None of the target date retirement funds have an admiral class equivalent. If I'm understanding you correctly, you'd like to replace VFIFX with the admiral versions of the four constituents: VTSAX, VTIAX, VBTLX, and VTABX (by the way, in my opinion I don't think people really need international bonds, but it's not a big deal either way).
In order to do that in a taxable account I am 99.99% certain it will be a taxable event. I do not believe that Vanguard can do some trickery and convert your shares of VFIFX into shares of the constituent funds. This would mean you'd have to sell VFIFX and buy the constituents. (The magic that Vanguard can do is convert your investor shares of a fund to admiral shares of the same fund, if it exists, with no tax consequences whatsoever)
You could try to wait until a market dip happens. But, I do not recommend this approach because you may wait a long time before such a dip occurs. It may be such that by the time a dip in the market occurs, the minimum of the dip is higher than today's price.
So that leaves you with two options:
- Take the hit now to switch the fund
- Just start buying VTSMX instead (total US stock, $3000 minimum) and once you hit $10k in that, you can ask Vanguard to convert to VTSAX without tax consequences. The repeat for the other constituent funds
If you're in the 25% bracket or greater:
What I would probably do is just start buying VTSMX instead and convert when possible. And then, when you have an unrealized loss in that fund, or any other fund in general, sell it to realize the loss, and then also sell VFIFX (so you're using the fund that lost money to offset the gains in VFIFX). That way, you can switch VFIFX to what you want without paying the capital gains tax on it.
If you're in the 15% bracket or less:
Your long term capital gain rate is zero. Start buying VTSMX, wait until VFIFX gains become long term (if they're not already), and you can sell it without federal taxes on it. But, you will still have to pay state taxes on this (generally speaking) because most states do not have a favorable tax treatment on long term capital gains. It depends though. So, it's still not a clear cut decision here either, just something to think about.
Holding VTSAX in your IRA doesn't count towards the minimum investment for a holding of VTSMX in a taxable account.
Another thing to consider:
Holding VFIFX in a taxable account is not tax efficient because part of the dividends are bond dividends, which can never be qualified dividends taxed at the favorable long term capital gains rates. Right now, bonds only constitute 10.1% of VFIFX, so it's not that big a deal. However, over time, the fund will shift to more bonds, and the tax drag on the fund will become more significant.