Asset Location Strategy: How are you splitting holdings between Traditional 401k vs. Mega Backdoor Roth?
I’m 28M and currently maxing out my Traditional 401k and fully utilizing my company's Mega Backdoor Roth (MBDR) (so $72,000 a year).
I’m looking to optimize my asset location. Right now, I’m basically mirroring my allocation in both (mostly total market/S&P 500), but I’m considering if I should be more intentional about which assets sit in which tax bucket.
The Question: For those with significant balances in both Traditional and Roth, how do you split your holdings?
Roth priority: Do you put your highest-growth/highest-risk assets here (e.g., Small Cap Value, Emerging Markets) to maximize tax-free growth?
Traditional priority: Do you keep the "steadier" stuff here (e.g., S&P 500, Bonds) to mitigate the future tax bill?
Or do you just keep the same allocation across all accounts for simplicity?
My current thoughts: I'm leaning toward putting my Small Cap tilt in the Roth side and keeping the core S&P 500 in Traditional. I have a 30+ year horizon, so I want to be aggressive, but I’m curious if I'm overthinking the "tax drag" vs. the simplicity of mirroring.
What’s your strategy and why?