The retirement tax traps that catch new retirees
From the Social Security “tax torpedo” to required minimum distributions, timing your income matters more than ever.
Taxes do not stop when your paycheck does. In fact, the years just after retirement are when careful timing of income matters most — and when a few well-known traps catch people off guard.
The Social Security tax torpedo
As your other income rises, a growing share of your Social Security benefit can become taxable, creating surprisingly high marginal rates over certain income bands. Coordinating withdrawals can soften the blow.
Required minimum distributions
Once you reach the age for required minimum distributions, the IRS forces taxable withdrawals from traditional retirement accounts whether you need the money or not. Planning withdrawals in the lower-income years beforehand can reduce the lifetime tax bill.
About the author
Susan Reyes
Tax & Estate Columnist
Susan focuses on retirement taxation and estate planning, with an emphasis on the timing mistakes that catch new retirees off guard.
