1-For other high income folks here, are all your bonds in taxable in munis? Fortunately >90% of my investable assets are in taxable, but the downside is not much space in tax sheltered for bonds.
I have less than 1% in tax deferred assets so more than 99% in taxable accounts. I am 30% in individual municipal bonds with staggered maturity dates, different states and credit quality (between BBB and AAA)
2-Does having all munis concern you given the swirling debt issues many states are having? Or the fact that there was discussion of eliminating tax-exempt bonds in the tax bill?
It does to a small extent for the following reason. I know that under our Constitution a State cannot file for bankruptcy. So the issuer of a State GO cannot file for bankruptcy. What does concern me is the games Congress played with Puerto Rico (after the Supreme Court ruled that they could not file under Chapter 9) to allow them to have the benefits of bankruptcy without filing for bankruptcy. Could this happen in NJ, RI, Illinois, Conn? That is why it is important to diversify among states. I am very careful in choosing bonds issued by political subdivisions such as school boards or municipalities. Revenue bonds must be closely scrutinized. In my opinion any elimination of the tax benefit would not be retroactively applied.
3-With the tax bracket changes and/or retirement - have you decided to move into taxable bonds when you previously held munis?
Retired last year and expect to be in the highest tax bracket for the foreseeable future. The difficulty I am having is replacing muni bonds that have matured or been called. It appears to me that although interest rates have risen (10-year at 2.70 today), the rates on muni bonds have not yet seen an increase either on new issues or in the secondary market. So I have decided not to replace with new bonds (with long maturity dates) and I am on hold with some money in liquid funds getting between 1.35% (Schwab MM) and 2.0% (1-year online CD rate as of recent). When I see an increase I will reinvest. Currently staying away from NJ, Ill, RI, PR, Guam, VI and Conn. Because of the pass-through benefits of the new tax code I have and will continue to shift some of these funds into membership interests in non-public LLCs owning commercial real estate. I was in this field prior to retirement.