Retirement Tax Planning: Keep More of What You've Saved
You spent decades building your retirement savings. The tax decisions you make in the years leading up to — and during — retirement can mean the difference between keeping 75% of your income or keeping 90%. This guide covers the strategies that matter most.
Tax-Advantaged Accounts Compared
The foundation of retirement tax planning is understanding how each account type is taxed — when you put money in and when you take it out.
| Account | 2026 Limit | Tax on Contributions | Tax on Withdrawals | RMDs? |
|---|---|---|---|---|
| Traditional 401(k) | $23,500 ($31,000 if 50+) | Tax-deductible | Taxed as ordinary income | Yes, at age 73 |
| Roth 401(k) | $23,500 ($31,000 if 50+) | After-tax (no deduction) | Tax-free | No (after 2024) |
| Traditional IRA | $7,000 ($8,000 if 50+) | May be deductible | Taxed as ordinary income | Yes, at age 73 |
| Roth IRA | $7,000 ($8,000 if 50+) | After-tax (no deduction) | Tax-free | No |
Roth Conversion Strategy
A Roth conversion moves money from a traditional IRA or 401(k) into a Roth account. You pay income tax on the converted amount now, but all future growth and withdrawals are permanently tax-free. For many pre-retirees, this is the single most impactful tax planning move available.
When a Roth conversion makes the most sense
- You're in a lower tax bracket now than you expect in retirement
- You're in a gap year between leaving work and starting Social Security
- You want to reduce future RMDs and the taxes they trigger
- You want to leave tax-free money to heirs (Roth IRAs have no RMDs for the original owner)
- The market is down — converting when values are low means less tax on the conversion
The Roth Conversion Ladder
Instead of converting everything at once (which could push you into a much higher bracket), many planners recommend converting a portion each year — just enough to "fill up" your current tax bracket. Over 5-10 years, you can shift a substantial amount into Roth status while keeping each year's tax bill manageable.
Example: If you're in the 22% bracket with $15,000 of room before hitting 24%, you convert $15,000 per year. Over 10 years, that's $150,000 moved to Roth — all taxed at 22% instead of a potentially higher future rate.
Social Security Tax Planning
Whether your Social Security benefits are taxed — and how much — depends entirely on your "combined income" (AGI + nontaxable interest + half of your Social Security benefits). The key insight: the type of account you withdraw from affects this number.
Strategies to reduce Social Security taxation
- Draw from Roth accounts instead of traditional IRAs — Roth withdrawals don't count toward combined income
- Use qualified charitable distributions (QCDs) from your IRA to satisfy RMDs without increasing income
- Time your Social Security claim — delaying can increase benefits, but starting earlier at a lower income may mean less taxation
- Keep taxable investment income low in years you receive Social Security
Required Minimum Distribution (RMD) Planning
Once you reach age 73, the IRS requires you to withdraw a minimum amount from traditional IRAs and 401(k)s each year — whether you need the money or not. These withdrawals are taxed as ordinary income, and missing one triggers a steep penalty.
RMDs currently begin at age 73 for most retirement accounts. SECURE 2.0 will push this to age 75 in 2033.
Miss an RMD and you'll owe a 25% excise tax on the shortfall. Correct it within 2 years and the penalty drops to 10%.
At age 70½+, donate up to $105,000/year directly from your IRA to charity. Counts toward your RMD but is excluded from taxable income.
Tax-Efficient Withdrawal Order
The order in which you draw from your accounts matters as much as how much you withdraw. The right sequence keeps you in lower tax brackets and lets your most tax-advantaged money grow longest.
The nuance:Many financial planners recommend a blended approach — pulling some from each account type each year to "fill" lower tax brackets. For example, taking enough from a traditional IRA to fill the 12% bracket, then covering the rest of your spending from Roth and taxable accounts.
Retirement Tax Calculators
Run the numbers for your specific situation.
Social Security Tax Calculator
See how much of your benefits will be subject to federal income tax based on your total income and filing status.
Open tool →RMD Calculator
Calculate your required minimum distribution based on your account balance, age, and the IRS Uniform Lifetime Table.
Open tool →Compare IRA Accounts
Side-by-side comparison of the best IRA providers — fees, investment options, Roth availability, and customer support.
Open tool →Frequently Asked Questions
When should I start planning for retirement taxes?
Ideally in your 40s or 50s, well before retirement. The earlier you optimize your mix of pre-tax and after-tax accounts, plan Roth conversions, and structure your savings, the more flexibility you'll have to minimize taxes throughout retirement. Even small adjustments made 10-15 years before retirement can compound into tens of thousands in tax savings.
Is a Roth conversion worth it?
Often yes, especially if you expect to be in a higher tax bracket in retirement, want to reduce future required minimum distributions, or are in a temporarily low-income year. You pay income tax on the converted amount now at your current rate, but all future growth and withdrawals are tax-free. The key is timing conversions during years when your marginal rate is lower than what you expect in retirement.
What is the tax-efficient withdrawal order for retirement?
The generally recommended order is: (1) taxable brokerage accounts first, (2) tax-deferred accounts like traditional 401(k)s and IRAs second, and (3) Roth accounts last. This lets your Roth assets grow tax-free for as long as possible. However, many retirees benefit from a blended approach — withdrawing some from each account type each year to fill lower tax brackets optimally.
How much of Social Security is taxable?
Between 0% and 85% of your Social Security benefits may be subject to federal income tax, depending on your combined income (AGI + nontaxable interest + half of Social Security benefits). For single filers, benefits become partially taxable above $25,000 and up to 85% taxable above $34,000. For married filing jointly, the thresholds are $32,000 and $44,000 respectively.
What happens if I miss a required minimum distribution?
Missing an RMD triggers a 25% excise tax on the amount that should have been withdrawn but wasn't. If you correct the missed RMD within two years, the penalty is reduced to 10%. RMDs currently begin at age 73 and will start at age 75 beginning in 2033 under the SECURE 2.0 Act.
Can I reduce taxes on Social Security by using Roth withdrawals?
Yes. Roth IRA and Roth 401(k) distributions are not included in the combined income formula that determines how much of your Social Security is taxable. By drawing from Roth accounts instead of traditional accounts, you can keep your combined income below the taxation thresholds and potentially pay zero federal tax on your Social Security benefits.
Ready for Personalized Retirement Tax Advice?
Roth conversions, withdrawal sequencing, Social Security timing — every decision interacts with the others. A tax professional who specializes in retirement planning can build a strategy tailored to your numbers.
This page is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently — information may not reflect the most recent IRS guidance. Consult a qualified tax professional for advice specific to your situation.