With $2.5 million in a 403(b) and $4 million in taxable accounts, what’s our smartest strategy for housing short-term Treasuries?

A Redditor has approximately $2.5 million in a 403(b) and $4 million in taxable accounts. The individual brought up this information in a Chubby FIRE Reddit post because they want to figure out where to put the T-bills. 

The original poster is married and wants to minimize their tax burden. On one hand, interest compounds tax-free in a 403(b), but on the other hand, any withdrawals will eventually be taxed at the state and federal levels.

The Redditor also mentioned that they have $125k in living expenses. Roughly $50k in dividends and $30k in T-bills from the 403(b) are their sources of cash flow. The Redditor’s goal is to pay a 0% federal tax rate on dividends and long-term capital gains. I will share my thoughts, but it is good to speak with a financial advisor if you can.

2025 Long-Term Capital Gains Tax Rates

Since the Redditor is married, they can incur up to $96,700 in long-term capital gains in 2025 without paying any taxes. Then, a 15% tax rate applies in the $96,700 to $600,050 range. Since the Redditor only has $125k in annual living expenses, the Redditor will incur very low long-term capital gains taxes. 

The standard deduction will also help. It’s currently $30,000 in 2025, meaning the Redditor can incur up to $126,700 in long-term capital gains without paying federal taxes. This conclusion assumes that the couple isn’t making any other type of money.

The Redditor has a real chance of not paying taxes as they make withdrawals. That’s especially true if the Redditor focuses on selling stocks that have relatively low capital gains.

Withdrawing T-Bills in a Down Market

One of the biggest mistakes investors make is selling stocks during down markets. The stock market has bull runs and sharp corrections, and it’s important to stay firm with reliable companies when asset prices go down.

The Redditor recognizes this and states that they will withdraw T-bills during a down market. Following this strategy allows the Redditor to hold onto stocks for a longer amount of time. The Redditor currently earns $10k per year from T-bills, so they can only withdraw $20k per year (on top of the $10k in annual interest) to avoid getting taxed on their withdrawals. 

As the Redditor sells more T-bills and withdraws from the 403(b), interest will make up a smaller percentage of each annual withdrawal. Meanwhile, the Redditor is interested in selling bonds in the 403(b) and buying equities during corrections. Similarly, the Redditor mentioned the possibility of selling equities during rallies and putting the funds into bonds.

The Strategy Is Solid

The Redditor has a great approach to reducing their tax burden. Capitalizing on long-term capital gains tax rates and the standard deduction can lead to no federal income taxes. The Redditor can simultaneously have enough funds to cover their living expenses.

The Redditor didn’t receive too many comments for their Chubby FIRE post. It seems as if more people were reading the post and taking notes for themselves. This post demonstrates how advantageous it is to know the tax code so you canminimize how much you owe.