WATCH FOR TAX BRACKET CHANGES
Withdrawals from non-Roth retirement accounts can push you into a higher tax bracket. Bracket tax rates are referred to as “marginal” because they apply to your highest dollar of income. For example, you will pay only 10% in 2023 on income up to and including %11,000 if you are single. But you will pay 35% on income over $231,250. Capital gains are taxed separately, at their own rates, so this income won’t affect your bracket.
SPREAD OUT WITHDRAWALS
You might want to consider limiting your withdrawals to an amount that doesn’t bump you over into the next highest tax bracket.
You can take the extra step of strategizing your withdrawals before your retirement years to ensure that you have enough income to meet your needs while also minimizing your tax bill.
CINSIDER FULL RETIREMENT AGE
The amount you must take in required minimum distributions (RMDs) depends on the balance of your retirement account on the last day of the tax year and your life expectancy factor, which is determined by the IRS based on your age and other factors.
You must begin taking them at age 73, so if you turned 72 in 2023, the required date for your first RMD is April 1, 2025.
