Be Tax Efficient with Withdrawals

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Be Tax Efficient with WithdrawalsEvery penny counts when managing money in retirement and that is especially true when it comes to tax savings.Every retirement account you have may be taxed differently and you will want to be strategic with how and when you take withdrawals from each bucket. A few tips to consider:

• Prioritize withdrawals for your required minimum distributions — mandatory withdrawals that now start at age 73 and will rise to age 75 in 2033.
• Consider a Roth conversion to spread out when and how much you are taxed.
• Be aware of how much you withdraw each year and how the amount impacts your tax bracket.

Taxes are really complicated and what is best for you is different from what is best for anyone else.Tax efficiency is one compelling reason why you might want to work with a good financial advisor for retirement. You will want to look for someone with experience specific to income taxes as well as someone familiar with retirement drawdown strategies. (Many financial advisors are well versed in helping clients save money but have less experience with managing and drawing it down in retirement.)