The order in which you take distributions from your retirement accounts absolutely matters in retirement. If you don’t have a formal withdraw strategy it could end up costing you more in taxes long-term, causing you to deplete your retirement assets faster, pay higher Medicare premiums, and reduce the amount of inheritance that your heirs would have received. Retirees will frequently have some combination of the following income and assets in retirement:
• Pretax 401(k) and IRA’s
• Roth IRA IRA’s
• After tax brokerage accounts
• Social Security
• Pensions
• Annuities
As Certified Financial Planner’s®, we look at an individual’s income needs, long-term goals, and map out the optimal withdraw strategy. In this article, I will be sharing with you some of the considerations that we use with our clients when determining the optimal withdrawal strategy.
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I just filed for SS and I'm receiving a pension from a employer where I paid both social security taxes and contributed to said pension. Residing in CA, I understood that my SS income would not get taxed either federally or by the state. Is that correct? Because you indicate in your video that SS is taxed. Thanks.
Wait to 70 to retire, and die at 71, that would suck ass
Nobody can become financially successful over night. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals.
Social security will be dead by 2030
Thank you Sir for all your tips!!!!!
I REALIZED THE SECRETE TO MAKING MILLIONS, IS SAVING FOR A BETTER INVESTMENT. I ALWAYS
TELL MYSELF I DON'T NEED A NEW MASERATI OR AN EXPENSIVE VACATION JUST YET.
THAT SINGLE MINDSET HELPED ME TO MAKE MORE MONEY INVESTING.
I MAKE STEADY WEEKLY PROFIT. I ALSO WORK? IT IS GOOD
TO HAVE MORE THAN ONE STREAM OF INCOME.
Fact is, though the 401k, IRA, name it are one of the safest retirement plans, they are not particularly good options. Better strategy; Live below your means, Invest 20-30% of your income into the stock market but of course, be well informed about where you want to put your money… I made my first million earlier this year from stocks alone with about 550k after I dissolved my 401k and added little cash (through the help of a pro though). Greatest decision I ever made.
Wow, I didn't know that Roth's are not protected for Medicaid. If folks are worried better off start taking distribution early as possible & gift away die with zero that's our plan.
Very insightful thanks for the good information
Thank you, great video. I didn’t know about the first $20,000, looking into it.
My question is should you delay social security to maximize the amount you will earn at age 70 or should you take social security at full retirement age and take RMD early? And how do you dine a calculator for these types of decisions?
Roth 401k has an RMD unless you roll it into a ROTH IRA. So for clarity, might want to call that out. And also I think you want to have the ROTH IRA you will move all that roth 401k money into open with some funding in it 5 years in advance or withdrawls would be taxable inside a 5 year period.
THINKING OF LIFE AFTER RETIREMENT is really a pain in the ass…. What’s the best advice for someone worried over Retirement.
I am a single mom, 59 years old, with a disable kid . I want to ensure that my kid , now 26, get part of my 401k money, tax free.
I will have a small pension, social security and probably around 85-100k in 401k at 65 ,and I recently started a Roth. What should be the best strategy to avoid or reduce taxes and ensure my kid future? Thanks in advance.
Only a NY Liberal Dem would think that "buying a second house" is something normal that most people do. Hard working Americans in the middle class (not talking about minimum wage earners) work hard and need as much help in retirement as possible. Oh, and when you NY Libs move into other states for low taxes, leave your Dem votes behind. Those of us who live in states that favor middle class workers, dont need you turning our states into bastions of Liberal policies (high taxes, high crime, poor education). Just stay in NY!!!!!
So as i understand converting; If i am going to be in about the same tax bracket it is still worth converting when i turn 60 as the earning will then be tax free in the future; but if i get sick and it is in a roth Medicare or the states can take the Roth whereas they can only get the RMD from standard account. Seems like after calculating all the possible issue to convert or not is a coin flip. No way to know it is beneficial until years later.
A Roll Out from a Traditional 401K to IUL seems to be a better deal to decrease tax liabilities…
As many have said below, great job on the video. What I appreciate most is that you’ve compiled a number of subjects into one easy to understand video. It’s that, a starting point.
Very much enjoyed your video. Any chance you can recommend anybody in the Richmond Va area that you know or have dealt with that deals with this subject? Thks
8:30 A very good advice to project out the RMDs.
Excellent info. Thank you. Just subscribed!
excellent information
Thanks for the information you answered some of my questions
My friend works for a tax firm. Every time he hears me complain about how much tax I owe, he says, "That's great. You made some good money."
Great video! Best one I've seen on the topic … and it's NY focused! Thank you!
Great content, thank you!
Thank you. one of the best.
one problem with ROTH IRA (if it is your last to draw from) is that they do not have the step up basis. Your heirs are going to pay based on YOUR basis, not the time of death basis.
Very informative. Thank you!
Great information!
What about the assets in annuity? We have investment in Annuity?
It was mentioned here that after-tax money can be spent with no tax consequences. Not true. Long term investments in, for example, mutual funds can have significant value above the basis that generate capital gains at a 15% tax rate.
There are RMDs for ROTH 401k accounts. ROTH IRA accounts do not have RMDs. I plan to transfer my ROTH 401k to my ROTH IRA to avoid RMDs.
I have a few 401k accounts with different amounts I want to retire early 55 if I want to get money out do I need to take the whole amount in the account? Or can I take part of it? I only need $40k a year it would be good if I could just take when I need and pay tax on that amount
“Let it accumulate for another 10 years” Sure. But if there’s a 50% to 70% market crash you will die before you can recover, and there are no do-overs. Don’t risk what you have and need for what you don’t need. Your kids can save their own money.
By living frugally and saving after tax money, I won’t have to touch my 401k until minimum distributions. I’m not worrying about taxes in retirement. If you have to pay a lot of income tax after you retire then you’re a winner.
Wow I’m so glad I fell upon your channel! Very informative. I didn’t know about this first 20% not being taxed on each year in a pre taxed account like an IRA. I need to check if they have this in Minnesota where my husband and I plan to retire. Also I wasn’t aware of RMDs – good to know.
Thank You for these very informative videos. You mentioned that NY has a provision that allows for a 20k for individual or 40k for married couple to withdraw every year from their pre-tax IRA free from NY state tax but not Federal. Would that 20k or 40k be looked at as income for a determine to see if someone would or would not qualify for Medicaid?
Great explanation! Thanks!
Good presentation, Sir! If I may add one opinion…
8:30 – I agree with the Concept of potentially taking early Distributions from Non-Roth IRAs in order to reduce future taxes. But an additional Point to consider…
Much of my Rollover IRA is in a Mutual Fund. While I do not believe we will relive 2008/2009, I do believe the Stock Market is due for a "significant downturn" in less than five years, quite possibly MUCH Less. If/when that happens, I plan to Roth convert as many shares of my Mutual Fund as I can (while they are "on sale"), up to the very top of my current tax bracket, or even go up one if it is a small incremental rate. Some of your readers in a similar Situation might want to keep this in mind when they are looking at the timing for such Distributions or Conversions. BTW, the rest of my Rollover IRA and ALL of my Traditional IRA are in cash. So, that downturn will not prevent me from sleeping well at night. I have LONG been a fan of the "Barbell Strategy."
Thank you for a Job Well Done, Sir! Cheers and All Best!
I have a question:
– I opened the Roth in 2020 (age 67) with $5.
– In 2021, I did a conversion of $10k (from a Traditional IRA).
– In 2022, I did another conversions of 15k.
– Let’s assume that NONE of my Roth had ANY gains, ever!
Having no gains, will I be able to withdraw any amounts, at any time, penalty free? Or must I still endure waiting period(s)?
I have a question:
– I opened the Roth in 2020 (age 67) with $5.
– In 2021, I did a conversion of $10k (from a Traditional IRA).
– In 2022, I did another conversions of 15k.
– Let’s assume that NONE of my Roth had ANY gains, ever!
Having no gains, will I be able to withdraw any amounts, at any time, penalty free? Or must I still endure waiting period(s)?
Some pensions also have a COLA tied to them not just SS. Some Annunites as well.