Asset Allocation Across Multiple Retirement Accounts

[britri3650]

My wife and I have Roth IRAs, SEP IRAs, and traditional IRAs with Fidelity. Plus I have money saved via my TSP (I'm a Fed). I can invest in low fee index funds through my TSP account and achieve a pretty good asset allocation across short term govt. securities, US bonds, US small cap, US large cap, and international EAFE stocks. My question is, what's the best way to maintain an overall asset allocation that includes all of our retirement accounts? Should I use my TSP for the bulk of my allocation and use my IRAs to invest in sectors not included in my TSP like REITs? Should I own a total stock market index fund in my IRAs and leave it at that? Also, should I treat my wife's IRAs separately from my retirement accounts and apply a different asset allocation to her money? She's 46 and I'm 45. Thanks in advance.

[Frankies Girl]

You need to have your asset allocations figured out as a whole - don't treat the separate account "buckets" (like the Roth, or TSP or IRAs) as different units. They're all part of the overall allocation. You can then look at your various accounts overall and see if there are any restrictions - and plug in the amounts as needed based off of the overall plan.

If you and your wife are planning to retire (early or otherwise) at the same time, then I would think lumping her accounts in with yours would make sense.

I know that it is best to place the more tax efficient funds/stocks/whatever in the taxable buckets and keep the high turnover/dividend payers in your deferred, but I don't see any taxable accounts in your list. If that's the case, then it's just get the AA figured out and then implement it across all of the accounts. So that might mean that one account has nothing but one fund (depending on the sizing) but that's okay since it's not a stand-alone account - it's a part of the whole.

http://www.bogleheads.org/wiki/Asset_allocation
http://www.bogleheads.org/wiki/Asset_allocation_in_multiple_accounts
http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement

[britri3650]

Thanks Frankies Girl. One follow-up question - I've read that it is good to have retirement funds in both 401k and Roth type accounts for various reasons. I understand your point about treating all my accounts as the same as far as implementing my asset allocation plan, but if I invest in only one type of fund in my Roth couldn't that put my Roth savings at greater risk of losses, therefore hindering any plans to withdraw funds from my Roth in retirement? For example, if I only hold a REIT index fund or ETF in my Roth. Thanks again.