Suggestions needed for RE-ALLOCATION of the non-IRA portion of my portfolio..to non-taxables. I am 70 and will have to start RMD at the end of 2012. I've been advised to re-allocate the $250K into non-taxables with not more than $25K in a fund.
Currently most of that is in VFSUX VG Short Term Bond, Admiral
$25K in my state tax exempt bond fund,
$30K in VWITX, VG Interm. Tax Exempt
$6K in VTSMX, VG Total Stock Mkt
$24K in VIPSX, VG TIPS
$12K in VFICX, VG Interm. Corp.
$44K in FCNTX Fidelity Contrafund
$11K in FGMNX. Fidelity GNMA
Obviously I like Vanguard but am open to suggestions. But I'd like to simply my portfolio, too.
Comments
If I understand correctly you have a portfolio that includes both IRA and non-IRA monies. Separating these should be pretty simple since Brokerage houses usually designate the type of accounts one owns. With the IRA portion of your portfolio, you will need to do a calculation on what your RMD will be each year.
Vanguard has a FAQ page to help with questions.
https://personal.vanguard.com/us/help/FAQRetirementRMDContent.jsp
Your RMD will become income, you will pay taxes on the distribution, and the distribution (minus taxes) could then be re-invested in a non-IRA account. I don't know if you actually have to sell shares or if you can roll over shares "in kind" into your non-IRA account. Some share may have to be sold (or withheld by the brokerage house) to pay taxes on this additional income.
Investing in tax managed funds, tax exempt funds, as well index funds might be some possible considerations for non-IRA investments.