I came up with this theoretical $3,000,000 portfolio for a 55 year old couple with different levels of accounts. I thought it was pretty accurate. Can anyone see areas of improvement?
Account Balance
401(k) $1,900,000
HSA $150,000
Roth IRAs $425,000
Taxable Brokerage $525,000
Total $3,000,000
Target Asset Allocation
Asset Class % Dollar Target
Small-Cap Value 40% $1,200,000
Large-Cap Growth 10% $300,000
Gold 20% $600,000
Managed Futures 10% $300,000
STRIPS / Zero-Coupon Bonds 20% $600,000
Total 100% $3,000,000
Optimal Asset Location (to minimize tax drag & maximize after-tax return)
Account Allocation Dollar Amount Rationale
401(k) ($1,900,000) - Gold – $600,000
- Managed Futures – $300,000
- STRIPS Bond Funds – $600,000
- Small-Cap Value – $400,000 $1,900,000 total 401(k) shelters high-turnover, interest-bearing, or special-tax assets (bonds, futures, gold).
Roth IRAs ($425,000) - Small-Cap Value – $425,000 $425,000 total Highest expected growth → tax-free compounding.
HSA ($150,000) - Small-Cap Value – $150,000 $150,000 total HSA = triple tax-advantaged; great for long-term compounding.
Taxable Brokerage ($525,000) - Large-Cap Growth – $300,000
- Small-Cap Value – $225,000 $525,000 total Growth equities = tax-efficient (qualified dividends + LTCG).
Total Check: $3,000,000 All targets hit.
Tax Optimization Logic (summary)Asset Type Tax Efficiency Best Location
Small-Cap Value Moderate (dividends, rebalancing gains) Roth + HSA + partial in 401(k)/taxable
Large-Cap Growth High (qualified dividends, low turnover) Taxable
Gold Low (collectibles rate up to 28%) 401(k)
Managed Futures Low (60/40 capital gains, frequent turnover) 401(k)
STRIPS Bonds Very low (phantom income, ordinary rates) 401(k)
Withdrawal Plan (5% = $150,000/year)
Taxable account first → avoids early withdrawal penalties and allows capital-gain management.
Sell large-cap growth or small-cap shares as needed (tax-loss harvest to offset gains).
Rebalance inside 401(k)/Roth to maintain target weights.
HSA → use only for qualified medical expenses (tax-free).
401(k) → defer withdrawals until age 59½ unless eligible for the “Rule of 55” (if separated from employer in or after age 55).
Roth IRAs → grow untouched; tap later for tax-free income.
Consider annual Roth conversions in lower-income years to reduce future RMDs.
Example Implementation (ETF tickers)
Asset Example ETF Notes
Small-Cap Value AVUV, IJS, VBR Strong small-cap value exposure
Large-Cap Growth SCHG, VUG, QQQ Low-cost, high-growth index
Gold IAU, GLDM, SGOL Prefer low-expense ETFs
Managed Futures DBMF, KMLM, CTA Liquid alternative exposure
STRIPS Bonds EDV, ZROZ Long-duration Treasury STRIPS
Summary
Roth + HSA: small-cap value (maximize long-term tax-free growth)
401(k): gold, managed futures, STRIPS, some small-cap value (shelter tax-inefficient assets)
Taxable: large-cap growth, remainder small-cap value (use LTCG rates & loss harvesting)