A few tax-related topics come up regularly in conversations with people planning for retirement. Important disclaimer up front: I'm not a tax professional, and this is educational information — not tax advice. Please consult your CPA before making any tax-related decisions. That said, here are the areas worth discussing with them.
Roth conversions.
Moving money from a traditional IRA to a Roth means paying tax now so withdrawals later are tax-free. The window between retiring and starting Social Security (or required distributions) is often a low-income stretch where conversions can be done at lower rates. Whether it's worth it depends on your current bracket, your expected bracket, and how long the money can stay in the Roth.
Withdrawal order.
Which account you draw from first — taxable, tax-deferred, or Roth — can change your lifetime tax bill significantly. There's no universal right order; it depends on your brackets each year. This is worth modeling rather than guessing.
Social Security taxation.
Up to 85% of your benefit can be taxable depending on your other income. That means a withdrawal from an IRA can also raise the tax on your Social Security. People are regularly surprised by this.
Required minimum distributions.
Starting at 73, you must take distributions from traditional accounts whether you need the money or not. Planning for that in your sixties — rather than discovering it at 73 — gives you more options.
Where annuities fit.
A non-qualified annuity grows tax-deferred, which can help control the timing of taxable income. An annuity inside an IRA doesn't change the tax treatment, but it can give you a predictable income stream to plan around. Neither is a tax strategy on its own — they're tools that work alongside one.
Bring these topics to your CPA. And if you'd like to see how income timing and withdrawal order interact in your situation, that's a conversation I'm happy to have alongside them.
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Author of Indexed Annuity Secrets and founder of Pacific Ridgeway Insurance Solutions in San Diego. Navy veteran. Licensed financial professional, CA #4132743.
Fixed indexed annuities are insurance products, not investments. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This article is for educational purposes only and is not financial, investment, tax, or insurance advice.