jamesmmParticipantStatus: SpousePosts: 1Joined: 07/17/2019
Wanted to run by an asset allocation question for a deferred comp account. Due to change in employment (hospital switched ER management company, changed employer to stay at same hospital).
Have $93K in deferred comp account and separation of service triggers a 10-year distribution plan. Allocation is 100% stock (SP 500, small cap value, international). Age is 39.
Should we move this to a stable value fund? 0% chance of losing principal, lock in current gains, and limit future upside or keep current allocation. No bonds/money market funds in other accounts based on age (can weather a 50% drop in stocks since retirement is 20+ years away).
If you have no control of taking a distribution (all distributions would be at our marginal tax rate, currently 32%), should you have a more conservative allocation (such as 50% stocks, 25% bonds, 25% money market)? Essentially a sequence of returns issue, but ventures into market timing and loss aversion.
To lose principal on deferred comp would be frustrating, but losing the time horizon to weather a bear market and being forced to take distributions in down years increases the risk of coming out worse off (and losing the tax arbitrage).
Will continue with deferred compensation with new employer, so can be very aggressive in allocation in rest of accounts.July 17, 2019 at 1:24 pm MST #231297LordosisParticipantStatus: PhysicianPosts: 1807Joined: 02/11/2019
Well that stinks.
You can leave the AA alone and when you are forced to take the money out just buy the funds you want in taxable. If there is a big dip it will be a wash because you will be buying cheap on the other end.
“Never let your sense of morals prevent you from doing what is right.”July 17, 2019 at 1:28 pm MST #231326