How to Save Taxes During Retirement?

Keep More of Your Retirement Assets


If you don’t pre-plan your retirement plan and failed to manage your drawdown; you could face a higher income-tax bracket, possible 50 percent penalty on distribution and be taxed higher on Social Security benefits.

To avoid these significant problems, you should meet with a retirement planner specialist, begin your draw-down in your sixties of your IRAs and consider converting some if not all IRA money to a Roth IRA before you reach the age of fifty.

IRAs and 401k pension plan withdrawals are treated like ordinary income; you are taxed at your marginal tax bracket rate in the year of distribution (withdrawal). Large withdrawals could move you into a higher tax bracket which means paying more taxes.

You are required to take a required minimum distribution also referred to as RMD at the age of 70 ½. Investors can pull money out of tax deferred retirement accounts without the 10 % penalty at the age of 59 ½.

You will be required to pay taxes on the distribution as they are made at ordinary tax rates each year you make a withdrawal.

Higher withdrawals will lead to a possible higher Social Security tax of 85 % of the benefits and could also trigger an additional cost on your Medicare Part B, thanks to the Obamacare.

Many investors tried to postpone paying taxes on their retirement accounts only to find they actually end up paying more taxes down the road due to RMDs.

Pre-planning is essential, the earlier you start after the age of 59 ½ the better. Monies withdrawn can be re-invested in a regular account and any capital gains after one year will only be subject to a maximum tax rate of 15 %.

You can also convert part of your IRAs yearly over time, pay the taxes each year; roll into a Roth IRA which will be tax-free after 5 years.

Seek professional help, both for your tax situation and investment, hire a fee-only financial planner that can advise you on both which will save you money.


Daniel F. Iuculano, AAMS CMFC

Accredited Asset Management Specialist

Chartered Mutual Fund Counselor

Comments are closed.