Retirement Tax Awareness
Taxes don’t retire when you do
The short answer
Much of what you’ve saved in pre-tax accounts hasn’t been taxed yet. Understanding RMDs, how Social Security is taxed, and the order you withdraw from accounts can meaningfully affect how much you keep.
Three tax realities to understand
- RMDs (Required Minimum Distributions) — the IRS eventually requires you to withdraw from pre-tax accounts, and those withdrawals are taxable. Large accounts can create large, sometimes unexpected, tax bills.
- Taxation of Social Security — depending on your other income, a portion of your Social Security benefits may be taxable.
- IRMAA — higher income can raise your Medicare premiums, based on your tax return from two years earlier.
Why “tax location” matters
Having money in three “buckets” — taxable, tax-deferred, and tax-free — gives you flexibility to manage your tax bracket year by year in retirement. Building and using those buckets thoughtfully is often where real, lasting value is found.
Official resource: IRS information on RMDs is at irs.gov.
Have questions about your own situation? Tracy is glad to talk it through with you — clearly and without pressure.
Not tax advice. Educational only. Tax laws are complex and change over time. Please consult a qualified tax professional about your specific situation. Services offered only where Tracy is properly licensed.