International stock in taxable or IRA?

[eboats]

I have a taxable account ( $200k ) and I have an IRA ( $500k ) and and would like to add some VTIAX. Would you recommend that international stock go in a taxable account or in an IRA? When I spoke to Vanguard, they recommended keeping it in my IRA.

 

[Sunset]

In taxable account, as you will get a credit for tax paid on the international stocks, but if it's in IRA you don't get the credit.

 

[bloom2708]

Put it wherever you want continued under performance.

 

[Gotadimple]

In Taxable for 2 reasons:
you claim the foreign taxes paid in the ETF as a credit to income taxes due
if the ETF is underperforming you can sell shares and claims losses against gains in other investments

- Rita

 

[RunningBum]

In taxable gives you a chance to get the foreign taxes as a credit on your US tax return, but it's not guaranteed that you can use it. I've got about $3K in credits that I'm unlikely to use before they expire. I think the most likely reason you wouldn't use them is if your total tax is low. Check out https://www.irs.gov/taxtopics/tc856 for more info.

 

[walkinwood]

I have a taxable account ( $200k ) and I have an IRA ( $500k ) and and would like to add some VTIAX. Would you recommend that international stock go in a taxable account or in an IRA? When I spoke to Vanguard, they recommended keeping it in my IRA.

If you're still working or have a high tax rate, definitely in Taxable.


I am currently questioning my internation equity allocation due to its continued under-performance compared to US equities.

 

[Animorph]

If you need to reduce your international allocation to rebalance, it would be nice to have some in an IRA that can be sold without tax consequences. If it is all in taxable you may need to let your asset allocation vary a bit.

International was great before I retired. It's a diversifier. You have it so that it behaves differently than the S&P 500, which it is doing. All funds will look crappy next to the one that has been leading the pack for a decode or two. Eventually things will change.

 

[eboats]

Thanks everyone for the info! I'm not sure why Vanguard recommended I put VTIAX in my IRA instead of taxable? But sounds like the foreign tax credit would help in taxable.