Rebalancing for Taxable Accounts

Rebalancing for Taxable Accounts

Mark W. Riepe, CFA, and Bill Swerbenski, CFA (JFP Journal, April 2007)

Tips When Rebalancing in a Taxable Account

1. Exert more care when rebalancing in taxable accounts.
2. Avoid generating rebalancing trades by directing new money into underweighted asset classes.
3. When sensible, execute trades to generate tax losses that can then be used to offset any capital gains generated by
rebalancing trades.
4. Be patient and wait until eligible for long-term capital gains treatment.
5. If taxable and tax-deferred accounts are both allocated toward the same goal, have the tax-deferred account bear as much of the
rebalancing load as possible.