Bond ETF: Taxable vs Tax-Advantaged account

[just]

I'm aware that I might be talking gibberish below - a little knowledge is a dangerous thing. Feel free to tell me to go back to the readings and learn more ...

My Tax-Advantaged accounts (403b, Roth IRA) are invested in target date funds. I have a taxable account that I've used for a 3-fund portolio (40%BND, 40%VTI, 20%VXUS).

Since I created my taxable account I read that it's better not to buy bond ETFs in taxable accounts. I don't quite understand why ... is it correct?
If so, when I rebalance my taxable account, should I not purchase more BND and instead purchase the Bond proportion for my 3-funds in my Roth IRA for next year? So fold my future investments for my Roth IRA (tax advantaged) into the 3-fund approach for the tax benefits?

Thanks in advance...  

[ohgillian]

I am thinking you'd get better help with this on bogleheads (https://www.bogleheads.org/forum/viewforum.php?f=1) but following to see what people here have to say.

[archiethedragon]

Bond Funds generate more annual taxable income (dividends) versus stock funds and dividends are taxed at your ordinary income rate versus the lower capital gains rate. For these two reasons some people recommend putting the bond portion of your asset allocation in your tax advantaged account. But every situation is unique. There is no one size fits all solution. So do what is right for you.

[meganiv]

I would probably ask for a professional help here. Taxslayer phone number is easy to find online and I am sure they will answer your question with more knowledge. I am very bad when it comes to taxes or finances, lucky i have people i can relay on in this matter

[ohgillian]

Aug 31, 2021 7:33:36 GMT -5 meganiv said:

I would probably ask for a professional help here. Taxslayer phone number is easy to find online and I am sure they will answer your question with more knowledge. I am very bad when it comes to taxes or finances, lucky i have people i can relay on in this matter

I'm so curious about your posts. More than half of them have random spammy links, but then you post ones like this with no spamming. It's so confusing. 

[just]

Aug 31, 2021 8:25:23 GMT -5 ohgillian said:

Aug 31, 2021 7:33:36 GMT -5 meganiv said:

I would probably ask for a professional help here. Taxslayer phone number is easy to find online and I am sure they will answer your question with more knowledge. I am very bad when it comes to taxes or finances, lucky i have people i can relay on in this matter

I'm so curious about your posts. More than half of them have random spammy links, but then you post ones like this with no spamming. It's so confusing. 

Yes! I liked and then unliked when I saw the spam in her history, and was going to call her out on it, but we have so little new blood around here, I figured I'd give her the benefit of the doubt

I do know on most boards spammers try to up their likes and post counts so that people are more likely to click...

[ohgillian]

Aug 31, 2021 9:02:18 GMT -5 just said:

Aug 31, 2021 8:25:23 GMT -5 ohgillian said:

I'm so curious about your posts. More than half of them have random spammy links, but then you post ones like this with no spamming. It's so confusing. 

Yes! I liked and then unliked when I saw the spam in her history, and was going to call her out on it, but we have so little new blood around here, I figured I'd give her the benefit of the doubt

I do know on most boards spammers try to up their likes and post counts so that people are more likely to click...

They aren't even all to the same site, which is what I don't get. I would be a terrible spammer, lol. I totally agree we need more new posters, though. 

[awkwardpenguin]

Aug 20, 2021 12:24:06 GMT -5 archiethedragon said:

Bond Funds generate more annual taxable income (dividends) versus stock funds and dividends are taxed at your ordinary income rate versus the lower capital gains rate. For these two reasons some people recommend putting the bond portion of your asset allocation in your tax advantaged account. But every situation is unique. There is no one size fits all solution. So do what is right for you.

Yup, this is the basic explanation.

Here is a Bogleheads wiki post on the subject:

www.bogleheads.org/wiki/Tax-efficient_fund_placement

We have a "three fund" portfolio as well, but we manage our asset allocation across all our account types.  Our entire bond position is held in my and DW's 401ks.  Our taxable account holds most of our international equity position, and U.S. equity is split across both types of accounts.  This requires a spreadsheet to figure out fund placement and rebalancing, but I only rebalance once a year so it's not a ton of extra work.