EF: Yes, $75k
Debt: 2x car loans (2.7% and 3% rates, $40k outstanding total), mortgage @ 2.65%, $350k outstanding
Tax Filing Status: MFJ
Tax Rate: 37% Federal, 5% State
State: KY
Age: 32 (self), 34 (spouse)
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Total portfolio: About 1.3mil across taxable and retirement investment accounts (excluding home equity)
Taxable Account
13% cash
87% stocks
My 401k + mega backdoor roth
100% Vanguard 2055 target date fund (expense ratio 0.08%)
Company match: $ for $ up to 50% of contributions
Maxed out 401k + mega backdoor roth account each year
My backdoored Roth IRA
15% bonds
85% stock
Maxed out to federal limits
Spouse Solo 401k
100% stock
Contributions limited based on S corp income, usually around $30k per year
Spouse backdoored Roth IRA
100% stock
Maxed out to federal limits
Other context
Our cashflow is such that we receive very substantial (currently ~$300k) sums each quarter from company-vested RSUs which are sold immediately on vest. This money can only be sent to the taxable investment account since it’s after-tax funds. This amount yearly is much more than we contribute to all retirement accounts throughout the year.
Much of the advice we’ve been able to find - particularly with regards to tax efficiency - seems to not fit well with our situation given the large quarterly RSU vesting. For example, it’s difficult to maintain a whole portfolio allocation given the disparity in income to taxable and tax-advantaged accounts over the year (the taxable account ratios would quickly dominate the tax-advantaged ratios over a period of 6 months).
We’re also seeking a portfolio composition that’s relatively easy to maintain. Since we receive the large company RSU vestings 4x / year, we’ll at least need to rebalance that often. We can usually max out the tax-advantaged accounts other than my spouse’s solo 401K in one lump sum, and the company vesting comes in four times a year. As such, we need to manually allocate funds at least twelve times to the solo 401K, four times to the taxable investment account, and one time each to the rest of the accounts.
Goals
In order of priority:
Debt: 2x car loans (2.7% and 3% rates, $40k outstanding total), mortgage @ 2.65%, $350k outstanding
Tax Filing Status: MFJ
Tax Rate: 37% Federal, 5% State
State: KY
Age: 32 (self), 34 (spouse)
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Total portfolio: About 1.3mil across taxable and retirement investment accounts (excluding home equity)
Taxable Account
13% cash
87% stocks
My 401k + mega backdoor roth
100% Vanguard 2055 target date fund (expense ratio 0.08%)
Company match: $ for $ up to 50% of contributions
Maxed out 401k + mega backdoor roth account each year
My backdoored Roth IRA
15% bonds
85% stock
Maxed out to federal limits
Spouse Solo 401k
100% stock
Contributions limited based on S corp income, usually around $30k per year
Spouse backdoored Roth IRA
100% stock
Maxed out to federal limits
Other context
Our cashflow is such that we receive very substantial (currently ~$300k) sums each quarter from company-vested RSUs which are sold immediately on vest. This money can only be sent to the taxable investment account since it’s after-tax funds. This amount yearly is much more than we contribute to all retirement accounts throughout the year.
Much of the advice we’ve been able to find - particularly with regards to tax efficiency - seems to not fit well with our situation given the large quarterly RSU vesting. For example, it’s difficult to maintain a whole portfolio allocation given the disparity in income to taxable and tax-advantaged accounts over the year (the taxable account ratios would quickly dominate the tax-advantaged ratios over a period of 6 months).
We’re also seeking a portfolio composition that’s relatively easy to maintain. Since we receive the large company RSU vestings 4x / year, we’ll at least need to rebalance that often. We can usually max out the tax-advantaged accounts other than my spouse’s solo 401K in one lump sum, and the company vesting comes in four times a year. As such, we need to manually allocate funds at least twelve times to the solo 401K, four times to the taxable investment account, and one time each to the rest of the accounts.
Goals
In order of priority:
- Develop a portfolio allocation strategy that allows us to hit an 80/20 split of (stocks + others)/bonds across the whole portfolio and tweak it over time as we get closer to retirement age (currently unset)
- Minimize tax liability as much as possible
- Expand into other asset classes like REITs
- Minimize effort for rebalancing across all accounts
- Given the disparity in income between the taxable and tax-advantaged accounts, how should we think about portfolio composition between our different accounts?
- What’s the best way to minimize tax liability in the taxable account, particularly for less tax-efficient assets like bonds and REITs (and stocks that yield dividends)?
Statistics: Posted by get9 — Mon Apr 15, 2024 2:40 pm — Replies 0 — Views 51