Author Topic: Help with 401k Rollover and Rebalancing Questions  (Read 405 times)

windyday

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Help with 401k Rollover and Rebalancing Questions
« on: November 28, 2018, 12:48:07 PM »
My husband started a new job a couple months ago and we want to rollover his former 401k and Roth 401k into a Vanguard IRA/Roth IRA. Additionally, our accounts are due for rebalancing based on our target allocations (US/INT/BOND/REIT) and the balance of small/mid/large and value/blend/growth stocks we like to have (I use the Morningstar Instant X-ray tool on our entire portfolio to see where we are at).

Trying to do all of that together with the dollar amount available in each account, while minimizing the number of funds we have in each account, puts us in a place of wanting to sell existing positions in some funds in one account and buy a position in the same fund in a different account. We are only planning to buy/sell funds within our tax-advantaged accounts and not within our taxable account.

So my two questions are

1) Are there any sort of rules (like the wash rule) that would prevent us from, for example, selling the Vanguard Total Stock Market Index fund from our Roth IRA and immediately buying the same fund in the new rollover IRA? My understanding is that the wash rule only applies when the sale is from a taxable account, but I want to be sure I’m not missing something problematic.

2) Is that a dumb thing to do, to sell investments in one account and re-buy it in another? Without the tax implications of gains or losses in these accounts, it doesn’t seem like it matters (and we’re essentially forced to do that for the rollover anyway). Some of the amounts we’re shifting are in the 100k’s, so I guess it just feels weird to make such big sells/purchases at one time.

Here’s some more detailed info if it helps:


Line 2 & 4: Move money from stocks to bonds within my 403b for rebalancing
Line 8 & 9: Rollover his old job 401k into a Vanguard IRA and purchase Total Stock Market Index
Line 10 & 11: Rollover his old job Roth 401k into a Vanguard Roth IRA (he already has one of these, so still need to understand if it can just be folded in to the existing one) and purchase Small-Cap Index
Line 12 & 13: Sell all of the Total Stock Market Index holding in my Roth IRA; use that money to buy Small-Cap Index and additional shares of REIT Index
Line 14: Sell all of the Total Stock Market Index holding in his Roth IRA and use that money to buy Small-Cap Index

As you can see, I’m selling 14% of our total portfolio worth of Total Stock Market Index between our two Roth IRAs, and purchasing 43% of the portfolio worth of Total Stock Market Index in the IRA rollover…basically shifting the location of the holding into the IRA instead of the Roth IRAs, to simplify the number of holdings we have across the accounts.

Thanks for any help or advice! Sometimes this all makes my head spin.

windyday

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Help with 401k Rollover and Rebalancing Questions
« Reply #1 on: November 28, 2018, 12:51:05 PM »
So sorry for the multiple posts!! I didn't mean for that to happen and I can't seem to delete the first one. :(