How To Minimize Taxes On Those Retirement Distributions

Retirement can open up a fulfilling new chapter in life, but make sure you know how to tame the tax bill. (Photo: Gustavo Fring/Pexels)

Once you turn 72, you need to start withdrawing money from your retirement accounts. When that time comes, do you know the secrets to managing and actually cutting your retirement tax bill down to size?

We do, so we were thrilled to share tax trimming tips with veteran report Sandra Block as she put together a guide for Kiplinger’s Personal Finance on shrinking that Required Minimum Distribution (RMD) tax bill.

As Sandra explains, “depending on the size of the account, that tax bill could be significant.”

In her article, Sandra highlights some of the strategies we recommend frequently to clients, like Qualified Charitable Distributions (QCDs), and Roth conversions.

As Mari told Sandra, “it’s important to get the Roth conversion calculation right the first time.” There are no longer any ‘do overs’ on Roth conversions, so aim to make smaller, more frequent conversions, and time them to fill up that low-tax ‘sweet spot’ after retirement, when you’ve stopped working but haven’t yet started taking Social Security or RMDs.

In the article, Sandra also talks about possible tax relief on the horizon, as Congress contemplates legislation to delay RMDs to age 75. We’ll keep you posted on RMD rule changes and strategies to manage your tax bill.

You can check out Sandra’s complete article here.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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