Tax Planning in Retirement

Key Takeaways

• If retiring mid-year, increase your 401(k) contribution percentage in the months you work to maximize deferrals before retirement, and consider timing your retirement for early 2023 to avoid mandatory distributions if you're past RMD age
• For appreciated company stock in your retirement plan, consult a tax professional about using Net Unrealized Appreciation (NUA) strategies to pay capital gains rates instead of income tax rates on the growth portion
• Use tax loss harvesting by selling positions with losses and immediately buying a similar (but not identical) investment to capture the tax deduction while maintaining market exposure
• Before age 59.5, understand where your income will come from and explore Substantially Equal Periodic Payments (SEPP) as a penalty-free withdrawal strategy; avoid rolling over employer plans without checking for penalty-free distribution options
• In your 60s, focus on Roth conversions and monitor AGI to control Medicare costs; in your 70s, use Qualified Charitable Distributions (QCDs) if charitably inclined to satisfy RMDs while reducing taxable income, with RMD rules now starting at age 72