Chosen theme: Tax Considerations for Retirement Planning. Today we explore practical, human-centered ways to keep more of what you’ve saved—through smart tax sequencing, timely decisions, and calm, confident planning. Share your questions, subscribe for updates, and shape the next topic with your feedback.
Taxable Accounts: Flexibility and Capital Gains
Taxable brokerage accounts offer flexibility, step-up potential at death, and favorable long-term capital gains rates. One reader, Maya, funded early retirement years solely from appreciated index funds, carefully harvesting gains during low-income periods to maintain subsidies and reduce lifetime taxes.
Tax-Deferred Accounts: The RMD Time Bomb
Traditional IRAs and 401(k)s grow tax-deferred but can create high taxable income later via required minimum distributions. Carlos assumed lower taxes in retirement, then discovered his growing balances pushed him into higher brackets. Early planning and partial conversions helped defuse the time bomb.
Tax-Free Accounts: The Power of Roth
Roth IRAs and Roth 401(k)s allow tax-free qualified withdrawals, offering control and insulation from future rate changes. Jenna loved the freedom to fund big travel years without raising Medicare surcharges. Tell us your Roth story, and subscribe for tactics on filling your Roth early.
Bridging Years Before Social Security
In the gap between retirement and Social Security, many use taxable assets first, then modest traditional withdrawals or conversions to fill low brackets. This kept Priya’s income steady while shrinking future RMDs, ultimately lowering taxes across her entire retirement timeline.
Harvesting Gains and Losses Intentionally
Tax-loss harvesting cushions volatility, while gain harvesting in low-income years resets cost basis efficiently. Omar alternated between the two during market swings, coordinating sales with realized ordinary income, avoiding wash sales, and tactically keeping adjusted gross income under key thresholds.
RMD Rules, Penalties, and Smart Defenses
Current law generally starts RMDs at age 73 for many retirees, with increases scheduled later. IRAs can be aggregated for calculation but not with employer plans. Elena learned that each account’s rules differ, so she mapped deadlines to avoid unpleasant surprises.
Roth Conversions: Turning Volatility Into Opportunity
Market dips can make conversions more efficient because you convert more shares at lower values, preserving upside inside Roth. Devon converted during a downturn, then watched the recovery occur tax-free. He used limit orders and careful lot selection to stay disciplined.
Roth Conversions: Turning Volatility Into Opportunity
Conversions increase modified adjusted gross income, which can trigger Medicare IRMAA surcharges two years later and affect certain credits. April planned with a multi-year view, capping conversions just below thresholds. She commented with her bracket targets and got community tips back.
Social Security Taxation: Provisional Income Traps
Understand the 50% and 85% Thresholds
Provisional income includes half of your Social Security plus other income sources. Crossing lower thresholds can make up to 50% taxable, and higher thresholds up to 85%. Though unchanged for decades, they still surprise planners. Build room for unexpected dividends and capital gains.
Reduce Provisional Income Without Reducing Lifestyle
Roth withdrawals and QCDs can lower provisional income, preserving benefits while maintaining spending. Nora funded travel with Roth dollars and charitable gifts from her IRA, keeping her benefits’ taxable portion modest. Share how you balance generosity and taxes without sacrificing experiences.
An Anecdote: The Twins Who Filed Differently
Identical savings, different tax outcomes: one twin delayed benefits and converted Roth, the other started early and drew traditional. Ten years later, their after-tax income diverged. Modeling helped them understand why timing, not just totals, shapes lifetime tax results.
Legacy, Inheritance, and Taxes Your Heirs Face
Under current rules, many non-spouse beneficiaries must empty inherited IRAs within ten years, sometimes with specific annual requirements. Sofia’s son planned withdrawals to avoid bracket spikes, coordinating with his bonus schedule. Clear instructions in beneficiary forms prevented avoidable delays and confusion.
Taxable assets may receive a step-up in basis at death, potentially reducing capital gains for heirs. Marcus kept fast-growing equities in taxable and slower assets in tax-deferred accounts. That placement helped his children sell inherited shares with minimal taxes and fewer headaches.
High federal estate exemptions are scheduled to sunset after 2025, which could reduce available shelter. Priyanka explored strategic gifting and trusts to align with family goals. Consider discussing with a professional—and subscribe to get our timeline of key estate planning milestones.