps.
I was saying that VUG has trailed the value fund by as much as 50 bps over long periods of time. From year to year or even over a handful of years, the outperformance will come and go.

It's strange to me that we're talking about taxable assets that are somehow large enough to have a 50 bps tax drag without rebalancing in a tax-advantaged account, yet there's a need to manage for ACA tax credits some day. It seems off.
Topic Author
digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

petulant wrote: Sat Jun 03, 2023 3:47 pm
digitalchampion wrote: Sat Jun 03, 2023 11:44 am
petulant wrote: Sat Jun 03, 2023 7:19 am
comeinvest wrote: Fri Jun 02, 2023 10:10 pm The tax on dividends can be "lost" forever if you either can't or have no need to realize capital gains; of course that depends on the individual situation.
But my question to you: What is the problem with Growth and Value growing at a different pace in different account types? I would think the total portfolio value and the total tax drag are what matters. Clearly, sorting equities based on tax efficiency would result in a risk-free return, and which boglehead wouldn't like risk-free returns?
There's nothing wrong with them growing differently in different accounts. That's what I'm proposing: put the value in a tax-advantaged account and growth in the taxable account, and let them grow, and rebalance them a bit here and there where there's space. I understood OP to be proposing skipping holding them both and just holding VUG in taxable. So, like, $1M in VUG in a taxable account and $200,000 in VTI in a tax-advantaged account. That's what I'm saying creates a lot of tracking error; it would hitch him to VUG which might be off as much as 50 bps from the value fund and cause tracking error from VTI in the long run, which he might regret.
Yes that's what I meant, since you can't balance a portfolio that's heavily skewed towards taxable investments. I'm not sure of any good way around it. Are we concluding VUG would likely only be 50bps off on a given year or something much more dire? Because if so, your breakeven given the tax drag of VTI is around 50bps.
I was saying that VUG has trailed the value fund by as much as 50 bps over long periods of time. From year to year or even over a handful of years, the outperformance will come and go.

It's strange to me that we're talking about taxable assets that are somehow large enough to have a 50 bps tax drag without rebalancing in a tax-advantaged account, yet there's a need to manage for ACA tax credits some day. It seems off.
So it has trailed 50bps annually, yet an accumulator will have a 50bps drag anyway, so isn’t growth in turn the better choice? At least you get a guaranteed savings then.

If you lean/coast fire, then you might as well get ACA or have the optionality to control Roth conversions up to the 2x% marginal brackets no?
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

digitalchampion wrote: Sat Jun 03, 2023 4:39 pm
petulant wrote: Sat Jun 03, 2023 3:47 pm
digitalchampion wrote: Sat Jun 03, 2023 11:44 am
petulant wrote: Sat Jun 03, 2023 7:19 am
comeinvest wrote: Fri Jun 02, 2023 10:10 pm The tax on dividends can be "lost" forever if you either can't or have no need to realize capital gains; of course that depends on the individual situation.
But my question to you: What is the problem with Growth and Value growing at a different pace in different account types? I would think the total portfolio value and the total tax drag are what matters. Clearly, sorting equities based on tax efficiency would result in a risk-free return, and which boglehead wouldn't like risk-free returns?
There's nothing wrong with them growing differently in different accounts. That's what I'm proposing: put the value in a tax-advantaged account and growth in the taxable account, and let them grow, and rebalance them a bit here and there where there's space. I understood OP to be proposing skipping holding them both and just holding VUG in taxable. So, like, $1M in VUG in a taxable account and $200,000 in VTI in a tax-advantaged account. That's what I'm saying creates a lot of tracking error; it would hitch him to VUG which might be off as much as 50 bps from the value fund and cause tracking error from VTI in the long run, which he might regret.
Yes that's what I meant, since you can't balance a portfolio that's heavily skewed towards taxable investments. I'm not sure of any good way around it. Are we concluding VUG would likely only be 50bps off on a given year or something much more dire? Because if so, your breakeven given the tax drag of VTI is around 50bps.
I was saying that VUG has trailed the value fund by as much as 50 bps over long periods of time. From year to year or even over a handful of years, the outperformance will come and go.

It's strange to me that we're talking about taxable assets that are somehow large enough to have a 50 bps tax drag without rebalancing in a tax-advantaged account, yet there's a need to manage for ACA tax credits some day. It seems off.
So it has trailed 50bps annually, yet an accumulator will have a 50bps drag anyway, so isn’t growth in turn the better choice? At least you get a guaranteed savings then.

If you lean/coast fire, then you might as well get ACA or have the optionality to control Roth conversions up to the 2x% marginal brackets no?
I don't see why you would take the tracking error risk to save on taxes. I think that's the tax tail wagging the dog.

It would take a portfolio of VTI over $3 million to trigger the ACA cliff. I have a hard time believing somebody is going to accumulate millions in a taxable account without a tax-advantaged account to rebalance who doesn't have access to some other kind of tax planning.
tibbitts
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Re: Substituting broad portfolio with growth in taxable account?

Post by tibbitts »

digitalchampion wrote: Sat Jun 03, 2023 11:58 am
tibbitts wrote: Sat Jun 03, 2023 11:50 am
digitalchampion wrote: Wed May 31, 2023 4:31 pm When in a high income bracket, the drag seems like it can be .5%+ each year, with NIIT tax, ACA limitations, etc tacked on over time.
I was never in a high income bracket except as a result of Roth conversions, so I'm not qualified to comment, but just find it ironic to think in terms of NIIT and ACA limitations simultaneously.
They're related. Dividends on large taxable accounts can easily reach the NIIT threshold, healthcare is an addition drag for an early retiree, and then it limits your ability to do roth conversions at a reasonable tax bracket. All seem valid to me.
It's still odd to think of the "affordable" care act having a cliff affecting someone earning over $200k in taxable income. Of course someone might choose to incur over $200k in taxable income (as I did once, for Roth conversions, possibly just due to unintelligent past behavior) but it still seems ironic to be talking about in the same breath as a program promoting "affordable" health insurance.
Topic Author
digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

petulant wrote: Sat Jun 03, 2023 4:43 pm
I don't see why you would take the tracking error risk to save on taxes. I think that's the tax tail wagging the dog.

It would take a portfolio of VTI over $3 million to trigger the ACA cliff. I have a hard time believing somebody is going to accumulate millions in a taxable account without a tax-advantaged account to rebalance who doesn't have access to some other kind of tax planning.
I'm coming up on that number with that skew, hence the question. Does that change anything?
Topic Author
digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

tibbitts wrote: Sat Jun 03, 2023 5:03 pm It's still odd to think of the "affordable" care act having a cliff affecting someone earning over $200k in taxable income. Of course someone might choose to incur over $200k in taxable income (as I did once, for Roth conversions, possibly just due to unintelligent past behavior) but it still seems ironic to be talking about in the same breath as a program promoting "affordable" health insurance.
Sometimes "odd" can be optimal. I'm trying to consider all drags for maximal optionality.
petulant
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Re: Substituting broad portfolio with growth in taxable account?

Post by petulant »

digitalchampion wrote: Sat Jun 03, 2023 11:15 pm
petulant wrote: Sat Jun 03, 2023 4:43 pm
I don't see why you would take the tracking error risk to save on taxes. I think that's the tax tail wagging the dog.

It would take a portfolio of VTI over $3 million to trigger the ACA cliff. I have a hard time believing somebody is going to accumulate millions in a taxable account without a tax-advantaged account to rebalance who doesn't have access to some other kind of tax planning.
I'm coming up on that number with that skew, hence the question. Does that change anything?
I don't see how you would get that money in a taxable account and not be able to handle paying for insurance or take some other action to keep health insurance.

I don't see the point of worrying about Roth conversions when you might not need any of the money anyway. You might be able to leave a traditional IRA balance to a charity.

I mean there's just so many moving parts with that level of money that it doesn't strike me as worthwhile to take on tracking error, etc. etc. just to get under ACA.

It's narrowly maximizing a couple parameters.

If I was accumulating that fast I wouldn't worry about the ACA cliff.
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digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

I do still find myself thinking about this concept. My IRA is global value tilted and I want the optionality to live in high tax states without shooting myself in the foot.

To those with lopsided large taxable accounts, what do you do? Do you bite the bullet and hold VTI + VXUS? Or do you opt for any other approaches?
runcyc
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Re: Substituting broad portfolio with growth in taxable account?

Post by runcyc »

digitalchampion wrote: Fri Aug 25, 2023 9:06 pm I do still find myself thinking about this concept. My IRA is global value tilted and I want the optionality to live in high tax states without shooting myself in the foot.

To those with lopsided large taxable accounts, what do you do? Do you bite the bullet and hold VTI + VXUS? Or do you opt for any other approaches?
Our total portfolio is about 90% in taxable accounts. And of that 90%, about 50% is in tax-deferred treasury direct I-bonds. We annually began making maximum I-bond purchases, beginning about 23 years ago. The other 50% of the taxable accounts is in VTI/VXUS. Our Roths are 10% of our total portfolio and are 100% invested in Wellesley Income Fund. We both have received large ACA health insurance subsidies and retired in our 50s. We are living off Wellesley tax-free dividends from the Roths, social security, and gradually redeeming I-bonds.
dkturner
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Re: Substituting broad portfolio with growth in taxable account?

Post by dkturner »

digitalchampion wrote: Fri Aug 25, 2023 9:06 pm I do still find myself thinking about this concept. My IRA is global value tilted and I want the optionality to live in high tax states without shooting myself in the foot.

To those with lopsided large taxable accounts, what do you do? Do you bite the bullet and hold VTI + VXUS? Or do you opt for any other approaches?
We hold U.S. and international total market funds in our taxable accounts (80+% equity) and “value” equity funds in our tax deferred retirement accounts (35% equity).
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digitalchampion
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Re: Substituting broad portfolio with growth in taxable account?

Post by digitalchampion »

Thanks all. So even with 7 figure accounts, you don't find the tax drag too damaging to the overall return? Do you think something like VT should outpace inflation?
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