held-to-maturity bond ladder · Also called: bond ladder, T-bill ladder, CD ladder, rolling ladder
A series of bonds maturing in successive years. RetIQ models each rung's coupon, the maturity run-off, and how a rolling ladder reinvests maturing principal.
A ladder holds several bonds — Treasuries, CDs, corporates, agencies, or munis — maturing in different years. Each rung pays interest on its face value until maturity; the account's blended yield is the face-weighted coupon of the rungs still before maturity, so it falls as rungs mature. Matured principal stays liquid.
RetIQ models each instrument's tax character: Treasury interest is state-exempt (31 U.S.C. §3124), muni interest is federally exempt (IRC §103), and CD or corporate interest is fully taxable. A rung bought above par has its premium amortized (IRC §171); a zero or STRIPS accrues original-issue discount (IRC §1272); a TIPS pays a real coupon plus inflation accretion (Treas. Reg. §1.1275-7). OID and TIPS accretion are taxed as they accrue but are not spendable.
A rung can be sold before maturity or called, realizing a capital gain or loss, and a rolling ladder reinvests maturing principal at a set rate. Set up a ladder on a Cash/HYS or pre-tax (IRA) account under Inputs, Accounts.