I (might) need help simplifying my retirement accounts

[A Bird In Hand]

As someone who has been saving fastidiously since childhood, and maxing out my 401k since shortly after college, I have an embarrassing confession: I never really paid much attention to the allocation of funds in my 401k. I vaguely remember choosing some funds when I opened my account, and I think after one or two years I (foolishly) switched around the funds and added some new ones which had done exceedingly well in the prior year. Mind you, this was around 15 years ago when I was fresh out of college and didn't have a clue about...well...much of anything.

Years have passed, my wife and I have had numerous employers, and now we have multiple accounts in Vanguard, TSP, and TIAA-CREF. If that's not enough to keep track of, we have a large number of funds in some of our accounts -- especially Vanguard. I have 15 funds in my Vanguard retirement plan (through my employer) alone. Some are undoubtedly near duplicates of others.

For Vanguard stock I have Growth Index Signal, PRIMECAP Admiral, US Growth Fund, Explorer, Growth Index, Growth and Income, Institutional Index, Strategic Equity, U.S. Value, Value Index.

For Vanguard balanced funds I have Balanced Index, LifeStrategy Moderate Growth, STAR, Wellesley Income, and Wellington.

For Vanguard bonds I have Inflation-protected Securities and Total Bond Market Index.

Is there any compelling reason (beyond reducing complexity) to consolidate my Vanguard funds to just a few that align with my risk tolerance -- perhaps Wellington, Wellesley, and one or two others?

Between all our plans the allocation works out to be about 70% stock (very heavily weighted toward domestic), 15% bonds, 10% guaranteed (employer contributions -- can't change this), and the remainder a combination of real estate, short-term reserves, and others.

I'm not even sure how to get started in simplifying things. I actually don't know that simplifying things is a good idea financially; maybe it's worthwhile (risk mitigation) to have the $$ spread around through various companies/plans and funds?

We could probably roll over all our 401k's and 403b's into IRAs and park them in our Vanguard accounts. From an accounting point of view it would be nicer to have everything in one place. Can anyone think of a good reason to just leave the TIAA and TSP accounts alone?

Any other been-there-done-that advice about this situation?

 

[2B]

If you have a bunch of legacy 401k plans, it would be worth you transferring them to accounts at Vanguard. I'll assume from your post you like Vanguard. In Vanguard you would have a rollover IRA and rollover Roth IRA for each of you.

If the TSP account is significant in size, I'd leave it there since they have great index funds and bottom dollar management fees. If it's a small chunk of your net worth, I'd suggest moving it and simplify it out of your life.

Unless there's something wonderful I don't know about TIAA, I'd get out of that ASAP.

There are dozens of threads here on asset allocation. I'm one in the ultimate simplicity and low-cost index fund camp. My 401k and SERP are both in a S&P500 Index Fund. All other equities are in Vanguard funds. I've got 40% in equities. Of this 60% is VTSAX, 20% in VDMAX, 10% VSMAX and 10% VEMAX. My fixed income is in US bonds and CDs. I don't buy bond mutual funds.

 

[A Bird In Hand]

If you have a bunch of legacy 401k plans, it would be worth you transferring them to accounts at Vanguard. I'll assume from your post you like Vanguard. In Vanguard you would have a rollover IRA and rollover Roth IRA for each of you.

I don't know enough to say whether we like Vanguard, despite the fact that I've had accounts there my entire career. I've read mostly positive things about the company...pretty low fees, a good selection of funds, etc. My current employer plan is at Vanguard, so I'm there for the foreseeable future. My wife and I also just bought Roth IRAs through Vanguard this week. If we rolled over from other plans into Vanguard, we'd have a 401k for me, an IRA for me, a Roth IRA for me, an IRA for her, and a Roth IRA for her. At least it would all be in one place I guess.

If the TSP account is significant in size, I'd leave it there since they have great index funds and bottom dollar management fees. If it's a small chunk of your net worth, I'd suggest moving it and simplify it out of your life.

About 7% of our retirement assets are in TSP, but the number is shrinking rapidly as we continue to contribute to other accounts. I didn't know the tidbit about the low management fees.

Unless there's something wonderful I don't know about TIAA, I'd get out of that ASAP.

I just did some quick research, and it might actually be smart to roll our TIAA 403b's into our TSP accounts instead. As far as I know there's no compelling feature of TIAA-CREF accounts (such as the G fund in TSP, and TSPs low management cost).

There are dozens of threads here on asset allocation. I'm one in the ultimate simplicity and low-cost index fund camp. My 401k and SERP are both in a S&P500 Index Fund. All other equities are in Vanguard funds. I've got 40% in equities. Of this 60% is VTSAX, 20% in VDMAX, 10% VSMAX and 10% VEMAX. My fixed income is in US bonds and CDs. I don't buy bond mutual funds.

The simplicity of that kind of approach is appealing. Thanks for your insight.

 

[2B]

About 7% of our retirement assets are in TSP, but the number is shrinking rapidly as we continue to contribute to other accounts. I didn't know the tidbit about the low management fees.

I just did some quick research, and it might actually be smart to roll our TIAA 403b's into our TSP accounts instead. As far as I know there's no compelling feature of TIAA-CREF accounts (such as the G fund in TSP, and TSPs low management cost).

If you throw the TIAA into the TSP, I'd still move it if it's not at least 20 to 25%. Unless you can justify keeping an account, move everything to wherever you pick. Vanguard works well for us. Some people like Fidelity. Since you already have a 401k there, I can't see a reason to go anywhere else.

 

[A Bird In Hand]

If you throw the TIAA into the TSP, I'd still move it if it's not at least 20 to 25%. Unless you can justify keeping an account, move everything to wherever you pick. Vanguard works well for us. Some people like Fidelity. Since you already have a 401k there, I can't see a reason to go anywhere else.

Consolidating miscellaneous 403's + IRAs into TSP would result in about 24% of our retirement savings. That would go down below 20% within 2-3 years assuming average return rates.

One benefit of keeping the TIAA accounts is that we can take fee-free loans (other than paying ourselves interest) if needed. I don't think this is possible with Vanguard et al. Not that we intend to take a loan out in the future, but we did that in the past to increase the down payment of our current house in order to qualify for a much better rate, avoid PMI, etc. It was a useful mechanism for us at the time.

 

[2B]

Consolidating miscellaneous 403's + IRAs into TSP would result in about 24% of our retirement savings. That would go down below 20% within 2-3 years assuming average return rates.

One benefit of keeping the TIAA accounts is that we can take fee-free loans (other than paying ourselves interest) if needed. I don't think this is possible with Vanguard et al. Not that we intend to take a loan out in the future, but we did that in the past to increase the down payment of our current house in order to qualify for a much better rate, avoid PMI, etc. It was a useful mechanism for us at the time.

Decide how much you want to simplify. You started this thread and it sounds like you are pretty happy with what you already have.

 

[A Bird In Hand]

Decide how much you want to simplify.

Indeed, that's what this thread is about. I've already discovered/remembered a couple pieces of relevant information since the first post that might help me hone in what I want to do.

You started this thread and it sounds like you are pretty happy with what you already have.

I'm not happy with what I have. Too many accounts, and too many funds within the accounts. That's irritating, but at least for the former I might decide the unique benefits of TSP and TIAA outweigh the extra mental gymnastics involved in keeping the accounts open and monitoring them. As for having too many funds within my accounts (especially Vanguard), I'm no closer to solving that problem yet.

I can't really blame you if you don't enjoy watching or participating in the evolution of my perspective on these matters. Nonetheless I've appreciated your input.

 

[LOL!]

If you want more help simplifying things, that is a tenet of the Bogleheads forum. You may wish to take a look there and get some help: Bogleheads • Index page

 

[A Bird In Hand]

If you want more help simplifying things, that is a tenet of the Bogleheads forum. You may wish to take a look there and get some help: Bogleheads • Index page

Thanks! I'll check that out. Bogelheads keeps coming up when I search for various financial keywords, so I've been meaning to take a look anyway.

 

[2B]

I can't really blame you if you don't enjoy watching or participating in the evolution of my perspective on these matters. Nonetheless I've appreciated your input.

I was happy to participate but it's starting to look like you'll end up not doing anything. I think I've pretty much thrown as much information and opinion into the pot as I've got.

 

[MichaelB]

I'm not happy with what I have. Too many accounts, and too many funds within the accounts. That's irritating, but at least for the former I might decide the unique benefits of TSP and TIAA outweigh the extra mental gymnastics involved in keeping the accounts open and monitoring them. As for having too many funds within my accounts (especially Vanguard), I'm no closer to solving that problem yet.

If you want to manage more carefully your asset allocation, consolidating accounts will help. It doesn't have to be all of nothing, but accounts with small balances are difficult because they don't fit well but do take up time. I recall past references to annuities and private REIT investment opportunities available at TIAA. Without compelling investment options, separate accounts only generate work.

Regarding asset allocation, before making any changes you should assess the likelihood that you will stay involved. If the future is going to be like the past (invest and forget) you should look to investments that will rebalance for you. Funds like Wellington and Wellesley, Vanguard Star, and the target date funds.

 

[nun]

If you are in TIAA-Traditional you have to do the transfer in equal parts over 10 years.

Reasons to stay with TIAA might be the tax status of your funds. I have a state retirement account with TIAA and withdrawals will be free of state income tax, so rolling it over to an IRA will require me to track the state tax free basis.

Also If you want to annuitize some of your retirement TIAA is a good provider.

 

[donheff]

+1 to moving IRAs into the TSP. As mentioned above the TSP has the best expense ratio available and good index funds. The G fund has features that don't exist anywhere else. The strategy I use is to hold all TSP funds in G (intermediate treasury with cash like guarantee never to lose absolute value) and use our much larger other accounts for other aspects of our portfolio.

 

[A Bird In Hand]

I was happy to participate but it's starting to look like you'll end up not doing anything.

I'm not sure how you came to that conclusion, but you've got me all wrong. Remember my "Hi, I am..." thread? The advice I received there helped me decide to pay off my 401k loans that same day, and use some of my taxable cash to max out Roth IRAs just four days later. Much like this thread, I started off with some foggy ideas of what I might want to do, I solicited and received some advice, and I took action when the path became clear.

And I think I've pretty much thrown as much information and opinion into the pot as I've got.

That very well may be. Thanks again (sincerely)!

 

[A Bird In Hand]

I recall past references to annuities and private REIT investment opportunities available at TIAA.

I just came across some discussion about the REIT at TIAA too. If that's the same as the TIAA real estate fund, I've had some of that in my portfolio for almost 15 years and it hasn't done much. I'll have to dig a little deeper and see what that's about.

Regarding asset allocation, before making any changes you should assess the likelihood that you will stay involved. If the future is going to be like the past (invest and forget) you should look to investments that will rebalance for you. Funds like Wellington and Wellesley, Vanguard Star, and the target date funds.

I think I'd like to become somewhat more involved than my previous invest-and-forget approach. But not to the extent where I'm frequently scrutinizing the performance of 15+ funds and re-allocating based on my desired portfolio allocation. The approach of picking a few of the big, well-regarded funds (like those you mentioned) is probably the best approach for me.

 

[A Bird In Hand]

If you are in TIAA-Traditional you have to do the transfer in equal parts over 10 years.

Ahh, good to know -- thanks. I have about 1/5 of my TIAA portfolio in Traditional. So even if I wanted to simplify things by rolling TIAA into an IRA and parking it at Vanguard, I'd still have my TIAA account hanging around for another 10 years.

Also If you want to annuitize some of your retirement TIAA is a good provider.

I'm nowhere near understanding/deciding whether I want annuities or not. It's buried somewhere on my long list of topics to research.

 

[A Bird In Hand]

+1 to moving IRAs into the TSP. As mentioned above the TSP has the best expense ratio available and good index funds. The G fund has features that don't exist anywhere else. The strategy I use is to hold all TSP funds in G (intermediate treasury with cash like guarantee never to lose absolute value) and use our much larger other accounts for other aspects of our portfolio.

I've been reading a bit more about the G fund. It looks like its performance since inception is a hair under 6%. I guess that's very good for that type of fund, and may be worth considering as a safe place to park a chunk of our savings that we want to make sure is preserved. Definitely worth considering!

 

[Lisa99]

We consolidated from over 20 FA-managed funds down to five total funds that we self-manage today in Vanguard and two 401k accounts.

The benefits are many including easier to track asset allocation, usually reduced expenses, less paperwork, easier to do year end taxes, etc.

 

[mystang52]

Between DW and myself we had about 10 different 401K's due to job changes (and Lord knows how many different funds within them). I decided to consolidate, called Vanguard, and they made the process 99% painless, guiding me each step of the way. We are now down to 2 IRA's with Vanguard plus DW's current active 403B. Total of 5 different funds. I love that my financial life is now a lot simpler.

 

[pb4uski]

I think simple is better so I tend to consolidate things. We currently have 3 taxable investment accounts (hers, mine and ours, not sure why we bother and don't just consolidate these), 2 tIRAs, 2 Roths, 2 HSAs and 1 former employer deferred comp plan.

I could have transferred the former employer deferred comp plan into my tIRA but it has an annuitization option that was fairly attractive so I have kept it.

I am all Vanguard other than the deferred comp plan and the HSAs. My core funds at Vanguard Total Stock, Total International Stock for equities. I also have a some Small Cap Growth and Mid Cap Growth that I use to balance out the large cap value fund that is the best offering available in the deferred comp plan and HSAs.

For fixed income I had traditionally used the Total Bond Fund for simplicity, but the interest rate risk is a bit scary to me so recently I changed to a mix of GNMA, Intermediate Term Investment Grade and High Yield Corporate to add a bit more yield with lower interest rate risk.

 

[Hud3]

A Bird in Hand,

Simplifying is a good idea. Since you're mostly with Vanguard, they can make it easy for you to do that.

Vanguard has a program to help you figure out the right mix of specific funds to meet your financial goals. First you fill out an online questionnaire to establish your risk profile. Then you select a ratio of stock and bond funds to match that profile (mine is 50% bonds and 50% stocks). These tools are available on their website at no charge.

Once having done that, you can work with one of their financial analysts who will work up a personal financial plan for you which includes suggestions as to just what funds you need to diversify your holdings across the various parameters--large/mid/small cap, value/growth, foreign, emerging mkts, etc. If you have less than $50K invested, this part costs $1,000. If $50K to $500K invested, it will cost $250. If you have more than %500K, it's free.

I've found this service to be excellent for my personal situation. Others may like a more hands-on approach, but I don't like to spend a lot of time analyzing and dealing with my investments. This approach allows me to sit back and simply monitor how things are doing as often or as infrequently as I choose. Once or twice a year, at my request, a Vanguard financial adviser will recommend changes to re-balance the portfolio. They'll even make the changes if I want.

Simple and effective. We've been doing this for 11 years and it's working.

 

[A Bird In Hand]

We consolidated from over 20 FA-managed funds down to five total funds that we self-manage today in Vanguard and two 401k accounts.

Between DW and myself we had about 10 different 401K's due to job changes (and Lord knows how many different funds within them). I decided to consolidate, called Vanguard, and they made the process 99% painless, guiding me each step of the way. We are now down to 2 IRA's with Vanguard plus DW's current active 403B. Total of 5 different funds. I love that my financial life is now a lot simpler.

I think simple is better so I tend to consolidate things. We currently have 3 taxable investment accounts (hers, mine and ours, not sure why we bother and don't just consolidate these), 2 tIRAs, 2 Roths, 2 HSAs and 1 former employer deferred comp plan.

Nice! I've definitely been persuaded that consolidation is the way to go. My plan now is to roll our TIAA funds (sans traditional fund) into Vanguard and TSP (for G fund). Because of the traditional fund, for the foreseeable future we'll still have accounts at Vanguard, TIAA, and TSP. But our TIAA accounts will just have 1 fund (traditional), TSP will just have 1 fund (G fund), and the last step is to pare down the Vanguard funds to just a small handful. Which brings me to...

Vanguard has a program to help you figure out the right mix of specific funds to meet your financial goals. First you fill out an online questionnaire to establish your risk profile. Then you select a ratio of stock and bond funds to match that profile (mine is 50% bonds and 50% stocks). These tools are available on their website at no charge.

Thank you! I can't believe I didn't notice this feature before. I'm going to run through this and see what it suggests. Does it recommend specific funds after you answer the questions? Well, I'll find out for myself soon enough.

Once having done that, you can work with one of their financial analysts who will work up a personal financial plan for you which includes suggestions as to just what funds you need to diversify your holdings across the various parameters--large/mid/small cap, value/growth, foreign, emerging mkts, etc. If you have less than $50K invested, this part costs $1,000. If $50K to $500K invested, it will cost $250. If you have more than %500K, it's free.

Hmmm...it would cost me $250 at the moment. In a couple years I should be up to $500k at Vanguard, so perhaps I'll wing it until then. Thanks again for this information. I found it very helpful.

 

[LOL!]

The Vanguard folks are only going to recommend 3 funds:
1. Total US Stock Market index fund,
2. Total International Stock Market index fund, and
3. Total US Bond Market index fund.

Save your $250.

 

[A Bird In Hand]

The Vanguard folks are only going to recommend 3 funds:
1. Total US Stock Market index fund,
2. Total International Stock Market index fund, and
3. Total US Bond Market index fund.

Seriously? Regardless of years 'til retirement, risk tolerance, etc. -- they'll just offer that boilerplate suggestion?

 

[pb4uski]

Seriously? Regardless of years 'til retirement, risk tolerance, etc. -- they'll just offer that boilerplate suggestion?

It is pretty close to true. The reality is that by changing the mix of these three funds you can cover a lot of situations.