Planning for retirement is a complicated yet essential goal for investors. Once you have accumulated sufficient assets to maintain your desired lifestyle for the next several decades, you may be ready to retire. However, you may have questions about how to determine your financial needs in retirement or in which order to withdraw from your retirement accounts. You may benefit from receiving retirement planning advice in Minneapolis, MN.
Withdrawal Order
First, you must take any required minimum distributions (RMDs) mandated by law. Next, you will need to decide which sources or a combination of sources to withdraw from to fund your living expenses. The amounts and accounts from which to withdraw will depend on your situation. Should you withdraw from your Roth accounts? Should you withdraw from your taxable accounts? Or a combination of both? Retirement planning advice in Minneapolis, MN can help you make decisions to maximize your tax efficiency and find your optimal tax scenario.
Roth Conversions
The order you access your accounts is an important decision. It may be possible to reduce your RMD obligations by reducing the amount of an IRA through partial Roth conversions. You can get a head start in paying income tax on your IRA withdrawals when you believe your income taxes will be lower. By doing a Roth conversion, you will increase funds in your Roth IRA, which can continue to grow free from tax. Planning for the future can be confusing. Obtaining retirement planning advice in Minneapolis, MN can help you as you make decisions.
