Well,

I think you may be a little off-kilter in how you're thinking about taxes. They're taxing the interest, not the principal-- you're not being double-taxed. That said, I completely understand wanting to minimize taxes.

If you're looking for sources of information about what to do with your money, I would recommend reading /Personal Finance for Dummies./ It's a pretty good, understandable resource that helps you think about your finances in the context of your individual situation, needs, and goals. You should be able to find a copy pretty easily, either at your library or a bookstore.

An IRA is almost always a good idea, unless you are going to want/need the money b4 retirement.

How are you set as far as being on track with retirement savings. Starting early to save, sure has its benefits, when it comes to growth, and what you will have come retirement time.

With a Roth IRA, there are heavy penalties for early withdrawals of earnings (withdrawals up to the total of contributions + conversions are tax-free). An unqualified withdrawal of earnings will result in federal income tax plus a ten-percent penalty on the amount. Fortunately there are many exceptions, such as buying a first home and paying qualified educational expenses.

The info above was copied from the link below.

Here is a link that might be useful: Roth IRA advisor

Thanks, but I already have a roth IRA, regular IRA and will be getting into a 401K again in 4-5 months on my new job. All of which I have tried to max to whatever was the legal limit in the year I made my contribution (rarely suceeding fully, but almost or but my best try), so I cannot add more to any IRA now. This question was for personal savings only - I am checking out tax free municipal bonds now.

Remember bonds are not the same as CDs, we are in a very volitle interest period right now, you could lose money on bonds in the short term. Especially if you needed to tap that emergency fund on a bad day

Vanguard, and (I imagine) other mutual-fund companies, offer tax-exempt money-market accounts. Typically, such accounts invest in government bonds in a single state, so the interest is not taxed by either the state or federal government.

They offer such accounts for residents of New York, New Jersey, Pennsylvania, California, and Ohio. Yield is approximately 3.5%; minimum balance is $3,000. If you're not in one of those states, they offer a fund that is exempt from federal taxes only, and pays a tiny bit more.

The advantage of such funds is that they are very easy to access. At least at Vanguard, once such a fund is set up, you can transfer money to or from your bank account over the Internet on two business days' notice.

Hi Surfergal,

(Man... with that moniker I wann know where you live, where you surf, I wanna see pics & stories of the last road trip!)

Where can I find information on alternatives?

What you are specifically asking about falls in the realm of conservative, tax-avoiding and tax-free savings/investment accounts.

BEFORE I PROCEED... it is important to state that your overall (personal? family?) portfolio and balance sheet needs to be structured to fit your stage in career earnings (on the rise? On the wane?) your time-to-target ("target" being financial freedom from safe passive income streams,) your risk exposures (health costs, employability, long-term care, asset protection, liability protection, etc.) and your "inflation defensive" investments (almost by definition, managed equities investment accounts.)

NOW.... HAVING SAID THAT....
You can get tax-deferred market-like upside, and zero-loss-of-principal guarantees on the downside, with Indexed Annuities. They grow without any "tax bite" on your interest credits, and you finally only pay taxes on the interest (not principal) when you actually withdraw funds. There are a growing assortment of indexed annuities coming on the market specifically designed for the Boomer personality, who has no interest in annuitizing (which gives away control of the principal in return for steady income for the rest of your life,) but still wants guarantes of spendable income.

ALTERNATIVELY, you can integrate your insurance coverage with the protective upside benefits of indexed annuities, and GAIN COMPLETE TAX FREE ACCESS to your interest income by using Equity Indexed Universal Life policies.

While the two vehicle categories above are "indexed" to the broad stock markets (which means they have interest payments calculated to rise when the markets rise, but never lose principal when the stock markets fall,) they also somewhat lag the stock markets a bit, because the guarantees against downside losses cost the offering companies an insurance cost to protect your money.

and how accessable would my funds be?

All "safe" vehicles usually have a lock-in period. CDs are generally 100% locked-in, with penalties for early withdrawel. Indexed Annuities and Indexed Universal Life usually have a 'no penalty withdrawal allowance' of a percentage of your total account during their lockin period.

and the tax implications on withdrawal?

Annuities' interest credits are taxed on withdrawal.
Cash-value Insurance interest is taxed IF withdrawn... NOT taxed if you take it as a loan to yourself, from your own account.

These tools are not a silver bullet one-size-fits-all solution... but ought to be considered in the overall balancing of your total family portfolio.

Cheers,
Dave Donhoff
Strategic Equity & Mortgage Planner

I'm the poster girl for Tax Free Munis. I get mine for $8 a trade with my muni broker, $6 a trade at e*trade.

Tired of explaining it to folks on here... everyone seems to want taxable income.

Follow up.. Tax free munis vary by very little in value, they are very liquid. clamshell at hotmail dot com with a subject of TaxFrees will give you more info.