here the crux of the matter - $200k to $300k in treasuries in taxable accounts is $10k-$15K in interest is $2500-$3750 in taxes (22%24%) - (a years living expenses for us is roughly $200k)I apply my AA to aggregate assets, not to type of account. Type of account comes into play only for purposes of tax-efficient placement. For me, keeping a couple years of expenses in fixed income in a taxable account would not be tax efficient because I'd be paying a combined 29% federal + state tax on the interest each year. For example, 200k in treasuries in taxable would currently generate over 10k in ordinary income per year. The same 200k in VTI would generate only 2.5k in dividends per year, almost all of which is qualified and would be taxed at more favorable capital gains rates. Your own tax rates could determine the most tax-efficient placement, but fixed income such as cash is usually best held in tax-deferred.yes, you can do it that way but you still will have increased your equity AA In TIRA vs just keeping a couple years expenses in treasuries or bond funds in taxable...... both ways work - i'm sure given 10 possible future conomic scenarios 1 way may be slightly better than the other way but hard to say since my crystal ball is in the shop.Not sure I understand your point. If you have adequate equities in your taxable account and cash in your tax-deferred account, why do you have to wait for a bounceback?it is a problem if the stock market tanks overnight and your equities have also dropped overnight....you will have to wait for a bounceback and if that takes 2 years and you don't have the cash in a taxable account then you have to sell equities at a loss or pay income taxes on TIRA fixed assets as you cash them out, you wouldnt want to sell RIRA equities since they will also be down, I'm not say you are wrong, but your advice is not what i would recommend.
Not a problem if you have adequate equity funds in your taxable account. See the link:
https://www.bogleheads.org/wiki/Placing ... ed_account
Let's say you have 200k in VTI in a taxable account, and you're keeping your cash in a tIRA. If VTI drops 50% overnight, you still have 100k of VTI in taxable. If you now suddenly need 50k in cash, you can sell half of your taxable 100k of VTI (and perhaps harvest a tax loss) and simultaneously use 50k of the "cash" in your tIRA to buy a comparable tax-loss harvesting partner to VTI (e.g., VOO). In aggregate, you haven't sold at loss. You're just replacing stock with cash in taxable and simulaneously replacing an equal amount of cash with stock in tax-deferred. You don't have to withdraw the cash from your tIRA and pay income tax on the withdrawal. Am I missing something?
You're also not stuck with the increased equity holdings in your tIRA if you have to raise cash in taxable accounts by off-setting exchanges. If you wait at least 30 days to avoid a wash sale, as you reaccumulate cash in your taxable account, you can use that cash to repurchase VTI (per my example above) while simultaneously converting an equal amount of VOO into cash in your tIRA. The bottom line for me is that holding cash in tax-deferred is much more tax-efficient and in no way impedes my ability to almost instantly access that cash with simutaneous intra-account exchanges that don't involve any withdrawal of funds from the tIRA. No crystal ball is needed.
- my portfolio increased $700k last year so ~$3000 is a rounding error, not worth thinking about, not worth caring about, my wife wastes more money than that in 2 months, too many people stress out trying to max everything to the penny, i find its not worth worrying about to be honest.
Statistics: Posted by john0608 — Fri Aug 02, 2024 1:45 pm — Replies 44 — Views 5156