Thank you for attending the class on reducing taxes in retirement. Understanding how different income sources are taxed can help you create a smart withdrawal strategy and minimize your overall tax burden.

Key Takeaways and Next Steps

Know How Your Investment Accounts Are Taxed

Withdrawals from Traditional IRAs are taxed as ordinary income.
Roth IRAs offer tax-free withdrawals (if the account is over five years old and you’re 59.5 or older).
Taxable investment accounts are subject to capital gains tax, with different rates for short-term and long-term gains.

Plan Your Withdrawals Strategically

Required Minimum Distributions (RMDs) from IRAs must start at age 73 (changing to 75 in 2033), and these withdrawals are fully taxable.
Consider balancing withdrawals from different account types to manage your tax bracket effectively.
Be aware of IRMAA (Income-Related Monthly Adjustment Amount), which can increase Medicare premiums based on income levels.

Use Tax-Friendly Investment Strategies

Explore tax-free bonds for tax-efficient income.
Compare mutual funds and ETFs to understand their tax implications.
Charitable contributions and larger standard deductions (for those 65+) can reduce taxable income.

Think Long-Term, Not Just Year-to-Year

The goal is to minimize lifetime taxes, not just one year’s tax bill.
If you haven’t retired yet, start planning now for a smoother tax strategy in retirement.
Converting to a Roth IRA before RMDs begin might be beneficial, but it’s important to understand the tax impact first.

Seek Professional Advice When Needed

Tax laws change, and retirement planning is complex—consulting a financial professional can help ensure you make the best decisions for your situation.

Resources:

Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event

Disclaimer: This class is for informational purposes only and does not offer personalized tax or financial advice. Please consult a qualified professional for guidance tailored to your circumstances.