Fotodog
Recycles dryer sheets
Greetings to all, and first a thanks for the knowledge that is shared on this forum.
I live in California, retired last year and sold my work condo. I’m trying to decide the best strategy for my taxable account of about 300k. My tIRA holds the majority of my retirement funds with a 60/40 mix of stock index funds and a ladder of individual bonds. I have 4 years before RMD’s start, and I’m using that time to do some Roth conversions of about 50k/year with taxes paid from the taxable account. I need about 50k/year for living expenses which I’m also drawing from this account.
Traditional thinking states that I should have stocks in my taxable account since long term capital gains are taxed lower than ordinary income. However California taxes LTCG’s as ordinary income at 9.3% in addition to Federal tax at 15%.
I’m beginning to think that a better strategy would be building a ladder of California Municipal bonds in my taxable account. I can currently get about 4% tax free yield. When using tools such as Fidelity’s tax calculator, that is equivalent to over 6% yield on a taxable investment.
What are your thoughts?
I live in California, retired last year and sold my work condo. I’m trying to decide the best strategy for my taxable account of about 300k. My tIRA holds the majority of my retirement funds with a 60/40 mix of stock index funds and a ladder of individual bonds. I have 4 years before RMD’s start, and I’m using that time to do some Roth conversions of about 50k/year with taxes paid from the taxable account. I need about 50k/year for living expenses which I’m also drawing from this account.
Traditional thinking states that I should have stocks in my taxable account since long term capital gains are taxed lower than ordinary income. However California taxes LTCG’s as ordinary income at 9.3% in addition to Federal tax at 15%.
I’m beginning to think that a better strategy would be building a ladder of California Municipal bonds in my taxable account. I can currently get about 4% tax free yield. When using tools such as Fidelity’s tax calculator, that is equivalent to over 6% yield on a taxable investment.
What are your thoughts?