New Year, New Retirement Withdrawal Strategy?

For retirees who are already receiving income from their 401(k) or other accounts, the new year is a great time to evaluate how their distributions and other withdrawals could be impacting their income taxes. For example:

  • Retirement accounts like 401(k)s are tax-sheltered, meaning the money goes into the account tax-free, and therefore taxes must be paid when the funds are withdrawn.
  • Roth IRA funds are taxed before going into the account, meaning retirees can make tax-free withdrawals. 

Between pensions, annuities, 401(k)s, Roth or traditional IRAs, stocks and bonds, many retirees will have a mix of both tax-sheltered and pre-taxed accounts. Understanding when to withdraw from each of them to help maximize tax savings could really add up over the course of your retirement. 

In the clip below, Heyday contributor, retirement author and professor of finance at York University, Dr. Moshe Milevsky, shares some high-level insights that may help minimize your tax liability in retirement. Of course, every situation is different, and retirees should always consult with their tax professional before changing their withdrawal strategy. 


Did you pass the quiz? 

In the specific example provided, the best withdrawal approach is the exact opposite of what most would expect… But you have to watch the video to see what it is! 

Taxation is one of many complex challenges retirees must navigate, and we recommend working with a tax professional to do so. 

There are several other key risks that should be addressed. To discover what they are and how to help address them, watch Dr. Milevsky’s on-demand presentation, The 7 Most Important Equations for Your Retirement

Be sure to meet with your advisor or financial representative to determine the best approach for your unique situation and goals.

If you’d like to speak with a Heyday Assistant about your retirement income strategy, schedule a complimentary call for a time that works best for you.

**Tax rates provided in the video are for illustrative purposes only. 

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Cindy Collins

Written by Cindy Collins

Forbes Contributor & Retirement Financial Professional

Cindy Collins is a Heyday Retirement contributor with over 30 years of experience in personal financial services.

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