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Reply to "Should I be able to turn off auto reinventing of dividends in my 401k?"
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[quote=Anonymous]There is no difference for tax purposes whether you move dividends into a new fund or just sell part of your existing holdings. If you want to move gradually over you can sign on once a month and move 5% of your holdings over. I think it's important to understand your risk tolerance and to match it to the right target date fund but just deciding that all target date funds are too conservative is kind of silly. For example, the TSP L funds underwent an overhaul recently so they have a lot more equities in them than they used to. Likewise, if you can decide between two target date funds it's perfectly reasonable to split the difference by putting half your money in each. You are not diversifying by doing that but you are getting a portfolio that is in between the two options. Again the TSP L funds used to only be offered in 10 year increments so some people did this, but now they are offered in 5 year increments so it is less of an issue.[/quote]
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