Hi folks, I recently joined a new company with different (I'd say better) fund choices in my 401k than my previous employer. Before, the closest thing I had to a Total US Stock Index was an S&P 500 fund, and the only bond fund was a US Bond Index.
As a result, I've been approximating a Total US Stock Index using the S&P 500 fund in my 401k and supplementing in taxable with VFIAX (Vanguard 500) and VEXAX (extended market index) to get to 75% large cap + 25% mid/small cap overall.
At my new job, I'll have access to Vanguard's US Total Stock Market Index (VTSAX) and US & Int'l Bond Indexes. I'd like to simplify my stock funds and diversify my bond funds.
The bonds are easy, because my entire allocation is in my old 401k. However, my US stock is split 60% in 401k and 40% in taxable. In taxable, I have $16k gains in VFIAX and $24k in VEXAX (mostly long-term gains). The new job also represents a major increase in income ($185k to $300k), and I live in a high-tax state, so I'm hoping to manage that as well.
A few approaches I'm debating:
If it's relevant, I'm currently in my late 30s and hope to retire early in the next 10 years.
Let me know if you need any more info!
As a result, I've been approximating a Total US Stock Index using the S&P 500 fund in my 401k and supplementing in taxable with VFIAX (Vanguard 500) and VEXAX (extended market index) to get to 75% large cap + 25% mid/small cap overall.
At my new job, I'll have access to Vanguard's US Total Stock Market Index (VTSAX) and US & Int'l Bond Indexes. I'd like to simplify my stock funds and diversify my bond funds.
The bonds are easy, because my entire allocation is in my old 401k. However, my US stock is split 60% in 401k and 40% in taxable. In taxable, I have $16k gains in VFIAX and $24k in VEXAX (mostly long-term gains). The new job also represents a major increase in income ($185k to $300k), and I live in a high-tax state, so I'm hoping to manage that as well.
A few approaches I'm debating:
- Suck it up, and do the switch across 401k and taxable all at once, setting aside what I'll owe for capital gains (~$7.2k). Annoying now, simpler long term.
- Take advantage of the market dip and use SpecID to sell as much as I can from VFIAX and VEXAX while breaking even on gains & losses (~$40k of the $150k total I have in those two funds). Then, put that $40K into VTSAX in taxable, along with the $230K stock allocation in my 401k. Leave the remaining $110k VFIAX & VEXAX where they are and wait for a continued / future dip to reduce gains (or a year I have lower income). This leaves me closer to where I want to be, but with a wonky asset allocation in the meantime.
- Roll my old 401k stock allocation from S&P 500 into VTSAX but keep my taxable stock in VFIAX + VEXAX indefinitely to avoid realizing gains. This would make me a little overweight in mid/small cap short term, but I could address that reasonably fast with new contributions. However, this doesn't do anything to simplify things for me long term.
If it's relevant, I'm currently in my late 30s and hope to retire early in the next 10 years.
Let me know if you need any more info!
Statistics: Posted by murphyslaw86 — Mon Aug 05, 2024 10:22 pm — Replies 3 — Views 234