Taxes are a vital component to consider when planning your retirement. Knowing how to manage your taxable income can be a feat in itself. There are options when choosing the right strategy to help minimize your taxes in retirement. Discuss which options can work with your retirement plan as you approach your retirement date.
1. Roth Conversions
If you have sizable balances in traditional IRAs or an employer plan such as a 401(k), the Required Minimum Distributions (RMDs) can represent a significant tax hit each year.
Is there a way around it? There can be with a little help from a RothIRA conversion. You can reduce your future income taxes by converting money from a traditional IRA or employer plan to a Roth IRA.
Lower RMDs mean less taxable income, resulting in lower taxes on Social Security benefits, lower Medicare premiums, and potentially more significant deductions for items tied to your Adjusted Gross Income (AGI). Reducing or eliminating RMDs through Roth conversions can dramatically impact your future tax costs.
*Converting from a traditional IRA to a Roth IRA is a taxable event.
2. Qualified Charitable Deductions (QCDs)
In 2025, if you turn 73 or are older, you may need to start taking the required minimum distributions (RMDs) from your retirement accounts. Failing to do so results in a hefty penalty—25% of the amount you should have withdrawn. But what if you don’t need the income? What if taking the RMD will increase your tax burden or Medicare insurance premiums?
To avoid receiving your RMD as income, you can transfer up to $111,000 from your IRA to a qualified charity. This satisfies your RMD and prevents additional income that would increase your tax burden. Importantly, a donation you make from income you’ve already received doesn’t qualify as a QCD.
Can I Do a Qualified Charitable Distribution From My IRA?
3. IRA Contributions beyond 73
The SECURE Act eliminated the maximum age limit for making traditional IRA contributions, allowing individuals to contribute at any age as long as they have earned income from employment or self‑employment. This rule applies in both 2025 and 2026. For 2025, the maximum IRA contribution is $7,000, or $8,000 for those age 50 and older, with contributions allowed through the unextended federal tax deadline of April 15, 2026. In 2026, the limit increases to $7,500, or $8,600 for those age 50 and older. Contributions are limited to earned income and apply to the combined total of traditional and Roth IRAs. Depending on income and whether you or your spouse are covered by a workplace retirement plan, contributions may be fully or partially deductible. While contributions are permitted after required minimum distributions begin, RMDs must still be taken and cannot be offset by new contributions.
Should I contribute to my Roth IRA vs. my Traditional IRA?
4. Deferring RMDs While Working
If you’re working past the age 73 you can postpone taking RMDs from your current employer’s 401(k), 403(b), or 457 plan, as long as you do not own 5% or more of the company. The employer must opt to offer this deferral.
If their plan allows it, you can potentially do a reverse rollover of an IRA or old 401(k) plan into this plan as well, given those funds were initially contributed on a pre-tax basis. These funds will not be subject to an RMD either. Before completing a Rollover,you should assess the quality of the investments offered by your current plan. RMDs connected with other retirement accounts must still be taken; this deferral does not apply to those accounts.
5. Age 65+ Updates
Need help with creating a tax-efficient retirement plan or have questions?
We believe offering stable strategies to help reduce taxes during retirement is equally valuable, as taxes can eat away at retirement income if not done properly.
If you have any questions or would like to discuss how these changes may affect you, please contact us- we're happy to help.