{"id":1599,"date":"2026-05-05T00:47:04","date_gmt":"2026-05-05T00:47:04","guid":{"rendered":"https:\/\/gw.adampg777.com\/?p=1599"},"modified":"2026-05-05T00:47:04","modified_gmt":"2026-05-05T00:47:04","slug":"taxes-in-retirement-what-to-know","status":"publish","type":"post","link":"https:\/\/gw.adampg777.com\/?p=1599","title":{"rendered":"Taxes in retirement \u2013 what to know"},"content":{"rendered":"
<\/p>\n
As investors approach retirement, one common misconception is that their taxes will be significantly lower than when they were working. While this might be the case for some retirees, the reality is that for many people taxes in retirement are a significant expense item.<\/p>\n
Here is a look at some planning issues to consider when managing taxes in retirement.<\/p>\n
Retirement accounts<\/strong><\/h2>\n
One of the biggest sources of taxable income is traditional IRA withdrawals, 401(k) withdrawals, and distributions from other traditional retirement accounts, such as 403(b)s and employer and self-employed retirement accounts. Traditional accounts, where money is contributed on a pre-tax basis, are taxed as ordinary income when withdrawn. If money is withdrawn prior to age 59 \u00bd, there is also an early withdrawal penalty in most cases.<\/p>\n
RMDs<\/strong><\/h2>\n
401(k) withdrawals and other distributions from traditional retirement accounts can be managed until you reach age 73, the age when required minimum distributions (RMDs) commence. At that point, the RMD rules require a specific withdrawal amount each year; these distributions are fully taxable. For those with large balances in their retirement accounts, RMDs can be substantial and can have significant consequences for your tax bill, according to Fidelity.<\/p>\n
Roth accounts and Roth conversions<\/strong><\/h2>\n
Roth IRAs, 401(k)s and other Roth retirement accounts work in the opposite way from traditional retirement accounts. Contributions are made with after-tax dollars and these do not offer any tax advantage in the year of the contribution. However, Roth accounts can be withdrawn tax-free as long as the distributions are qualified.<\/p>\n
Another great feature of Roth IRAs and other types of Roth retirement accounts is that they are not subject to RMDs. This can be a significant tax savings in retirement for many investors.<\/p>\n
More Retirement<\/strong><\/p>\n
\n
Bank of America spotlights 401(k) tips you overlook\u00a0<\/strong><\/li>\n
Tennessee tax perks retirees should know<\/strong><\/li>\n
Key social security updates you need to know for the rest of 2026<\/strong><\/li>\n<\/ul>\n
Roth conversions can be a way to reduce taxes in retirement, but they are a double-edged sword: when converting a traditional IRA or 401(k) to a Roth IRA, the money converted is subject to taxes. <\/p>\n
Timing can be key; many retirees complete conversions during their \u201cgap\u201d period, early in retirement, before they enroll in Social Security. According to Fidelity, there are several factors to consider when determining whether and when a Roth conversion is right for you.<\/p>\n
QCDs<\/strong><\/h2>\n
Qualified charitable distributions or QCDs allow owners of traditional IRA accounts to take distributions from their account and direct them to a qualified charitable organization. They must be 70 \u00bd or older to do this.<\/p>\n
The money taken as a QCD is not taxed and can be a way to reduce RMDs for those who have reached the age where they have commenced. QCDs can count toward their RMD for the year as long as the QCD is made before the RMD is satisfied. QCDs made before the commencement of RMDs will reduce the IRA balance and, in turn, the amount of future RMDs. QCDs can be a very tax-efficient way to make charitable contributions.<\/p>\n
Taxes and Social Security<\/strong><\/h2>\n
The IRS reminds taxpayers that their Social Security benefits may be taxable. This doesn\u2019t mean that the IRS taxes the benefit directly, but rather based on your income a portion of your Social Security benefit may be included in your taxable income. The limits are:<\/p>\n
Fifty percent of your benefit might be taxable if:<\/p>\n
\n
If you file as single, head of household or a qualifying widow and your income is in the $25,000 to $34,000 range.<\/li>\n
Married filing separately and lived apart from your spouse for the year and your income is in the $25,000 to $34,000 range.<\/li>\n
Married filing jointly with income in the $32,000 to $44,000 range.<\/li>\n<\/ul>\n
Up to 85% of your benefit might be taxable if:<\/p>\n
\n
You file as single, head of household or qualifying widow or widower with income of more than $34,000.<\/li>\n
Married filing jointly with income in excess of $44,000<\/li>\n
Married filing separately and lived apart from your spouse for the year and your income was more than $34,000.<\/li>\n
Married and filing separately but lived with your spouse at any time during the year.<\/li>\n<\/ul>\n
Most states don\u2019t tax Social Security benefits, but it is important to check the rules in your state.<\/p>\n\n
Taxes in retirement can be an unpleasant surprise for many.<\/p>\n
JLco Julia Amaral/Shutterstock<\/p>\n<\/figcaption><\/figure>\n
Earnings from employment<\/strong><\/h2>\n
Many people are working longer and may have earnings from employment or self-employment during their normal retirement years. These earnings must be taken into account in doing your tax planning around retirement accounts, Social Security and other forms of retirement income.<\/p>\n
Pensions<\/h2>\n
Though less common than in the past, if you were covered by a defined benefit pension plan from an employer, this income is generally taxable at the federal level. It may or may not be taxable at the state level.<\/p>\n
Retirement tax planning <\/h2>\n
Taxes can take a big bite out of your retirement income. Tax planning is critical before retirement and ongoing during retirement to minimize the tax impact to the extent possible.<\/p>\n
Related: Roth 401k match could trigger a surprise tax bill<\/strong><\/p>\n
As investors approach retirement, one common misconception is that their taxes will be significantly lower than when they were working. While this might be the case for some retirees, the… <\/p>\n","protected":false},"author":1,"featured_media":1600,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[208,417],"class_list":["post-1599","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-retirement","tag-taxes"],"_links":{"self":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1599"}],"version-history":[{"count":0,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1599\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/media\/1600"}],"wp:attachment":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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