Allocation on different accounts
Hi – I’m new to this forum and looking for help about a debate I’m having with my “Financial Guy”
My wife (55 – planning to retire 2021) and I (65 – Retired) have Taxable accts, deferred (IRA’s, 401K, 403B, ….) retirement and Tax-free Roth retirements accounts. To make a long story short the debate is which accounts should be Aggressive vs which accounts should be Conservative? Presently our Stock / Bond allocation, sorted by least to most aggressive is
Wife Roth – ———3 S / 95 B
Wife IRA, 403B – 33 S / 65 B
Husband IRA –—-47 S / 13 B / 40 Cash
Husband Roth —-52 S / 47 B
Joint Brokerage – 86 S / 5 B
Thank You !!
Permalink Submitted by Alan - IRA critic on Sun, 2020-03-29 14:29
Usually the Roth accounts should be the most aggressive, but only if the plan is not to tap them until well into retirement. Next most aggressive would be the taxable accounts since stocks produce LT cap gains and qualified dividends taxed at a lower rate, and cap losses will offset the gains and up to 3000 of ordinary income. Least aggressive would be the pre tax retirement accounts and they would hold most of the bonds since bonds generate mostly ordinary income taxed at the highest rate anyway. Overtime they will grow less, and that will tamp down the RMD amount taxed at the higher ordinary income rates. Of course, exceptions must be made in some cases to match up to your risk tolerance.