Arvin Ash

Retirement Money Withdrawal Strategies to Minimize taxes (2019x18)

Udgivelsesdato: Apr 05, 2019

The worst way to withdraw money during retirement? No matter how old you are, retirement is approaching or is already here. This means that you are going to have to withdraw some of the money you worked your whole life to save. But there’s a way to withdraw this money so that you don’t end up putting it in Uncle Sam’s pocket instead of your own. You need to minimize taxes, and keeping your investments working for you for as long as possible.In fact, if you withdraw money the wrong way, it could cost you tens or even hundreds of thousands of dollars in lost potential gains and unnecessary taxes. First you should always withdraw from your taxable investment income first. This means withdraw the dividends and capital gains that you have earned on your investments every year. Why? Because you have already paid taxes on these, so keeping them in the investment is not saving you any taxes. And Municipal bond income, if you have it in your taxable account should be the first one to draw on because all interest is completely federal tax free. But otherwise dividends and interest income should be your first tap. If you are seventy and a half, the federal government requires that you withdraw a certain portion of your IRA. This is called RMD or Required Minimum Distribution. Uncle Sam does this because they want their money, and they don’t want you to sit on it forever. They think that once you’re 70, you should start withdrawing it, so that you can pay your taxes on them before you die. And if you don’t withdraw, they will penalize you. So you have to do this first because otherwise you end up paying a hefty penalty if you don’t. It is almost never a good idea to not withdraw the required amount, and instead pay the penalty. However, if you are not 70 and a half, and you don’t need to withdraw from an IRA, then don’t withdraw. The reason is that the Federal government is allowing this investment to grow tax free until you withdraw. This means that