9 comments

  1. I like the primer!

    One thing to note is that if your traditional IRA withdrawal (or RMD) plus, where applicable, Social Security payment, is less than the upper end of the 0% long term capital gains tax bracket, you have an opportunity for long term capital gains tax harvesting (or, if you have sufficient gains in your taxable account, you may not need to withdraw from the IRA…YMMV, check with your CFP, etc.).

    Michael Kitces (whom my phone wants to autocorrect to Michael Kitteh) has an excellent primer on how ordinary income and long term capital gains stack: https://www.kitces.com/blog/understanding-the-mechanics-of-the-0-long-term-capital-gains-tax-rate-how-to-harvest-capital-gains-for-a-free-step-up-in-basis/

    Liked by 1 person

    • Thanks Jason. Yes, I agree regarding room for capital gains harvesting if your “stacked” income leaves room in that 0% range. And I love Michael Kitces. He has some of the best posts on many of the topics we write about. He is for sure one of my research go to sites. Cheers!

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    • Thanks Jess. This can be a complex topic but I think there are lots of ways to make it relatable to our daily lives. When we broke it down into manageable topics we felt a lot more in control.

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  2. I love the coffee analogy! I’m also a black coffee drinker and I’m in the JL Collins camp with 3 funds – stock funds, bond funds, and a money market; also cash, of course!

    It’s funny, I have no problem with the concept of long-term savings, but it’s the much shorter-term that always trips me up. I’m saving up quite a chunk to be used in later 2022 and the vast majority of it is in VTSAX; the rest I’ve been putting into a savings account. Thanks to your talking about allocations, and a passing mention from Revanche, I did a little poking into I bonds and realized I could get 3%+ interest for 6 months, which isn’t a lot, but is a lot better than my 0% (but so convenient) savings account. So I’m off to do some allocating!

    Liked by 2 people

    • I’ve been hearing about those I-Bonds. Sounds like you have to buy them from a savings or bank account? Not a brokerage? And what is the investment limit? I say use what ever makes it easy to save for sure! Oh, and just wait for the cookie analogy.

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