While placing bonds and other income producing investments in a traditional IRA makes sense to avoid the tax drag, it always bugged me that it also resulted in the low growth (presumably) investment going into the tIRA.
So, considering everything, where is the best place for bonds? What I found was that of course the tIRA was better for both stocks and bonds (with equal in and out tax rates). However, the advantage was larger with stocks rather than bonds. So if you contribute $1000 for stocks in the tIRA and $1000 - $250 taxes for bonds in the taxable account your withdrawal amounts are higher than if you bought bonds in the tIRA and stocks in the taxable account. The withdrawals were about 8% higher with bonds in a taxable account and stocks in the tIRA.
The result was fairly robust with a few different tax rates and investment gains. Bond yields had to approach stock total returns before they were better placed in the tIRA.
I made a spreadsheet, hopefully attached, that compared the income available if you have $1000/year available to save pre-tax, and saved it as stocks or bonds in a taxable account or stocks or bonds in a tIRA. I assume 30 years of saving, and then 30 years of withdrawals, with the withdrawals sized to zero out the portfolio in the last year.
I used a fixed stock growth rate of 6% plus a 1% yield. I used a fixed bond yield of 3% with 0% principal growth. No inflation, so it's all real rates. I taxed the yields at a 15% rate in the taxable account. I taxed stock withdrawals at 10% from the taxable account, assuming 15% capital gains and noting roughly 1/3 tax basis at retirement to avoid tracking the stock basis. I taxed contributions to the taxable account at a 25% rate and withdrawals from the tIRA at 25%. The results were about the same using a 15% tax rate for both.
The spreadsheet uses iteration to find the withdrawal amount that gives a $0 final portfolio value for each of the four combinations of stock/bonds and taxable/tIRA.
You can plug in your own numbers or modify to your heart's content. This is just a quick and dirty start.
(I can't get the regular attachment to download for me.)