What does this mean (excerpted from this article): Explore tax-efficient withdrawal strategies: Coordinate your RMDs with other sources of retirement income to minimize your tax bracket. By carefully managing the timing and amounts of withdrawals, you may be able to keep your income in lower tax brackets and reduce the overall tax impact.
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Hi BJ,
Thank you for bringing this up, and hopefully you found the answer before now!
Retirees sometimes have different accounts that make up their nest egg – individual (or joint) brokerage accounts, Roth IRAs, and Traditional IRAs or 401 (k) s, and of course, Social Security.
This article states that being strategic about where and how much you pull from each account can lower your overall tax liability.
For instance, if you need $100,000 a year to maintain your lifestyle in retirement and your RMD is only $30,000, it suggests being mindful of other sources you can draw on. If you limit the amount you pull from your pre-tax account to $30,000 to satisfy your required minimum distribution, then pull from other sources to make up the remaining $60,000.
If you’re nearing retirement, you may want to meet with a financial advisor who does heavy planning to map this out for you. Taxes, along with healthcare, are the biggest expenses in retirement.