I agree, that's a ton of money to be sitting in a savings account.
I think an emergency fund has limited usefulness, and some people are actually better off without one than with one. I can get into my reasoning there if you want, but for the rest of this post I'm going to assume you still want an emergency fund.
You'll probably want to tier your emergency fund. Keep some amount in Ally still, and then the rest in a more profitable investment vehicle.
VSXGX is 40/60 stocks and bonds. Which is good from the point of view from preservation of capital, which is what an emergency fund should do. It's bad from the point of view from taxes.
If you look here
https://personal.vanguard.com/us/funds/snapshot?FundId=0724&FundIntExt=INT#tab=4 you can see the distribution history. VSCGX has distributed short term and long term capital gains, along with dividends. All three types of distributions are taxable events,
regardless of whether you reinvest them back into the fund or not.
Short term capital gains distributions are always taxed at your marginal rate.
Long term capital gains distributions are always taxed at a rate lower than your marginal rate - it is 15% for you.
Some dividends are qualified dividends. From
http://www.bogleheads.org/wiki/Vanguard_LifeStrategy_Fund_tax_distributions we can tell that unlike VTSAX, not all of the dividends from VSCGX are qualified dividends, which are taxed at your LTCG rate (15%), not your marginal rate. Non qualified dividends are taxed at your marginal tax rate.
When you go to sell, you will pay taxes on the capital gains.
Any sale of a Vanguard MF should be transferred to your bank account within a few business days.