What is a Tax-efficient retirement withdrawal strategy?
A tax-efficient retirement withdrawal strategy is a structured plan for withdrawing funds from taxable, tax-deferred, and tax-free retirement accounts in a sequence that minimizes lifetime tax liability. This approach involves drawing from taxable brokerage accounts first, executing Roth conversions during lower-income years, and then using qualified charitable distributions to satisfy required minimum distributions. Proper sequencing of Traditional 401k withdrawals helps retirees control taxable income, avoid bracket escalation, reduce Medicare surcharges, and preserve their savings.
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