4 days ago
Two retirees with identical $1.65M portfolios face different tax outcomes based solely on withdrawal order and account placement, not holdings.
Drawing down or converting a traditional IRA to Roth before age 73 shrinks future RMDs and keeps income below IRMAA Medicare surcharge thresholds.
VTEB's tax-exempt municipal interest still counts fully toward IRMAA calculations, making it a hidden Medicare cost trap for retirees.
Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)
Two retirees, same age, same $1.65 million balance, same seven holdings in identical weights. One will pay a Medicare premium surcharge stacked on top of a rising required withdrawal starting at 73. The other will not. Only the order they draw from, and the accounts those draws come from, separates the outcomes.
#medicare #irmaa #holdings
Drawing down or converting a traditional IRA to Roth before age 73 shrinks future RMDs and keeps income below IRMAA Medicare surcharge thresholds.
VTEB's tax-exempt municipal interest still counts fully toward IRMAA calculations, making it a hidden Medicare cost trap for retirees.
Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)
Two retirees, same age, same $1.65 million balance, same seven holdings in identical weights. One will pay a Medicare premium surcharge stacked on top of a rising required withdrawal starting at 73. The other will not. Only the order they draw from, and the accounts those draws come from, separates the outcomes.
#medicare #irmaa #holdings
7 days ago
A $400,000 inherited IRA can become much more expensive if you get the withdrawal timing wrong. Many non-spouse beneficiaries must empty the account within 10 years, and some also have annual RMDs. Delaying distributions could concentrate more taxable income into later years and potentially push more of your money into higher tax brackets.
For many non-spouse beneficiaries, an inherited IRA must be emptied by December 31 of the year containing the 10th1 anniversary of the original owner's death. Certain beneficiaries qualify for different rules.
The 10-year deadline may not be the only requirement. If the original owner died on or after their required beginning date, a non-spouse beneficiary subject to the 10-year rule generally must also take annual RMDs during the 10-year period.
Missing a required distribution can trigger an excise tax of up to 25% of the amount not withdrawn. This makes it important to know whether annual withdrawals apply instead of ****** uming you can leave the entire account untouched until year 10.
Traditional inherited IRA distributions are generally taxed as ordinary income. Leaving a large amount until the final years could force you to withdraw more at once, potentially pushing more of the $400,000 into higher tax brackets.
#year #spouse #beneficiaries #account
For many non-spouse beneficiaries, an inherited IRA must be emptied by December 31 of the year containing the 10th1 anniversary of the original owner's death. Certain beneficiaries qualify for different rules.
The 10-year deadline may not be the only requirement. If the original owner died on or after their required beginning date, a non-spouse beneficiary subject to the 10-year rule generally must also take annual RMDs during the 10-year period.
Missing a required distribution can trigger an excise tax of up to 25% of the amount not withdrawn. This makes it important to know whether annual withdrawals apply instead of ****** uming you can leave the entire account untouched until year 10.
Traditional inherited IRA distributions are generally taxed as ordinary income. Leaving a large amount until the final years could force you to withdraw more at once, potentially pushing more of the $400,000 into higher tax brackets.
#year #spouse #beneficiaries #account
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7 days ago
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I'm turning 68 shortly and plan to wait to claim my Social Security at age 70 to maximize the monthly benefit. I also plan to retire at the end of the year, if not sooner (so in three months or less). Does withdrawing from my traditional IRAs (current balance is $215,000) to reduce the income tax on my RMDs outweigh the benefit of keeping those withdrawals invested and growing tax-deferred? My understanding is that if I withdraw amounts up to my standard deduction, then those amounts would be tax-free.
– Austen
Retirement withdrawals, Social Security benefits, required minimum distribution (RMDs), taxes … there are a lot of moving parts when it comes to making decisions about your retirement income. Reducing the amount of money that's subject to RMDs can help minimize your taxes once they kick in. This may also help avoid taxes on your Social Security benefits.
If you don't need the money now, but want to reduce RMDs later, one of the best moves might be converting a portion of your IRA to a Roth IRA each year. That can help reduce future required withdrawals and allow your money to grow tax-free, though there can be tax consequences for certain withdrawals. (A financial advisor can help guide you through the Roth conversion process and potentially avoid unwanted tax consequences.)
#Help #taxes #roth #Retirement
I'm turning 68 shortly and plan to wait to claim my Social Security at age 70 to maximize the monthly benefit. I also plan to retire at the end of the year, if not sooner (so in three months or less). Does withdrawing from my traditional IRAs (current balance is $215,000) to reduce the income tax on my RMDs outweigh the benefit of keeping those withdrawals invested and growing tax-deferred? My understanding is that if I withdraw amounts up to my standard deduction, then those amounts would be tax-free.
– Austen
Retirement withdrawals, Social Security benefits, required minimum distribution (RMDs), taxes … there are a lot of moving parts when it comes to making decisions about your retirement income. Reducing the amount of money that's subject to RMDs can help minimize your taxes once they kick in. This may also help avoid taxes on your Social Security benefits.
If you don't need the money now, but want to reduce RMDs later, one of the best moves might be converting a portion of your IRA to a Roth IRA each year. That can help reduce future required withdrawals and allow your money to grow tax-free, though there can be tax consequences for certain withdrawals. (A financial advisor can help guide you through the Roth conversion process and potentially avoid unwanted tax consequences.)
#Help #taxes #roth #Retirement
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9 days ago
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Ever wondered what it would be like to have seven-figures in your 401(k) plan? Well, for at least 769,000 Americans, that's a reality. That's the number of people with at least $1 million in their 401(k) at the end of June 2026, according to Fidelity data cited by Yahoo Finance (1).
That's a tiny fraction of adults with retirement accounts. If you're in this club, you're extremely lucky. You're also sitting on a relatively large IOU to the tax authorities. At age 73, the Internal Revenue Service (IRS) (2) imposes required minimum distributions (RMDs), which are generally taxed as ordinary income.
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
JPMorgan sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Get your free guide from Priority Gold
#like #wealth #ever
Ever wondered what it would be like to have seven-figures in your 401(k) plan? Well, for at least 769,000 Americans, that's a reality. That's the number of people with at least $1 million in their 401(k) at the end of June 2026, according to Fidelity data cited by Yahoo Finance (1).
That's a tiny fraction of adults with retirement accounts. If you're in this club, you're extremely lucky. You're also sitting on a relatively large IOU to the tax authorities. At age 73, the Internal Revenue Service (IRS) (2) imposes required minimum distributions (RMDs), which are generally taxed as ordinary income.
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
JPMorgan sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Get your free guide from Priority Gold
#like #wealth #ever
11 days ago
No withdrawal order eliminates RMDs from a traditional IRA. Only Roth conversions, qualified charitable distributions, or never owning one in the first place can genuinely shrink them.
IRMAA surcharges hit Medicare premiums two years after the income that triggers them, jumping joint filers from $203 to $284 monthly by crossing $218,000 MAGI.
Letting an IRA compound untouched through your 60s forces larger RMDs at 73, often pushing retirees into higher brackets and through IRMAA cliffs simultaneously.
Read More: Avoid these 13 retirement mistakes before they derail your future (sponsor)
A $2.1 million nest egg split evenly between a taxable brokerage account and a traditional IRA can throw off a six-figure income. What most retirees miss is that where each holding sits and when each dollar comes out determine whether Medicare surcharges and a swollen required minimum distribution eat that income a decade later.
#medicare #surcharges #retirees #magi
IRMAA surcharges hit Medicare premiums two years after the income that triggers them, jumping joint filers from $203 to $284 monthly by crossing $218,000 MAGI.
Letting an IRA compound untouched through your 60s forces larger RMDs at 73, often pushing retirees into higher brackets and through IRMAA cliffs simultaneously.
Read More: Avoid these 13 retirement mistakes before they derail your future (sponsor)
A $2.1 million nest egg split evenly between a taxable brokerage account and a traditional IRA can throw off a six-figure income. What most retirees miss is that where each holding sits and when each dollar comes out determine whether Medicare surcharges and a swollen required minimum distribution eat that income a decade later.
#medicare #surcharges #retirees #magi
15 days ago
IRA withdrawals cannot satisfy 401(k) RMDs. Each 401(k) requires its own separate distribution, no matter how much you pull from the IRA.
Missing a 401(k) RMD triggers a 25% excise tax, but filing Form 5329 within two years cuts that penalty to 10%.
Rolling old 401(k)s into a single traditional IRA via direct trustee-to-trustee transfer reduces multiple RMD calculations to one annual withdrawal.
Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)
At age 73, retirement savers face a firm deadline set by the IRS. That is when Required Minimum Distributions begin under the SECURE 2.0 Act, and the IRS begins expecting a slice of the pre-tax money that has been growing untouched for decades. The mechanics look simple on paper: calculate the amount, take the withdrawal, and report it on the tax return. Real accounts complicate that picture, and one woman's story shows why.
#withdrawal #missing
Missing a 401(k) RMD triggers a 25% excise tax, but filing Form 5329 within two years cuts that penalty to 10%.
Rolling old 401(k)s into a single traditional IRA via direct trustee-to-trustee transfer reduces multiple RMD calculations to one annual withdrawal.
Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)
At age 73, retirement savers face a firm deadline set by the IRS. That is when Required Minimum Distributions begin under the SECURE 2.0 Act, and the IRS begins expecting a slice of the pre-tax money that has been growing untouched for decades. The mechanics look simple on paper: calculate the amount, take the withdrawal, and report it on the tax return. Real accounts complicate that picture, and one woman's story shows why.
#withdrawal #missing
21 days ago
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Transferring some of your retirement savings from a tax-deferred account like a 401(k) to a Roth IRA can help you reduce or possibly avoid required minimum distributions (RMDs) and income taxes later on. It can also be beneficial if you want to leave tax-free savings to your heirs. A Roth conversion can therefore provide you with some flexibility when tax planning your finances in retirement.
However, you can't escape paying income taxes on your tax-deferred savings entirely, and converting 25% of a large 401(k) could lead to a sizable tax bill you'll have to pay right now. You may want to consider a conversion strategy based on keeping you from entering a higher marginal income tax bracket rather than converting a set percentage, although other timing factors may come into play.
Here are some factors to think about. You can also get matched with a financial advisor for free if you need help developing a 401(k) conversion plan that will balance present and future tax consequences.
Because Roth accounts are not subject to the required minimum distribution (RMD) rules that apply to 401(k) accounts, a retirement saver may want to consider converting funds from a 401(k) to a Roth IRA. Under RMD rules, funds left in a 401(k) or similar tax-deferred account have to be withdrawn on a strict schedule starting at age 73 or 75, depending on your birth year.
#conversion
Transferring some of your retirement savings from a tax-deferred account like a 401(k) to a Roth IRA can help you reduce or possibly avoid required minimum distributions (RMDs) and income taxes later on. It can also be beneficial if you want to leave tax-free savings to your heirs. A Roth conversion can therefore provide you with some flexibility when tax planning your finances in retirement.
However, you can't escape paying income taxes on your tax-deferred savings entirely, and converting 25% of a large 401(k) could lead to a sizable tax bill you'll have to pay right now. You may want to consider a conversion strategy based on keeping you from entering a higher marginal income tax bracket rather than converting a set percentage, although other timing factors may come into play.
Here are some factors to think about. You can also get matched with a financial advisor for free if you need help developing a 401(k) conversion plan that will balance present and future tax consequences.
Because Roth accounts are not subject to the required minimum distribution (RMD) rules that apply to 401(k) accounts, a retirement saver may want to consider converting funds from a 401(k) to a Roth IRA. Under RMD rules, funds left in a 401(k) or similar tax-deferred account have to be withdrawn on a strict schedule starting at age 73 or 75, depending on your birth year.
#conversion
22 days ago
I'm 84 and my wife is 77, and we are both fully retired. We have no significant financial obligations beyond routine monthly expenses such as food, utilities, taxes, insurance and so forth. Our largest expenses are required minimum distribution-related taxes and annual real-estate taxes, which together run about $7,000 per year.
Our combined net worth is approximately $8 million, most of which is held in separate traditional IRAs — two in my name and two in my wife's name. Our annual income comes from Social Security, RMDs and monthly pensions from previous employers. Our pensions total about $2,200 per month.
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After taxes, we reinvest approximately half of our RMDs in a taxable brokerage account. The other half goes into a bank account from which we pay our expenses; it normally maintains a balance of about $45,000. We simply don't seem to need much money. Our relatively minor healthcare expenses are covered by Medicare and Medigap policies.
#taxes
Our combined net worth is approximately $8 million, most of which is held in separate traditional IRAs — two in my name and two in my wife's name. Our annual income comes from Social Security, RMDs and monthly pensions from previous employers. Our pensions total about $2,200 per month.
Dick's Sporting Goods' epic drop hits other footwear giants, as shoppers sour on retro sneakers
There's so much betting against long-term bonds that a turnaround could catch investors off guard, says Citadel Securities
After taxes, we reinvest approximately half of our RMDs in a taxable brokerage account. The other half goes into a bank account from which we pay our expenses; it normally maintains a balance of about $45,000. We simply don't seem to need much money. Our relatively minor healthcare expenses are covered by Medicare and Medigap policies.
#taxes
22 days ago
Retirees should spend their traditional IRA first, since heirs forced to empty inherited accounts within 10 years often pay 32% tax versus a retiree's 12%.
Early retirees have nearly a decade before RMDs begin at 73, a prime window to draw down traditional IRA funds at lower tax rates.
Roth IRAs carry no lifetime RMDs and pass to heirs tax-free, making every dollar of compounded growth free of federal income tax upon inheritance.
Read More: Learn 7 secret wealth tips high net worth investors use that most investors miss (sponsor)
Retirees often carry both a traditional IRA and a Roth IRA into their sixties, and the order in which they draw down those accounts shapes both their tax bill and what their children eventually receive. Published tax rules and inherited-account guidance point to a sequence many families reverse: spend the traditional IRA first and leave the Roth IRA alone.
#traditional #inherited #often
Early retirees have nearly a decade before RMDs begin at 73, a prime window to draw down traditional IRA funds at lower tax rates.
Roth IRAs carry no lifetime RMDs and pass to heirs tax-free, making every dollar of compounded growth free of federal income tax upon inheritance.
Read More: Learn 7 secret wealth tips high net worth investors use that most investors miss (sponsor)
Retirees often carry both a traditional IRA and a Roth IRA into their sixties, and the order in which they draw down those accounts shapes both their tax bill and what their children eventually receive. Published tax rules and inherited-account guidance point to a sequence many families reverse: spend the traditional IRA first and leave the Roth IRA alone.
#traditional #inherited #often
23 days ago
RMDs are locked to the prior December 31 balance, so a midyear IRA collapse from $100,000 to $16,000 still requires the full withdrawal.
A $4,065 RMD can trigger a 'tax torpedo,' pushing Social Security into taxable income and adding roughly $6,820 to total gross income.
Retirees 70½ or older can use a Qualified Charitable Distribution to satisfy the RMD without adding to adjusted gross income, reducing the Social Security tax hit.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A retired man in his mid-seventies ended December with approximately $100,000 in a traditional IRA. Much of it sat in a private-credit investment he had treated as a conservative source of income. Then the investment collapsed. By summer, his account was worth approximately $16,000. He called the custodian expecting his required minimum distribution (RMD) to fall with it. It did not.
#december #adding #investment
A $4,065 RMD can trigger a 'tax torpedo,' pushing Social Security into taxable income and adding roughly $6,820 to total gross income.
Retirees 70½ or older can use a Qualified Charitable Distribution to satisfy the RMD without adding to adjusted gross income, reducing the Social Security tax hit.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A retired man in his mid-seventies ended December with approximately $100,000 in a traditional IRA. Much of it sat in a private-credit investment he had treated as a conservative source of income. Then the investment collapsed. By summer, his account was worth approximately $16,000. He called the custodian expecting his required minimum distribution (RMD) to fall with it. It did not.
#december #adding #investment
23 days ago
Retired married couples can withdraw ~$46,700 from a traditional IRA tax-free by stacking three 2026 deductions, including $32,200 standard and $12,000 in new senior deductions.
Most retirees skip this window by ****** uming all IRA withdrawals trigger taxes, waiting for forced RMDs at 73 when rates can reach 22% or higher.
Couples can use the window to reinvest IRA funds in a brokerage account or convert to Roth, both strategies carrying zero federal tax owed.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Every January, a specific window opens for retired married couples: they can pull roughly $46,700 out of a traditional IRA, count it as ordinary income, and owe nothing in federal tax. The window closes on December 31. Most couples do not use it, and the mechanics of why they leave it unused, and what it costs them later, are the actual story.
#advisor
Most retirees skip this window by ****** uming all IRA withdrawals trigger taxes, waiting for forced RMDs at 73 when rates can reach 22% or higher.
Couples can use the window to reinvest IRA funds in a brokerage account or convert to Roth, both strategies carrying zero federal tax owed.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Every January, a specific window opens for retired married couples: they can pull roughly $46,700 out of a traditional IRA, count it as ordinary income, and owe nothing in federal tax. The window closes on December 31. Most couples do not use it, and the mechanics of why they leave it unused, and what it costs them later, are the actual story.
#advisor
24 days ago
If you're nearing retirement and find yourself sitting on a lot of money in a traditional IRA or 401(k), you may have a problem on your hands. Granted, some might say it's a good one to have. But a large traditional IRA or 401(k) balance means you may be looking at sizable required minimum distributions, or RMDs.
The problem is that RMDs can drive up your taxes and cause other consequences, too, such as having to pay more for Medicare. So it's important to be mindful of ways to minimize RMDs.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
One strategy is to do a Roth conversion before RMDs begin. But if you're going to go that route, there's one big mistake you'll want to make sure to avoid.
A Roth conversion could benefit you in a few ways. Not only can it help you minimize or avoid RMDs, but it can also give you access to savings you can withdraw from tax-free.
#roth #ways
The problem is that RMDs can drive up your taxes and cause other consequences, too, such as having to pay more for Medicare. So it's important to be mindful of ways to minimize RMDs.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
One strategy is to do a Roth conversion before RMDs begin. But if you're going to go that route, there's one big mistake you'll want to make sure to avoid.
A Roth conversion could benefit you in a few ways. Not only can it help you minimize or avoid RMDs, but it can also give you access to savings you can withdraw from tax-free.
#roth #ways
24 days ago
An unexpectedly large inheritance can feel like winning the lottery — but it can also be an unexpected burden. From taxes and RMDs, to fending off friends and family who suddenly expect financial favors, the experience can be overwhelming.
Take Chloe, for example. She's 22 and her mom just died from a sudden illness. Since Chloe grew up in a rather frugal household, she was stunned to learn that she had inherited $1.7 million. She'd been planning to go to med school, so this money is a game-changer.
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Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake. Here's what it is and 3 simple steps to fix it ASAP
The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes
#rmds #take #since #she 'd
Take Chloe, for example. She's 22 and her mom just died from a sudden illness. Since Chloe grew up in a rather frugal household, she was stunned to learn that she had inherited $1.7 million. She'd been planning to go to med school, so this money is a game-changer.
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake. Here's what it is and 3 simple steps to fix it ASAP
The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes
#rmds #take #since #she 'd
1 month ago
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We have a combined pension and Social Security income of $8,400 per month that will only drop to $6,730 if one of us passes away. Our RMDs will start soon and we have $1.6 million in a 401(k) which we feel we can use a low-cost (expense ratio 0.12%) total return target fund to avoid the use of a robo-advisor that charges 0.3 – 0.8%. Plus, we have another $350,000 in Roths and a taxable brokerage account of $300,000 which RMDs would flow into. We own our home outright. In place of an annuity purchase can I simply use a target date fund in my IRA from which RMDs would be drawn automatically?
-JR
I hear a few different questions here, JR. First, should you purchase an annuity or rely on your investment portfolio? Next, is the cost of a robo-advisor worth it compared to a target date fund? And lastly, is a target date fund or robo-advisor sufficient for managing a portfolio like yours? Let's dig into each of them to help you get some answers. (And if you need more help answering questions like these, consider speaking with a financial advisor.)
An annuity is a form of insurance. You purchase it with the expectation that over the long term, the cost will be greater than the benefit. But, as with other types of insurance, it protects against a key risk. In this case, that risk is the possibility of running out of money, especially if you live longer than expected.
#cost #questions
We have a combined pension and Social Security income of $8,400 per month that will only drop to $6,730 if one of us passes away. Our RMDs will start soon and we have $1.6 million in a 401(k) which we feel we can use a low-cost (expense ratio 0.12%) total return target fund to avoid the use of a robo-advisor that charges 0.3 – 0.8%. Plus, we have another $350,000 in Roths and a taxable brokerage account of $300,000 which RMDs would flow into. We own our home outright. In place of an annuity purchase can I simply use a target date fund in my IRA from which RMDs would be drawn automatically?
-JR
I hear a few different questions here, JR. First, should you purchase an annuity or rely on your investment portfolio? Next, is the cost of a robo-advisor worth it compared to a target date fund? And lastly, is a target date fund or robo-advisor sufficient for managing a portfolio like yours? Let's dig into each of them to help you get some answers. (And if you need more help answering questions like these, consider speaking with a financial advisor.)
An annuity is a form of insurance. You purchase it with the expectation that over the long term, the cost will be greater than the benefit. But, as with other types of insurance, it protects against a key risk. In this case, that risk is the possibility of running out of money, especially if you live longer than expected.
#cost #questions
1 month ago
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Reaching $1.5 million in your 401(k) plan could feel like touching the finish line of a decades-long marathon. It's obviously a time for celebration.
But there's someone else celebrating with you: the taxman.
With such a large balance in your retirement account, you're potentially at risk of triggering required minimum distributions (RMDs) in your retirement, according to the IRS (1). Simply put, an RMD is the minimum amount you have to withdraw from your 401(k) each year during retirement — and it's fully taxable as ordinary income.
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
#Retirement #minimum #finance
Reaching $1.5 million in your 401(k) plan could feel like touching the finish line of a decades-long marathon. It's obviously a time for celebration.
But there's someone else celebrating with you: the taxman.
With such a large balance in your retirement account, you're potentially at risk of triggering required minimum distributions (RMDs) in your retirement, according to the IRS (1). Simply put, an RMD is the minimum amount you have to withdraw from your 401(k) each year during retirement — and it's fully taxable as ordinary income.
Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
#Retirement #minimum #finance
1 month ago
Couples aged 65+ can withdraw $46,700 from a traditional IRA in 2026 and owe $0 in federal income tax, thanks to stacked deductions.
Most retirees leave this ***** e unused by waiting for RMDs at 73, risking larger future distributions that push them into higher tax brackets.
The same $46,700 ceiling applies to tax-free Roth conversions, but the senior bonus deduction enabling it expires after 2028, making each year count.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A married couple in which both spouses are 65 or older can withdraw roughly $46,700 from a traditional IRA in 2026 and owe nothing in federal income tax on the withdrawal. The figure is the sum of deductions the IRS already allows this year, stacked in a way that most retirees never fully use. The tax-free ***** e exists whether it is claimed or not, and unclaimed ***** e in a low-bracket year does not roll forward. It simply expires.
#federal
Most retirees leave this ***** e unused by waiting for RMDs at 73, risking larger future distributions that push them into higher tax brackets.
The same $46,700 ceiling applies to tax-free Roth conversions, but the senior bonus deduction enabling it expires after 2028, making each year count.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A married couple in which both spouses are 65 or older can withdraw roughly $46,700 from a traditional IRA in 2026 and owe nothing in federal income tax on the withdrawal. The figure is the sum of deductions the IRS already allows this year, stacked in a way that most retirees never fully use. The tax-free ***** e exists whether it is claimed or not, and unclaimed ***** e in a low-bracket year does not roll forward. It simply expires.
#federal
2 months ago
Moving from California to Nevada eliminates the 9.3% state income tax on RMDs, saving six figures over 20 years on a $2.1 million IRA.
Nevada residency doesn't fix federal exposure: IRMAA surcharges kick in above $109,000 MAGI, and up to 85% of Social Security stays federally taxable.
A Qualified Charitable Distribution of up to $111,000 in 2026 can satisfy the entire first RMD and keep it out of AGI completely.
Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.
A recent post on r/personalfinance describes exactly this move: a father who rolled a large 401(k) into a traditional IRA at 72, then relocated from California to Nevada for what the poster called "a 9.3% instant savings once RMD hits." The specifics fit a common profile: a $2.1 million balance, a first required minimum distribution one year away, and a California tax bill that grows every year the account does. The math on why the U-Haul is worth it, and the federal trap the move does not solve, is more interesting than the headline.
#california #distribution #federal
Nevada residency doesn't fix federal exposure: IRMAA surcharges kick in above $109,000 MAGI, and up to 85% of Social Security stays federally taxable.
A Qualified Charitable Distribution of up to $111,000 in 2026 can satisfy the entire first RMD and keep it out of AGI completely.
Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.
A recent post on r/personalfinance describes exactly this move: a father who rolled a large 401(k) into a traditional IRA at 72, then relocated from California to Nevada for what the poster called "a 9.3% instant savings once RMD hits." The specifics fit a common profile: a $2.1 million balance, a first required minimum distribution one year away, and a California tax bill that grows every year the account does. The math on why the U-Haul is worth it, and the federal trap the move does not solve, is more interesting than the headline.
#california #distribution #federal
2 months ago
Converting $600,000 in $75,000 annual Roth IRA slices locks in sub-22% tax rates before RMDs stack with Social Security at 73.
Spreading conversions below the $218,000 IRMAA threshold avoids Medicare surcharges reaching $6,900 per person, since any overage triggers the full cliff penalty.
Delaying Social Security to 70 adds 8% yearly to the benefit while keeping taxable income low, maximizing Roth conversion headroom during the window.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A 63-year-old couple with $1.5 million in a traditional 401(k) and no earned income has just entered the most valuable tax planning window of their lives. From now until age 73, when required minimum distributions begin, they get to decide exactly how much taxable income to show each year. Most people fill that window with a few small IRA withdrawals and a delayed Social Security claim. That decision costs tens of thousands of dollars in avoidable taxes.
Spreading conversions below the $218,000 IRMAA threshold avoids Medicare surcharges reaching $6,900 per person, since any overage triggers the full cliff penalty.
Delaying Social Security to 70 adds 8% yearly to the benefit while keeping taxable income low, maximizing Roth conversion headroom during the window.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A 63-year-old couple with $1.5 million in a traditional 401(k) and no earned income has just entered the most valuable tax planning window of their lives. From now until age 73, when required minimum distributions begin, they get to decide exactly how much taxable income to show each year. Most people fill that window with a few small IRA withdrawals and a delayed Social Security claim. That decision costs tens of thousands of dollars in avoidable taxes.
2 months ago
Delaying Social Security past full retirement age adds roughly 8% per year up to 70, making the claim timing an irreversible longevity bet.
Three recurring pitfalls each punish inattention with steep, often-delayed financial costs: missed RMDs, the tax torpedo on Social Security, and IRMAA surcharges above $109,000 income.
Spreading Roth conversions across multiple years lowers future RMDs and provisional income, protecting Social Security from taxation and Medicare premiums from IRMAA tier jumps.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first. Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today.
She is 68, single, manages her own brokerage and IRA accounts, and reads the fine print on her Medicare statements. She has watched friends drift into their mid-seventies with sharper opinions but slower instincts about money, and she does not want to make her biggest financial decisions on a day when she is tired or distracted. So she is using this year to lock in the choices that are hardest to reverse, while putting the rest on autopilot.
Three recurring pitfalls each punish inattention with steep, often-delayed financial costs: missed RMDs, the tax torpedo on Social Security, and IRMAA surcharges above $109,000 income.
Spreading Roth conversions across multiple years lowers future RMDs and provisional income, protecting Social Security from taxation and Medicare premiums from IRMAA tier jumps.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first. Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today.
She is 68, single, manages her own brokerage and IRA accounts, and reads the fine print on her Medicare statements. She has watched friends drift into their mid-seventies with sharper opinions but slower instincts about money, and she does not want to make her biggest financial decisions on a day when she is tired or distracted. So she is using this year to lock in the choices that are hardest to reverse, while putting the rest on autopilot.
2 months ago
Deferring the first RMD to April 1 stacks two distributions into one tax year, potentially adding $70,000 onto existing retirement income for a $900,000 IRA holder.
IRMAA's two-year lookback locks 2028 Medicare premiums to 2026 income, and tax-exempt municipal bond interest counts toward MAGI with no correction after filing.
Crossing the first IRMAA tier costs a couple roughly $2,300 more per year; the second tier pushes the household Medicare bill to nearly $6,000.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first. Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today.
A retiree who turns 73 this year has a deceptively simple decision: take the first required minimum distribution by December 31, or use the one-time option to delay it until April 1 of the following year. The delay can look harmless. But it may put two RMDs into one tax year, push modified adjusted gross income across an IRMAA bracket, and raise Medicare premiums two years later.
IRMAA's two-year lookback locks 2028 Medicare premiums to 2026 income, and tax-exempt municipal bond interest counts toward MAGI with no correction after filing.
Crossing the first IRMAA tier costs a couple roughly $2,300 more per year; the second tier pushes the household Medicare bill to nearly $6,000.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first. Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today.
A retiree who turns 73 this year has a deceptively simple decision: take the first required minimum distribution by December 31, or use the one-time option to delay it until April 1 of the following year. The delay can look harmless. But it may put two RMDs into one tax year, push modified adjusted gross income across an IRMAA bracket, and raise Medicare premiums two years later.
3 months ago
A $122,000 RMD pushed Margaret and her husband into the top IRMAA tier, adding $13,872 per year in Medicare surcharges on top of normal premiums.
Medicare's 2-year income lookback means three consecutive RMDs lock in three separate years of top-tier surcharges, totaling roughly $42,000 for the couple.
A qualified charitable distribution of up to $111,000 per person in 2026 can reduce MAGI enough to drop below the top IRMAA cliff and recover the surcharge.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Margaret turned 75 in March and took her first required minimum distribution from a $3 million traditional 401(k). Using the IRS Uniform Lifetime Table divisor of 24.6 for age 75, that first RMD ran roughly $122,000. She had budgeted for the federal income tax. She had not budgeted for the Medicare premium surcharges the same withdrawal will trigger two years later, or the ones already locked in for the two RMDs that follow.
Medicare's 2-year income lookback means three consecutive RMDs lock in three separate years of top-tier surcharges, totaling roughly $42,000 for the couple.
A qualified charitable distribution of up to $111,000 per person in 2026 can reduce MAGI enough to drop below the top IRMAA cliff and recover the surcharge.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Margaret turned 75 in March and took her first required minimum distribution from a $3 million traditional 401(k). Using the IRS Uniform Lifetime Table divisor of 24.6 for age 75, that first RMD ran roughly $122,000. She had budgeted for the federal income tax. She had not budgeted for the Medicare premium surcharges the same withdrawal will trigger two years later, or the ones already locked in for the two RMDs that follow.
3 months ago
Filing Form SSA-44 after retirement eliminates IRMAA surcharges built on prior-year income, saving top-tier enrollees $6,936 per year in avoidable Medicare premiums.
SSA-44 covers eight qualifying events including retirement and spousal death but cannot reverse voluntary income spikes like Roth conversions or RMDs.
A spouse's death halves IRMAA thresholds overnight, potentially triggering $6,355 in annual surcharges even when household income stays completely flat.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Two women retired from the same Boston law firm in March 2026. Both turned 65 that month, and both had identical 2024 W-2 income above $500,000. In April, each received a Medicare enrollment notice quoting a Part B premium of $689.90 per month. One paid it. The other filed Form SSA-44, attached proof that she had stopped working, and asked Social Security to use her lower 2026 income instead.
SSA-44 covers eight qualifying events including retirement and spousal death but cannot reverse voluntary income spikes like Roth conversions or RMDs.
A spouse's death halves IRMAA thresholds overnight, potentially triggering $6,355 in annual surcharges even when household income stays completely flat.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
Two women retired from the same Boston law firm in March 2026. Both turned 65 that month, and both had identical 2024 W-2 income above $500,000. In April, each received a Medicare enrollment notice quoting a Part B premium of $689.90 per month. One paid it. The other filed Form SSA-44, attached proof that she had stopped working, and asked Social Security to use her lower 2026 income instead.
3 months ago
The federal survivor annuity election is irrevocable, permanently cutting monthly checks by 10% and costing retirees roughly $90,000 in lifetime present-value income.
FEGLI Option B premiums double every five years past 60, often making private term life insurance a cheaper replacement for healthy retirees.
Rolling a TSP into a traditional IRA unlocks qualified charitable distributions up to $108,000 annually, satisfying RMDs without adding taxable income.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A 68-year-old federal retiree sits down with his account statements and has a startling revelation. His Thrift Savings Plan (TSP) holds $1.2 million, his FERS or CSRS annuity arrives like clockwork, and on paper he looks secure. The problem is the irrevocable survivor election he signed at retirement. Either he locked in a full survivor annuity that permanently reduces his monthly check by roughly 10%, or he waived it without modeling what that meant for his spouse. Either way, the present-value cost of that single signature looks like roughly $90,000 in lifetime income. He cannot undo it, but he can stop compounding the mistake.
FEGLI Option B premiums double every five years past 60, often making private term life insurance a cheaper replacement for healthy retirees.
Rolling a TSP into a traditional IRA unlocks qualified charitable distributions up to $108,000 annually, satisfying RMDs without adding taxable income.
Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.
A 68-year-old federal retiree sits down with his account statements and has a startling revelation. His Thrift Savings Plan (TSP) holds $1.2 million, his FERS or CSRS annuity arrives like clockwork, and on paper he looks secure. The problem is the irrevocable survivor election he signed at retirement. Either he locked in a full survivor annuity that permanently reduces his monthly check by roughly 10%, or he waived it without modeling what that meant for his spouse. Either way, the present-value cost of that single signature looks like roughly $90,000 in lifetime income. He cannot undo it, but he can stop compounding the mistake.
3 months ago
Starting 2026, earners over $150,000 lose the 401(k) catch-up deduction, costing a 32% bracket taxpayer roughly $2,560 in immediate tax shelter.
Forced RMDs from a $2.3M 401(k) at age 73 generate ordinary income taxed up to 40%, versus 23.8% on taxable brokerage gains.
Contribute only enough to capture the employer match, redirect between $12,000 and $16,000 annually to a taxable brokerage, and run Roth conversions before RMDs begin at 73.
A recent study identified one single habit that doubled Americans' retirement savings and moved retirement from dream, to reality. Read more here.
A reader on a Bogleheads forum recently posed the question that frames this entire piece: at 58 with $2.3 million already saved in a traditional 401(k), why keep stuffing more pretax dollars into an account future-you will hate?
Forced RMDs from a $2.3M 401(k) at age 73 generate ordinary income taxed up to 40%, versus 23.8% on taxable brokerage gains.
Contribute only enough to capture the employer match, redirect between $12,000 and $16,000 annually to a taxable brokerage, and run Roth conversions before RMDs begin at 73.
A recent study identified one single habit that doubled Americans' retirement savings and moved retirement from dream, to reality. Read more here.
A reader on a Bogleheads forum recently posed the question that frames this entire piece: at 58 with $2.3 million already saved in a traditional 401(k), why keep stuffing more pretax dollars into an account future-you will hate?
3 months ago
The One Big Beautiful Bill left RMD rules untouched, meaning retirees with $1.5M traditional accounts still face a forced $56,604 first withdrawal at 73.
Roth conversions in your 60s, Qualified Charitable Distributions up to $111,000, and moving to a no-income-tax state are the three strategies that actually reduce RMD tax exposure.
Waiting until 72 to start Roth conversions is the costliest mistake, because conversions then stack on top of mandatory RMDs instead of replacing them.
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
Many retirees spent 2025 hoping the One Big Beautiful Bill would shrink or scrap Required Minimum Distributions. The law rewrote brackets, made the higher standard deduction permanent, and added a new senior bonus deduction, but RMD rules sit exactly where SECURE 2.0 left them. For someone with a seven-figure traditional 401(k), that omission is the single most expensive line item in the entire bill.
Roth conversions in your 60s, Qualified Charitable Distributions up to $111,000, and moving to a no-income-tax state are the three strategies that actually reduce RMD tax exposure.
Waiting until 72 to start Roth conversions is the costliest mistake, because conversions then stack on top of mandatory RMDs instead of replacing them.
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
Many retirees spent 2025 hoping the One Big Beautiful Bill would shrink or scrap Required Minimum Distributions. The law rewrote brackets, made the higher standard deduction permanent, and added a new senior bonus deduction, but RMD rules sit exactly where SECURE 2.0 left them. For someone with a seven-figure traditional 401(k), that omission is the single most expensive line item in the entire bill.
3 months ago
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We have a combined pension and Social Security income of $8,400 per month that will only drop to $6,730 if one of us passes away. Our RMDs will start soon and we have $1.6 million in a 401(k) which we feel we can use a low-cost (expense ratio 0.12%) total return target fund to avoid the use of a robo-advisor that charges 0.3 – 0.8%. Plus, we have another $350,000 in Roths and a taxable brokerage account of $300,000 which RMDs would flow into. We own our home outright. In place of an annuity purchase can I simply use a target date fund in my IRA from which RMDs would be drawn automatically?
-JR
I hear a few different questions here, JR. First, should you purchase an annuity or rely on your investment portfolio? Next, is the cost of a robo-advisor worth it compared to a target date fund? And lastly, is a target date fund or robo-advisor sufficient for managing a portfolio like yours? Let’s dig into each of them to help you get some answers. (And if you need more help answering questions like these, consider speaking with a financial advisor.)
An annuity is a form of insurance. You purchase it with the expectation that over the long term, the cost will be greater than the benefit. But, as with other types of insurance, it protects against a key risk. In this case, that risk is the possibility of running out of money, especially if you live longer than expected.
We have a combined pension and Social Security income of $8,400 per month that will only drop to $6,730 if one of us passes away. Our RMDs will start soon and we have $1.6 million in a 401(k) which we feel we can use a low-cost (expense ratio 0.12%) total return target fund to avoid the use of a robo-advisor that charges 0.3 – 0.8%. Plus, we have another $350,000 in Roths and a taxable brokerage account of $300,000 which RMDs would flow into. We own our home outright. In place of an annuity purchase can I simply use a target date fund in my IRA from which RMDs would be drawn automatically?
-JR
I hear a few different questions here, JR. First, should you purchase an annuity or rely on your investment portfolio? Next, is the cost of a robo-advisor worth it compared to a target date fund? And lastly, is a target date fund or robo-advisor sufficient for managing a portfolio like yours? Let’s dig into each of them to help you get some answers. (And if you need more help answering questions like these, consider speaking with a financial advisor.)
An annuity is a form of insurance. You purchase it with the expectation that over the long term, the cost will be greater than the benefit. But, as with other types of insurance, it protects against a key risk. In this case, that risk is the possibility of running out of money, especially if you live longer than expected.
