An asset location strategy decides which investments sit in your taxable account, 401(k), IRA and Roth, and Modera Wealth Management writes that map into your playbook before you buy or sell anything. Done late, it costs you twice. First come years of bond interest taxed at ordinary rates. Then comes a tax bill on the gains when the taxable holdings are finally sold to make the swap.
Maybe you opened your January 1099-DIV and saw several thousand dollars of ordinary dividends from a bond fund. Your 401(k), meanwhile, holds only stock funds. Something looks backward, and it is. Every quarter your RSUs vest, shares get sold, and fresh cash lands in a brokerage account that has no plan for it.
This page is not for you if almost all your money sits in one employer stock. That problem is bigger, and it comes first. It's also less useful if nearly everything you own is in a single account type. Have your latest statements nearby, including the 401(k) fund menu, before you read on.
What does an asset location strategy decide for someone paid in RSUs?
An asset location strategy gives each holding one account. Bond funds and REITs (funds that own commercial property) usually go in the 401(k) or traditional IRA. The fastest-growing stock funds go in the Roth. Broad stock index funds, and shares you may donate or hold for decades, stay in taxable. An HSA, if you have one, counts as a fourth slot.
The people who need this have real money in at least two account types. For an RSU holder, quarterly vest sales keep dropping fresh cash into taxable, so the question comes back four times a year. Once $500,000 or more is split across accounts, the yearly difference usually reaches four figures. Below that, it's smaller but still real.
You can see the firm's position at work in one habit. Modera Wealth Management never recommends a fund without first naming the account it will live in and estimating what holding it there costs in tax each year. If no account is assigned, the fund doesn't get bought.
At 50, 60 and 73 the rules start moving the money
Look at how each age in the table adds or removes room in a specific account. From 50, the IRS 401(k) catch-up for 2026 is $8,000, for a total of $32,500. At ages 60 to 63 it rises to $11,250. Most senior tech salaries clear the $150,000 prior-year FICA wage line, and above that line the IRS requires the catch-up to be Roth money. That puts the catch-up dollars in the Roth, the account for your highest-growth holdings.
Required minimum distributions (RMDs, the forced withdrawals the IRS makes you take) start at 73, or 75 if you were born in 1960 or later. With 10 to 15 years left, holding bonds inside the traditional account slows its growth and keeps those future withdrawals smaller. The catch-up years are the last stretch when location choices still compound.
For illustration (hypothetical): Tuan, 34, will have $250,000 of fresh cash in taxable after his first year of RSU sales, plus $150,000 in his 401(k). He wants 25 percent in bonds, or $100,000. If the bonds sit in taxable at an assumed 4 percent, they pay $4,000, taxed at an assumed 35 percent: $1,400. If he swaps them into the 401(k) and holds $100,000 of stock index funds in taxable instead, at 1.5 percent dividends taxed at 15 percent, that is $1,500 × 15 percent = $225.
He saves $1,175 annually. Over 30 years that is $35,250 before growth. Waiting two years costs $2,350, and waiting five costs $5,875, before growth. The swap costs nothing today because the taxable money is new cash and trades inside the 401(k) are untaxed. Five years from now, the same fix means selling a taxable fund that may carry a gain.
Any of these funds can fall in value, including the money first put in, and the savings above are an illustration, not a forecast.
Which ages change the room you have
Tuan acting now or later
If new cash is going into taxable and your 401(k) menu offers a bond index fund, hold your bond share inside the 401(k) and buy broad stock index funds in taxable, unless you will spend that cash within about three years.
| Age | Rule that switches on | What it means for location |
|---|---|---|
| Age 50 | 401(k) catch-up $8,000; IRA catch-up $1,100 | More tax-sheltered room each year |
| Prior-year wages over $150,000 | Catch-up must go in as Roth | Put high-growth funds in Roth |
| Age 59½ | 10% early withdrawal penalty ends | IRA money becomes spendable |
| Ages 60–63 | Catch-up rises to $11,250 | Last big years to add |
| Age 73 or 75 | RMDs begin (75 if born 1960+) | Bonds in traditional keep RMDs smaller |
Does selling company stock change where the proceeds should land?
Yes, because the proceeds become cash in your taxable account, and that is the cheapest moment to place it well. Concentrated stock diversification turns employer shares into that cash. RSU tax planning sets how much is sold each quarter, and so how much new cash needs a home.
ISO exercise planning often leaves shares that must stay in taxable for a year after exercise to qualify for long-term treatment, so they count as taxable stock exposure when the location map is drawn.
Same question at 34 and at 54: should the bonds move into the 401(k)?
Compare two people on the same three criteria: the tax bill to move today, the years left to compound, and the size of future RMDs. Tuan (hypothetical, 34) gets a yes, done now. His cash is fresh, his 401(k) trades are untaxed, and the gap has three decades to compound.
A hypothetical 54-year-old engineering director has $1.8 million, and her taxable bond fund carries a $40,000 gain. She gets a different answer. Leave the existing fund where it is. Point new 401(k) money and the $8,000 catch-up at stock funds; the catch-up goes in as Roth because her wages top $150,000. The taxable bond fund becomes the cash reserve for her first retirement years.
Here is a shortcut for choosing between them. If fixing the location means realizing a gain whose tax bill exceeds about three years of the yearly saving, change only the new money.
Two people, three criteria
Modera Wealth Management, your CPA, your attorney and the custodian each own one step
You send statements and the 401(k) fund menu. Modera Wealth Management writes the location map into the playbook, along with a trade list showing the tax bill of each move. Your CPA confirms your bracket and your exposure to the 3.8 percent net investment income tax. Your attorney handles account titling, any trust and beneficiary forms. The custodian, the firm that holds your accounts, places the trades and mails the 1099s each February.
Three things to pull together yourself before the first call
Asset location does nothing about the larger risk of $900,000 sitting in one employer stock, so trimming that position comes first. And if almost all your money is in one account type, the yearly difference may be only a few hundred dollars. Doing the prep alone is a fair first step. You can do it in an evening with your year-end statements.
Call Modera Wealth Management when fixing a holding would realize a gain, when the catch-up years at 50 begin, or when taxable passes about $250,000. There's no published phone number. Reach the team through the contact form on this website.
- List every account, type and balance
- Mark any bond fund in taxable
- Check for a bond index fund in your 401(k)
Where a fund sits can matter as much as which fund you own.
What people ask about an asset location strategy
At what age does the Roth catch-up rule change which account gets my extra 401(k) dollars?
The catch-up starts at 50, but the Roth rule depends on pay, not age. If your prior-year FICA wages exceeded $150,000, the IRS requires the catch-up to be Roth. That makes the catch-up a natural place for your highest-growth stock funds.
When should I redo my asset location if I plan to retire in about 12 years?
Redo it now, then again whenever a large vest sale or a catch-up change adds cash. Twelve years is enough for bonds in the traditional account to slow its growth and shrink future RMDs. Each year you wait, fixing it may mean selling a taxable fund with a gain.
Is it worth selling a taxable bond fund that has a gain just to move my bonds into the 401(k)?
Usually not if the tax bill on the gain exceeds about three years of the yearly saving. In that case, leave the old fund alone and point new 401(k) money and catch-up dollars at stock funds. If the gain is small, selling can pay off.
Does an HSA count as its own slot when deciding where each fund sits?
Yes, if you have one, an HSA is a fourth slot next to taxable, traditional and Roth. Money used for medical costs comes out tax-free, so long-term growth holdings can fit there. Check the current IRS limit for your coverage type before counting on it.
Read the rules at the source
How Modera Wealth Management can also help
This is general information, not advice for your specific situation. Investing involves risk, including loss of principal. Nothing here replaces guidance from a tax professional or attorney. Talk to a qualified adviser before you act.