I get it. Thank you.

It’s tax blind in the 401k and IRA but would trigger taxable events in the brokerage right?

Besides, it would go against the ideology of putting maxing out bonds in tax advantage accounts right?

I’m aware about tax efficient asset allocation, where bonds must go into tax advantaged accounts rather than a brokerage, etc etc.. that’s not what I’m asking.

A traditional IRA is pre tax dollars, right? So when we calculate the total ratio, all the assets must be considered post-tax right? So how’s it wrong?

That would require a lot of buying and selling, for example - I’m 100% stocks in 401k.. which is why I’m wondering is it important?

Yeah and that’s very difficult to do, because my funds are spread out all over in different quantities and proportions, so I can’t just consider the pre-tax assets and post-tax assets equal to reach my asset allocation, ratio right?

Ok let me explain in the most basic way:

Assume I have $100 to invest and I split it between VTI and BND in a 60:40 ratio ($60 in VTI and $40 in BND), so my asset allocation is 60:40.

Now, assume the VTI sits in a tax-advantaged account like a 401k or IRA, and the $40 of BND is in a taxable brokerage, so that $60 is actually pre-tax dollars, while the $40 is post-tax dollars.

If I assume my tax rate in retirement would be 10%, the $60 of VT is effectively $54 of assets I own.

So my actual asset allocation is $54:$40 or 57:43.

That’s what I’m trying to say.

Ok let me explain in the most basic way:

Assume I have $100 to invest and I split it between VTI and BND in a 60:40 ratio ($60 in VTI and $40 in BND), so my asset allocation is 60:40.

Now, assume the VTI sits in a tax-advantaged account like a 401k or IRA, and the $40 of BND is in a taxable brokerage, so that $60 is actually pre-tax dollars, while the $40 is post-tax dollars.

If I assume my tax rate in retirement would be 10%, the $60 of VT is effectively $54 of assets I own.

So my actual asset allocation is $54:$40 or 57:43.

That’s what I’m trying to say.

Ok let me explain in the most basic way:

Assume I have $100 to invest and I split it between VTI and BND in a 60:40 ratio ($60 in VTI and $40 in BND), so my asset allocation is 60:40.

Now, assume the VTI sits in a tax-advantaged account like a 401k or IRA, and the $40 of BND is in a taxable brokerage, so that $60 is actually pre-tax dollars, while the $40 is post-tax dollars.

If I assume my tax rate in retirement would be 10%, the $60 of VT is effectively $54 of assets I own.

So my actual asset allocation is $54:$40 or 57:43.

That’s what I’m trying to say.

Isn’t split and asset allocation the same thing? Or am I missing something?

I’m not sure what you’re saying. Split and asset allocation mean the same thing right?

Oh wow, wait… so you’re saying he wouldn’t pay any tax in retirement if his only income is SS + 4% or less withdrawals from the retirement accounts?

Just making sure.. SS for him would be ~$3400/mo, wife would be $1700, and 4% withdrawal is another $1kish a month. Is it really under the standard deduction amount making the whole thing tax free essentially?

So if that’s true, even the traditional IRA or 401k withdrawals will forever be withdrawn tax free if the above withdrawal pattern is followed?

Someone yesterday said: something to keep in mind is that after-tax and before-tax dollars are not equal. If it is a traditional 401k then there are still income taxes to be paid. That might change what the actual split is when compare on an after tax basis.

Which is why I asked.

Someone yesterday said: something to keep in mind is that after-tax and before-tax dollars are not equal. If it is a traditional 401k then there are still income taxes to be paid. That might change what the actual split is when compare on an after tax basis.

Which is why I asked.

What does that mean?

But how can we compare apples to oranges? The non-retirement account assets are POST-TAX, and the retirement account assets are PRE-TAX.

If he has say $100k of equity in his traditional IRA, and his tax rate in retirement is 10%, the above equity amount is effectively $90k needed for calculating his current asset allocation, no?

Oh that’s right.. so I’m wondering if he’s making a mistake by holding a traditional IRA instead of Roth IRA

So $7.5k/year in Roth IRA until retirement?

And max out the Traditional IRA simultaneously too?

Invest in the covered call ETFs just in the Roth? Currently, he’s only invested in a 2-fund portfolio of VT & BNDW (Boglehead philosophy) since our investment knowledge is zilch.