Tips For Reducing Taxes During Your Retirement Years

There are many ways to reduce the amount of taxes that you pay during your retirement years. Some of these include:

• Maximizing the nontaxable amount of your retirement plan benefits by taking a lump sum distribution limited to your previous contributions.

• Planning the order and timing of (a) retirement plan rollovers and (b) IRA distributions – to maximize the nontaxable amount.

• Eliminating withholding tax on retirement plan distributions by making a trustee-to-trustee rollover to your IRA.

• Electing to defer tax on the distribution to you of your employer’s stocks and bonds.

• Carefully considering whether (and when) you should convert your regular IRA to a Roth IRA.

• Planning the order and timing of (a) retirement plan rollovers and (b) Roth IRA conversions to maximize the nontaxable amount.

• Reversing your previous conversion of an IRA to a Roth IRA – because of changed circumstances.

• Obtaining temporary use of retirement or IRA funds without paying tax or interest on the funds.

• Deferring or accelerate income or deductions between tax years to minimize tax on social security benefits.

• Choosing distribution alternatives that delay taxation of required minimum distributions from retirement plans and IRAs.

• Taking a partial lump sum distribution from a personally purchased annuity or a funded nonqualified plan after the annuity has started, rather than before.

• Carefully consider whether your rollover of retirement plan funds to an IRA should include your previous contributions to the plan.