Ask Terry Questions Taxes in Retirement

Taxes in Retirement

By Terry Savage on December 11, 2023 | Financial Planning / Retirement

My wife and I are both 71 yrs old and retired at age 65. We have 3 sources of monthly income, pension, SS, and Exec Defer Acct totaling $156,000. We have been blessed not having to withdraw from our 401K/IRA accounts. We donate to charities via QCD withdrawls from 401K/IRA accounts. How do I make withdrawls without being taxed to death. RMD withdrawls are close. Also, I have to take Medicare IRMMA into consideration. My financial planner missed the boat regarding taxes. How do I pay the least amount of Federal Taxes?

I enjoy your appearances on WGN.
Best Regards.

Terry Says

Well, with the type of income you have, it’s almost impossible to “avoid” or even reduce taxes!
It is all considered ordinary income. I’m assuming your Executive Deferred account doesn’t give you the opportunity to do a qualified rollover, and must be paid out on a schedule.

Aside from making your donations to a charity directly from your IRA, there are very few tax dodges. Until you are required to take RMDs in 2 years, you could make charitable donations out of your ordinary income, and itemize your taxes.

It doesn’t seem that your financial planner missed the boat. It seems your boat looks a bit more like a yacht! And you can’t hide that! You’re fortunate enough to have plenty of income. You should read some of the emails I get from seniors who are in the opposite position.

PS I assume you have made a current estate plan, and named current beneficiaries for your retirement accounts.

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