Do you want to pay taxes now or later? Do you want to risk having a large stock allocation or pay taxes now? Those questions have to do with your risk tolerance. If you do decide to liquidate some stock, and the windfall (and/or your income) is really large, then if you sell a large part of it in one year, you might bump yourself up to a higher capital gains tax bracket (20% instead or 15%) and/or incur NIIT (look it up). So it might make sense to divide the sales of equities across 2 or more tax years.Suppose I have $100k in a taxable brokerage account that is invested in 50% S&P500, 25% international, and 25% tax free muni bond fund. All future contributions are invested in this ratio too.
Then one day, you get a gift from a family member of another $100k that is 100% in S&P500 shares. Now your asset mix is $150k S&P500 (75%).
How do you rebalance that back into a 50/25/25 allocation? Change my future contributions to only buy international and bonds until the allocation returns to normal (will take a long time)? Sell S&P shares to rebalance (taxable event)?
Statistics: Posted by snic — Fri Sep 05, 2025 10:51 am — Replies 2 — Views 163