Personal Investments • Tax-efficient fund placement

I would like to minimize taxes by placing investments appropriately in my tax-deferred or taxable accounts.

I am retired, age 65, in the US, and married filing jointly, if it matters. My desired asset allocation is 50% stocks / 50% bonds. I've always taken the easy way out and maintained my 50% asset allocation in each type of account (tax deferred or taxable). I recently inherited an annuity, which leads to my question: should I move things around?

My total portfolio is $2,725,000. Currently, that is arranged as follows:

Taxable - $1,000,000
50% Total Stock Market & Total International Stock Market
50% Total Bond Market

Traditional IRA - $1,000,000
50% Total Stock Market & Total International Stock Market
50% Total Bond Market

Roth - $375,000
50% Total Stock Market & Total International Stock Market
50% Total Bond Market

Annuity - $350,000
50% Total Stock Market & Total International Stock Market
50% Total Bond Market

The $350k annuity is an inherited, variable deferred annuity. It must be completely emptied in the next five years, ad-hoc, so I'll withdraw $70k or so each year. Capital gains, interest and dividends within the annuity are not taxed. All withdrawals are taxed as income.

I think I might rebalance to hold assets more tax efficiently. I propose changing so that the annuity and traditional IRS accounts would hold only bonds, and the Roth and taxable accounts would hold only stocks.

Taxable - $1,000,000
100% Total Stock Market & Total International Stock Market

Traditional IRA - $1,000,000
100% Total Bond Market

Roth - $375,000
100% Total Stock Market & Total International Stock Market

Annuity - $350,000
100% Total Bond Market

Is that change reasonable and appropriate?

Statistics: Posted by elsienc — Mon Aug 12, 2024 7:38 pm — Replies 3 — Views 381

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