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Lazy Portfolio Building Help
Old 12-03-2014, 12:33 PM   #1
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Lazy Portfolio Building Help

Decided it's time to move away from my long time advisor and move into a Lazy Portfolio as I prepare to start withdraws. My question centers around how to transition my current account that has 70% in tax defered accounts as well as about 200k which is taxable that holds long term funds. Are there any concerns in moving the tax defered accounts and what should one look out for in regards to the taxable account. I currently have to many funds (my opinion) that makes it really hard to rebalance and get yearly performance info Time for a change!
Thanks Tom

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Old 12-03-2014, 12:47 PM   #2
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The only concern re tax-deferred accounts is to avoid the transfer becoming taxable. So try to make any transfers be trustee-to-trustee. Sometimes they will insist on sending you a check in which case have it made out to "[name of new institution] FBO [your name]" and then relay the check you receive to the institution. FBO stands "for the benefit of".

For taxable accounts, be wary of capital gains and having capital gains push you over any limits you want to stay within for ACA or other purposes.

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Old 12-03-2014, 12:48 PM   #3
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Switching around tax deferred accounts is no problem. Transfer from the old trustee to the new trustee and then you can sell and buy any securities with no tax consequences (save wash rules). Be careful not to take a "distribution" instead of a transfer.

Taxable accounts are much trickier. Depends on what you have in taxable, but you might consider leaving that as invested if the gains are big and then configuring the portfolio around it. Over time you can ease out of those positions, if you want to minimize tax bite.
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Old 12-03-2014, 04:59 PM   #4
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If you are planning to move to Vanguard, they offer a "Concierge Services" desk that can help with all of the transfer details.
I suspect many of the other big mutual fund companies have something similar (Fidelity, TRowe Price, etc.).
I am not an expert on the taxable accounts, but I can think of two possible options to explore:
- transfer the holdings "as is" (same securities) from your current advisory firm to a discount brokerage if they are able to accept the funds (I know that Vanguard allows this on the brokerage side, I suspect Schwab, etc. also do).
- calculate your cost basis (remember that you need to add back all the capital gains that you've already paid taxes on) for each fund - it's a pain in the a$$ but you may find that you have some losses in some funds and minimal gains in others so you can sell those first and then decide if it's worth paying the taxes to get the lower fees and simpler life.

Good luck - sounds like a very smart move on several counts.
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Old 12-03-2014, 06:20 PM   #5
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Thanks MBAustin
Vanguard is where I was thinking about parking my funds.
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Old 12-03-2014, 08:17 PM   #6
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I plan to do the same with my investments. I plan to rollover my 401K to an IRA in January and reduce my 10 index funds portfolio to 5 for the sake of simplicity. This would make it more manageable for DW if something happens to me. I have a meeting with my Fidelity private client advisor in a couple of weeks to go over the details.

The bulk of my portfolio is in tax deferred so there is no tax impact. As for the taxable account I plan to leave it as is since that I plan to spent from this account over the next few years.

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