Originally Posted by RunningBum
Like I said yesterday, you can sell stocks in your taxable account to raise cash, while at the same time trading bonds for stocks in your tax-deferred account. The net effect is that you've sold bonds for cash, with the tax advantage of keeping income-producing bonds in a tax deferred account.
Let's dig a bit deeper and continue my example.
You are now 41. You spent 50K in cash plus dividends from the $950K portfolio. We had another 2008. Equities dropped 37% leaving you with $599,000 in your taxable.
In your IRA. The stocks are $315,000 and the bonds are up %7 or $535,000 Leaving you with $1,449,000 in total assets
You decide to decrease spending $50K + ~2% dividends from the portfolio.
At the start of 2009 your taxable portfolio 50K cash $549K equity
IRA 500K equity, 340K bonds.
But here is the problem you are planning on withdrawing ~$60K a year for the next 17.5 before you can easily tap into the IRA. While your overall withdrawal rate of 4.1% is a bit high for long retirement. The 60K withdrawal (10.9%) from a $549,000 taxable portfolio looks downright crazy. The Firecalc success rate is 14.4% for 18 years
At this point I'd be heavily researching 72(t), I know I did back in early 2009.
I'd think that any tax advantage of having bonds in your IRA would be more than negated by needing to use a 72(t)
So in theory I can understand why have bond in your IRA is good idea, in practice I think it doesn't make much sense a lot of time.