I have found some posts[1][2] indicating that it may not be as risky as I think, BUT I wonder if there is more to the story. Thoughts?
[1] https://blog.1password.com/totp-for-1password-users/
[2] https://security.stackexchange.com/questions/194142/is-it-safe-to-store-2fa-tokens-together-with-passwords-in-1password
PS. Let’s stick to software tokens for the purpose of this discussion and not debate physical vs software token generators.