Flex Your 401(k)

Flex Your 401(k): Allocation

 

So it makes sense to put investments that generate the biggest tax bills, such as taxable bond funds or funds that turn over their stock holdings frequently, in tax-deferred accounts.

Fran Kinniry, a principal at Vanguard's investment counseling and research department, says the fund company tries to teach clients that they have a limited amount of tax-deferred "shelf space" and that it should be used wisely.

Coming up tomorrow: avoiding withdrawals.

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Allison Bisbey Colter joined TheStreet.com in 2006 from the New York office of Dow Jones Newswires, where she spent the previous seven years covering consumer finance, mutual funds and hedge funds. Prior to that, she worked in Europe for Dow Jones covering transportation from London and Italian capital markets from Milan. She is a graduate of Wesleyan University, where she received a BA in government.

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