For a few months last year while I was trying to figure some things out, I put my 401(k) contributions into the Roth instead of the Traditional. This is super annoying now because the funds that it has are in parallel with the Traditional 401(k), except that they’re tiny amounts, so it gets pennies (ish…) of stable value income each month and a few dollars of S&P 500 and Total International dividends every quarter. In essence: it’s just an annoying paper trail. So I’m going to simplify!
Since my stocks asset allocation is currently a bit overweighted to international vs. US, I’m going to exchange all of the money into the S&P500 index fund. With this move, plus all the stock dividends coming in next week (!), it looks like my entire 401(k) contribution for the next two months will be going to the stable value fund.
Scratch that, I’m going to do a double exchange instead (order of operations is important because of Vanguard’s exchange rules, so the exchanges to the stock index funds have to happen first and the exchange from the stock index fund last):
- In Roth 401(k), 100% ($X) from stable value to S&P 500 index fund.
- In Roth 401(k), 100% ($Y) from total international to S&P 500 index fund.
- In Traditional 401(k), $X + $Y from S&P 500 index fund to stable value.
That will keep things exactly in line (almost) AND reduce the paper trail on the Roth account!
With that little bit of rearranging and the stock dividends this month, I should put 93% of my December 401(k) contribution into the S&P 500 index fund and 7% into the stable value fund. Ignoring that rearranging and just looking at the expected stock dividends, it looks like I should do 50/50 into the S&P 500 index fund and the stable value fund. That’s way off from what I set it at a few months ago (72/28), so I’m going to update it. I’ll probably wait until January I will do the Roth “fixing”, so I think I’ll just update my contribution allocation to 50/50 to be safe and re-visit my contribution allocation for January.
I’ve also already updated my 401(k) contribution % for 2013 to contribute $17,500  since less than that from my December paycheck is going to max it out anyways. I’m pretty excited for the extra $500/year, even though it is a bit under $500/year less that I can use to pay down the mortgage! Readers, have you updated your 401(k) contribution % for 2013?