By Matt D’Amico, CFP®, ChFC®
Retirement doesn’t end your tax bill. In many cases, it’s actually when taxes become more complicated. How you withdraw and position your assets can have a bigger impact on your wealth than how you invested them in the first place. Strategic decisions made in your late 50s and early 60s can significantly influence taxes, income sustainability, and what ultimately passes to the next generation.
As you shift from accumulation to distribution, tax planning plays a significant role in preserving wealth and maintaining flexibility. For those nearing retirement or already retired, we recommend considering the following three smart tax planning moves.
1. Managing RMDs and Reduce Taxes
Required minimum distributions (RMDs) start at age 73 (for 2026), and missing them can carry severe penalties.
RMDs also provide opportunities for proactive tax planning. For example, consider a couple in Collierville with $2 million in traditional IRAs. At 73, their RMDs could be in the mid-$70,000 range annually, potentially pushing them into a higher tax bracket.
With careful planning, withdrawals can be structured to reduce taxes by using the following strategies:
- Timing distributions: Spacing RMD withdrawals throughout the year can manage taxable income and reduce the impact on Social Security taxation.
- Offsetting income with charitable contributions: Qualified charitable distributions (QCDs) allow retirees to donate up to $100,000 directly from an IRA. These donations count toward RMDs but aren’t taxed, lowering taxable income while supporting your favorite causes.
- Coordinating with other income sources: Rental income, dividends, or part-time consulting income can be factored into RMD planning to prevent unnecessary bracket creep.
Managing RMDs carefully can help to reduce lifetime taxes and create flexibility in retirement spending.
2. Using Roth Conversions Strategically
Roth conversions remain one of the most effective tax planning tools available to retirees, particularly during years when income is temporarily lower.
For example, a 60-year-old executive with $1.5 million in a traditional IRA may currently fall into the 35% federal tax bracket. Converting $100,000 annually to a Roth IRA over several years can spread the tax impact and reduce the risk of a single-year income spike. Over time, this approach can lower future RMDs and reduce taxable income later in retirement.
Key factors for strategic Roth conversions include:
- Current vs. future tax rates: Conversion opportunities are often most efficient during years with reduced income, large deductions, or business transitions.
- Partial conversions: Gradual conversions help manage marginal tax brackets and reduce exposure to surtaxes and Medicare IRMAA thresholds.
- Coordination with other planning areas: Pairing conversions with charitable giving, significant medical expenses, or changes in employment can enhance tax outcomes when timing aligns.
Roth assets also provide flexibility later in retirement, as withdrawals are tax-free and not subject to RMDs during the original owner’s lifetime.
3. Avoiding Hidden Tax Traps
Retirees often face tax pitfalls that are easy to overlook, so awareness and planning can prevent unnecessary losses.
Common traps include:
- Investment location mistakes: Placing highly taxed investments in taxable accounts instead of tax-advantaged accounts triggers avoidable capital gains taxes. Municipal bonds or index funds in taxable accounts and higher-growth equities in tax-deferred accounts improve after-tax returns.
- Social Security taxation: Over-withdrawing from taxable accounts in early retirement can increase the portion of Social Security that is taxable. Coordinating withdrawals with Social Security timing helps reduce exposure.
- Inheritance planning: Certain beneficiary designations, such as leaving an IRA to a non-spouse, can create significant tax obligations for heirs. Strategies like Roth conversions, QCDs, or life insurance help mitigate these taxes.
Even seemingly small missteps—like a $50,000 mismanaged distribution—can result in tens of thousands in additional taxes over retirement. Comprehensive planning helps avoid these costs.
Take Action: Smart Tax Planning Starts Now
Tax planning involves making intentional moves today to save money tomorrow. By managing RMDs carefully, using Roth conversions strategically, and avoiding hidden tax traps, retirees can preserve more wealth, reduce tax liabilities, and leave a stronger legacy.
Our team at Networth Advisors, LLC guides retirees through these decisions with real-world projections and strategies. Our goal is to help high-income clients, especially those aged 55–65, align retirement income, legacy goals, and life plans with tax-efficient strategies.
Ready to take control of your taxes and enjoy a confident 2026 and retirement?
Schedule a meeting with us by calling (800) 822-3639 or emailing schedule@networthadvisorsllc.com.
Frequently Asked Questions
Why is tax planning especially important once you reach retirement?
In retirement, taxes are driven less by what you earn and more by how and when you withdraw assets. Thoughtful tax planning helps retirees manage RMDs, reduce unnecessary income spikes, and preserve flexibility so retirement income lasts longer and supports long-term goals.
What tax planning strategies can help reduce required minimum distribution taxes?
Tax planning strategies for RMDs often include coordinating withdrawals with other income sources, using qualified charitable distributions, and timing distributions to manage tax brackets. These approaches can help reduce lifetime taxes while supporting charitable and spending priorities in retirement.
How can a financial advisor help retirees with ongoing tax planning?
A financial advisor can help integrate tax planning with retirement income, investment strategy, and legacy goals. At Networth Advisors, retirees receive guidance on RMD management, Roth conversions, and avoiding hidden tax traps so tax decisions support a confident, sustainable retirement rather than creating unnecessary surprises.
About Matt
Matt D’Amico, CFP®, ChFC®, is a registered Investment Adviser Representative and financial advisor at Networth Advisors, LLC, a financial planning and wealth management firm in Canonsburg, PA. The firm is dedicated to helping clients enjoy a successful retirement, specializing in income planning and legacy preservation for pre-retirees and retirees. Matt excels at simplifying complex retirement concerns to help clients make smart financial decisions.
Matt discovered his passion for finance in college, inspired by a trusted mentor, and earned a degree in finance and business management from Saint Vincent College. Before joining Networth Advisors, he gained valuable experience at New York Life and MassMutual, where he obtained his Life, Accident & Health Insurance Licenses. Matt is also a CERTIFIED FINANCIAL PLANNER® professional and Chartered Financial Consultant®.
Outside of work, Matt is a sports junkie and music enthusiast. He enjoys spending time with friends, embarking on adventures with his wife, Kayla, and their mini labradoodle, Nellie. He is also the co-author of Networth for Retirement: Mapping Out Your Journey. To learn more about Matt, connect with him on LinkedIn.
