Hello everyone! My wife and I have recently been looking at our retirement funds and while the numbers are good, I’m confident the allocations will make a few Bogleheads pull their hair out. I’ve been going over Bogleheads and other sources for a few months now and have some ideas, but some big changes are in order, and I feel like an extra pair of eyes would do us well. I really appreciate any advice you can provide. I can get more details about any of the funds. I did not want to overwhelm the initial post. Please let me know if I’ve filled out the review format correctly. I'll edit this post with any requested new data.
Thanks!
Emergency funds: YES, three to six months of expenses in checking account. Need to find a higher yield, but it’s there.
Debt: Home loan, $250,000 @ 2.85%. Don’t carry any monthly credit card debt, cars are paid off, etc.
Tax Filing Status: Married Filing Jointly, no children, 1 dog, 1 cat.
Tax Rate: 0% Federal, 0% State
We are living off dividends and cap gains from taxable accounts that are below 0% federal tax bracket.
State of Residence: WA (no state tax)
Age: Self 52, wife 48
Desired Asset allocation: unsure, advice welcome!
Desired International allocation: same
Approximate size of your total portfolio: $4.5M
40% taxable / 60% Tax Adv, all in 401(k)s at Fidelity.
I’ve tried to use similar table formats for all funds. I shake my tiny fist at the limited bbcode gods![:annoyed]( "annoyed")
!
Current retirement assets
Get ready for the first hair tug!
Taxable:
Has 100% of taxable funds, and 40% of overall assetsMSFT cost basis is approx 52%.
All cash is invested, or for emergency fund.
First 401(k):
Has about 95% of Tax Adv funds, and 57% of overall assets
Company match? n/a, not currently employedMSFT cost basis is approx 30%, useful info for the NUA.
Second 401k:
Has about 5% of Tax Adv funds, and 3% of overall assets.
This 5% + the 22% and 73% above = 100% of Tax Adv funds. Each investment is <1% of overall Tax Adv funds, so I listed the % in the 401(k) itself.
Company match? n/a, not currently employed_______________________________________________________________
Contributions
New annual Contributions
Not currently employed, not making any contributions. Interested in how roth conversions might be useful for us.
Available funds
Funds available in First 401(k)
This 401 has most options available at Fidelity, too many to list.
Funds available in Second 401(k)
This one has more limited options, so listing them. Also at Fidelity.
** indicates currently heldNotes:
No grand plan here. I basically violated all conventional investment wisdom, until now, and kept 100% of our 401(k)s in company stock until they took the option away, thus the small BTC 2040 TDF position, and kept the company granted stock awards, ESPP purchases and reinvested all dividends in the same. The return has been too good to abandon. Looking to start to secure the investments now.
1. We currently live off of selling shares from the tax accounts and try to keep the basis/capital gains under the $94,050 / 0% tax bracket. This really stretches the dollar.
2. We pay for ACA health care, and wow, it is more than the cost of our house and almost all of our utilities combined. I’m trying to keep are (M)AGI low enough to qualify for subsidies in 2025. As it stands, we’ll spend >20% of total yearly income on health care going forward. Considering moving overseas to avoid this, but then we get hit with their taxes and it wipes out the 0% effective we currently enjoy.
3. We need to live off the taxable account for about 6 more years when I hit 59.5 and can access the full 401 funds without penalty.
4. Expenses are low, but I don’t like to shortchange us. I plan on $10,000/month to cover everything. ACA healthcare costs $2k+ of that. Home another $1.7k. The rest is for bills, average travel, home repairs, car maint, and other life expenses.
5. At $120,000/yr out of $4.5M overall, that’s only a 2.7% withdrawal rate. That gives room for bigger years, and downturns. Keeps us well below NIIT and WA’s capital gains tax targets.
Questions:
1. I know I should get out of my concentrated position in MSFT, it has been very good to us. ;-( I think the first 401 is easy, just move it into something like a Fidelity (FZROX) ZERO Total Market Index Fund. Looking for advice on this.
2. The second 401 is from an old company and is just a few percent of overall. It has fewer options for investment, but I suspect the ones picked by the manager could be better.
3. Any better way to handle taking money out of the taxable account, other than just selling the MSFT shares to live off of?
4. A Net unrealized appreciation (NUA) has been discussed for the MSFT 401(k) position, but it never seems to make sense. Any experience with NUAs here?
5. What are the options for a retired person to do roth conversions at this low tax rate? We've done zero intentional IRA contributions or conversions of any type. Sounds like there is opportunity to reduce future RMDs with some roth work now.
6. Finally, over a year ago we spoke with a financial advisor that we found through our 401(k) manager, and they recommended the below asset classes and percentages. It would have been an AUM deal that ended up at about 0.82% AUM fees, or roughly $34,000k/yr. I couldn’t stomach that much. Does access to the private funds from these big AUM firms really return that much? Currently talking with another firm, we’ll see how that goes.
So, what would you do with an over concentrated position in one stock? How do we unwind this and protect our future? Thanks!!
Thanks!
Emergency funds: YES, three to six months of expenses in checking account. Need to find a higher yield, but it’s there.
Debt: Home loan, $250,000 @ 2.85%. Don’t carry any monthly credit card debt, cars are paid off, etc.
Tax Filing Status: Married Filing Jointly, no children, 1 dog, 1 cat.
Tax Rate: 0% Federal, 0% State
We are living off dividends and cap gains from taxable accounts that are below 0% federal tax bracket.
State of Residence: WA (no state tax)
Age: Self 52, wife 48
Desired Asset allocation: unsure, advice welcome!
Desired International allocation: same
Approximate size of your total portfolio: $4.5M
40% taxable / 60% Tax Adv, all in 401(k)s at Fidelity.
I’ve tried to use similar table formats for all funds. I shake my tiny fist at the limited bbcode gods
!Current retirement assets
Get ready for the first hair tug!
Taxable:
Has 100% of taxable funds, and 40% of overall assets
Code:
+——————————————---+--------------+-----------+--------------------+-------------+--------+| Name: | Asset Class: | Category: | % Overall Taxable: | YTD Return: | Fee: |+------------------+--------------+-----------+--------------------+-------------+--------+| MSFT | stock | n/a | 100% | 14.55% | n/a |+------------------+--------------+-----------+--------------------+-------------+--------+All cash is invested, or for emergency fund.
First 401(k):
Has about 95% of Tax Adv funds, and 57% of overall assets
Company match? n/a, not currently employed
Code:
+——---------------------------+--------------+-----------+--------------------+-------------+--------+| Name: | Asset Class: | Category: | % Overall Tax Adv: | YTD Return: | Fee: |+-------------------------------+--------------+-----------+--------------------+-------------+--------+| BlackRock LifePath Index 2040 | Blended | TDF | 22% | 13.12% | 0.042% || MSFT | stock | n/a | 73% | 14.55% | n/a |+-------------------------------+--------------+-----------+--------------------+-------------+--------+Second 401k:
Has about 5% of Tax Adv funds, and 3% of overall assets.
This 5% + the 22% and 73% above = 100% of Tax Adv funds. Each investment is <1% of overall Tax Adv funds, so I listed the % in the 401(k) itself.
Company match? n/a, not currently employed
Code:
+———-----------------+---------------------------+---------------+------------+------------+---------+| Name | Asset Class | Category | % Invested | YTD Return | Fee |+-----------------------+---------------------------+---------------+------------+------------+---------+| TARGET 2040 FUND | Blended Fund Investments* | N/A | 20.9% | 13.12% | 0.0517% || LARGE CAP EQ FUND | Stock Investments | Large Cap | 19.5% | 21.48% | 0.3133% || FIXED INCOME FUND | Bond Investments | Stable Value | 17.3% | 2.42% | 0.2760% || DOMESTIC BOND INDEX | Bond Investments | Income | 13.2% | 1.46% | 0.0394% || GD STOCK FUND (GD) | Stock Investments | Company Stock | 11.3% | 3.42% | n/a || SM/MID CAP EQ INDEX | Stock Investments | Mid-Cap | 9% | 17.17% | 0.0249% || S&P 500 EQUITY INDEX | Stock Investments | Large Cap | 8.5% | 25.53% | 0.0041% |+-----------------------+---------------------------+---------------+------------+------------+---------+Contributions
New annual Contributions
Not currently employed, not making any contributions. Interested in how roth conversions might be useful for us.
Available funds
Funds available in First 401(k)
This 401 has most options available at Fidelity, too many to list.
Funds available in Second 401(k)
This one has more limited options, so listing them. Also at Fidelity.
** indicates currently held
Code:
+—----------------------+-------------+---------------+-----------------------+| Option | Asset Class | Category | Gross Expense Ratio** |+------------------------+-------------+---------------+-----------------------+| TARGET DATE FUNDS | Blended | | || TARGET 2025 FUND | Blended | N/A | 0.0504% || TARGET 2030 FUND | Blended | N/A | 0.0511% || TARGET 2035 FUND | Blended | N/A | 0.0515% || **TARGET 2040 FUND | Blended | N/A | 0.0517% || TARGET 2045 FUND | Blended | N/A | 0.0538% || TARGET 2050 FUND | Blended | N/A | 0.0538% || TARGET 2055 FUND | Blended | N/A | 0.0513% || TARGET 2060 FUND | Blended | N/A | 0.0517% || TARGET 2065 FUND | Blended | N/A | 0.0629% || TARGET 2070 FUND | Blended | N/A | 0.0588% || INDEXED FUNDS | | | || **S&P 500 EQUITY INDEX | Stock | Large Cap | 0.0041% || **SM/MID CAP EQ INDEX | Stock | Mid-Cap | 0.0249% || INTL EQUITY INDEX | Stock | International | 0.0485% || **DOMESTIC BOND INDEX | Bonds | Income | 0.0394% || ACTIVELY MANAGED FUNDS | | | || **LARGE CAP EQ FUND | Stock | Large Cap | 0.3133% || SM/MID CAP EQ FUND | Stock | Small Cap | 0.4054% || INTL EQUITY FUND | Stock | International | 0.4581% || INFLATION RESPONSE | Blended | N/A | 0.8252% || RETIRE INC & GROWTH | Blended | N/A | 0.0489% || **FIXED INCOME FUND | Bonds | Stable Value | 0.2760% || BOND PLUS FUND | Bonds | Income | 0.2014% || SPECIALTY OPTIONS | | | || **GD STOCK FUND (GD) | Stock | Company Stock | -- || BROKERAGELINK | Other | Other | N/A |+------------------------+-------------+---------------+-----------------------+No grand plan here. I basically violated all conventional investment wisdom, until now, and kept 100% of our 401(k)s in company stock until they took the option away, thus the small BTC 2040 TDF position, and kept the company granted stock awards, ESPP purchases and reinvested all dividends in the same. The return has been too good to abandon. Looking to start to secure the investments now.
1. We currently live off of selling shares from the tax accounts and try to keep the basis/capital gains under the $94,050 / 0% tax bracket. This really stretches the dollar.
2. We pay for ACA health care, and wow, it is more than the cost of our house and almost all of our utilities combined. I’m trying to keep are (M)AGI low enough to qualify for subsidies in 2025. As it stands, we’ll spend >20% of total yearly income on health care going forward. Considering moving overseas to avoid this, but then we get hit with their taxes and it wipes out the 0% effective we currently enjoy.
3. We need to live off the taxable account for about 6 more years when I hit 59.5 and can access the full 401 funds without penalty.
4. Expenses are low, but I don’t like to shortchange us. I plan on $10,000/month to cover everything. ACA healthcare costs $2k+ of that. Home another $1.7k. The rest is for bills, average travel, home repairs, car maint, and other life expenses.
5. At $120,000/yr out of $4.5M overall, that’s only a 2.7% withdrawal rate. That gives room for bigger years, and downturns. Keeps us well below NIIT and WA’s capital gains tax targets.
Questions:
1. I know I should get out of my concentrated position in MSFT, it has been very good to us. ;-( I think the first 401 is easy, just move it into something like a Fidelity (FZROX) ZERO Total Market Index Fund. Looking for advice on this.
2. The second 401 is from an old company and is just a few percent of overall. It has fewer options for investment, but I suspect the ones picked by the manager could be better.
3. Any better way to handle taking money out of the taxable account, other than just selling the MSFT shares to live off of?
4. A Net unrealized appreciation (NUA) has been discussed for the MSFT 401(k) position, but it never seems to make sense. Any experience with NUAs here?
5. What are the options for a retired person to do roth conversions at this low tax rate? We've done zero intentional IRA contributions or conversions of any type. Sounds like there is opportunity to reduce future RMDs with some roth work now.
6. Finally, over a year ago we spoke with a financial advisor that we found through our 401(k) manager, and they recommended the below asset classes and percentages. It would have been an AUM deal that ended up at about 0.82% AUM fees, or roughly $34,000k/yr. I couldn’t stomach that much. Does access to the private funds from these big AUM firms really return that much? Currently talking with another firm, we’ll see how that goes.
Code:
+—-------------------------------------------+--------+| Big AUM Firm Proposal | |+---------------------------------------------+--------+| US Equity | || Individual Core Equity SMA | 7.80% || Smead Value Fund | 2.00% || Wasatch Ultra Growth Institutional | 0.30% || Private Hedged Equity Income Institutional | 0.30% || Retained US Equity | 48.70% || | || Non-US Equity | || Individual International Equity SMA | 3.00% || iShares ACWI ex US | 2.10% || | || Real Assets | || Lazard Global Infrastructure Institutional | 2.10% || | || Convertibles | || Private Global Convertible Institutional | 2.50% || | || Fixed Income | || Individual Corporate Bonds SMA | 6.20% || PIMCO Income Fund Institutional | 1.00% || Western Asset Core Bond Institutional | 7.10% || BBH Limited Duration N | 3.90% || Vanguard Long-Term Treasury Index | 5.10% || | || Alternatives | || Private Market Neutral Income Institutional | 3.50% || Apollo Debt Solutions | 1.90% || Monroe Private Debt | 1.10% || | || Cash | 1.10% |+---------------------------------------------+--------+Statistics: Posted by BogleMyRetirement — Tue Dec 31, 2024 1:18 pm — Replies 0 — Views 15