Tax Strategy in Retirement

If you’ve been contributing regularly to qualified retirement plans like 401(k)s and IRAs, you may be looking at a sizable nest egg as you approach retirement age. Unfortunately, you’ll probably have a significant tax liability too and could lose 25–30% of these assets to taxes. Millions of Baby Boomers are in this situation, so you’re not alone in wondering how this happened and what can be done.

Unfortunately, almost everyone who’s retiring today heard the same message for decades: You’ll pay taxes on qualified retirement savings after you step out of the workforce and your tax bracket is lower. Instead, the opposite is true. You paid no income taxes whatsoever on contributions or earnings for years and years, so withdrawals for retirement income and minimum distribution requirements will be fully taxable. Chances are you’ll be paying Uncle Sam far more than you bargained for. The same goes for your non-spouse beneficiaries. With recent rule changes, beneficiaries who inherit tax-deferred plans (with the exception of spouses) must pay the total income taxes within 10 years. Just think about the implications for higher earning adult children whose tax bracket is already high.

It’s also important to consider where U.S. tax rates may be headed in the future. Without Congressional action, there’s speculation that the administration is eyeing additional tax increases to reduce the federal deficit and support new social programs. If that comes to pass, your tax burden will increase.

How We Can Help You Design a Tax-Efficient Strategy for Retirement Income

Fortunately, paying a high tax rate isn’t mandatory for retirees. There are steps you can take to manage your tax situation efficiently. Johnson Brunetti can help you gain tax relief on income from qualified plans, Social Security, and corporate pensions. We can also assist you in planning for tax-efficient wealth transfer.

Our strategies include spreading out your tax liability over a number of years or diversifying your savings across a mix of tax-deferred, taxable, and tax-free accounts. Using a Roth conversion can be a smart move for many pre-retirees as can directing future savings to a Roth account.

Income taxes are a complex subject, particularly within the context of retirement plans.

We’ll Put Our Knowledge and Experience to Work As We Address Your Biggest Tax Questions:

  • What will my tax liability will be in retirement?

  • Are there ways to reduce the income taxes on my retirement income?

  • How can I reduce the tax burden on my beneficiaries?

  • Will owning a Roth IRA account provide me with tax relief?

  • If I’m considering a Roth conversion, how much money can I move?

  • Are estate taxes relevant in my case?

  • If I need specialized income, gift, or estate tax advice, can you recommend a tax professional in my area?

Our Philosophy & Approach to Tax-Efficient Retirement Planning

1. We believe tax reduction is a major consideration in planning for retirement income

It’s not just gross income but net after-tax income that determines how well you live in retirement. We want to reduce your tax obligation so you can keep more of your income to spend on your needs.

2. We look at your lifetime tax obligation, not just your annual tax bill

Your retirement may last for decades. We believe a big-picture, long-term view of your tax situation is necessary to make the best recommendations for your financial future.

3. We encourage you to take action now, before tax rates increase

Tax rates and brackets aren’t static for long, and we think increases are in the offing for 2026 and beyond. Advance planning can be critical to giving less to Uncle Sam. If a Roth conversion is in your future, you may want to take action before taxes increase, required minimum distribution begin at age 72, and wealth transfer occurs.

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  • Sandy and Thomas C.
    Sandy & Thomas C. are clients of Johnson Brunetti and received no compensation for their statement.

    “We always felt our financial needs were in very capable hands. Alex Angst is great to work with. Our advisor always made us feel he had our best interests at heart and explained things so we could understand them.”

  • Robert G.
    Robert G. is a client of Johnson Brunetti and received no compensation for his statement.

    “We’ve been clients of Johnson-Brunetti for > 10 years. We’re enjoying a comfortable retirement as a result. Many thanks to Joel and our CFP, Eric Hogarth. I wish we had plugged into this decade approach back when we were in our 30s.”

  • Lisa D.
    Lisa D. is a client of Johnson Brunetti and received no compensation for her statement.

    “Working with Johnson Brunetti has had a positive impact on my life by providing me with the knowledge, confidence, and peace of mind to move forward with my retirement plans. The process of getting to this point, through their guidance, has been informative and pleasurable.”

  • Ken D.
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    “I view your company as one that puts my interests first. I think that is very uncommon and very refreshing. “

  • Jeanne P.
    Jeanne P. is a client of Johnson Brunetti and received no compensation for her statement.

    “Matt does an awesome job! So easy to understand and he listens to our concerns and addresses them! happy I chose your firm!”

  • Anonymous
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    “I have been pleased with the help and service I have received from the company. I have met several team members on Eric’s team and have found all of them very well prepared to meet with me when reviewing my portfolio. I always feel that I am an important customer and appreciate that very much. I hope the firm continues to focus on the customer and maintains its great service. I think you do a great job for someone like me!!!! I’m happy I chose your firm!”

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