[wayne]

Even a few months ago, I was recommending the same to friends. But late in 2021, Vanguard unexpectedly hit all their Target Date funds with large tax bills: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=366566

The speculation online is that it's because they lowered the minimum for their institution class funds, many large employer retirement funds sold their holdings of the non-institution funds, leaving everyone left with large capital gains and hence large tax bills unless you held it in a 401k/IRA.

I find Wealthfront to be overkill, but this is precisely the kind of thing they'd save you from.

[onphonenow]

I still don't understand why there wasn't a way to do an exchange on this conversion that avoided this! I mean, contribute the holdings of fund A to fund B etc.

[kmonsen]

OK I see they do this every 5 years so it should not be that extreme (I only hold it in various tax sheltered accounts now).

One step further is to hold the index funds and bonds yourself, that is not exactly rocket science.

I would also say that if you have 6 million USD that is a bit different than most wealthfront customers I think.

[forrestthewoods]

Yikes. I have a fair amount of non-tax advantaged money in a target date fund. Not sure what I should do with it now. Hrmmm.

[jbullock35]

Useful Wall Street Journal article on this point: https://archive.is/3i800.