Summary

The article discusses strategies for withdrawing money from 401k's and IRA's tax-free in retirement, emphasizing the use of standard deductions and caution regarding required minimum distributions and social security taxation.

Abstract

The article "How To Take Money From 401k’s & IRA’s [100% Tax-free]" outlines methods for retirees to withdraw funds from their tax-deferred retirement accounts, such as 401k's and IRA's, without incurring taxes. It suggests leveraging the standard deduction, which is $27,700 for married couples and$ 13,850 for singles, to make tax-free withdrawals. The author advises that these withdrawals should be managed to avoid pushing the retiree into a higher tax bracket, especially considering the required minimum distributions (RMDs) that begin at age 72. The article also warns against increasing provisional income to a point where social security benefits become taxable. The author, Matt, encourages readers to consider Roth conversions and to connect with him for further resources on retirement planning and tax-efficient strategies.

Opinions

The author believes that while Roth conversions are valuable, not all funds should be converted to tax-free accounts.
Tax-deferred vehicles like 401k's and IRA's are considered the best place to save, but only up to a certain point due to future tax implications.
It is important to plan for RMDs to ensure they do not exceed the standard deduction, which would result in taxable income.
The author emphasizes the importance of managing withdrawals to prevent triggering taxation on social security benefits.
The article suggests that strategic planning can lead to a tax-free retirement, highlighting the significance of understanding and utilizing tax laws effectively.

How To Take Money From 401k’s & IRA’s [100% Tax-free]

(don’t forget to checkout the video too)

I talk frequently about repositioning money from your taxable retirement accounts to accounts that are tax-free in retirement.

This is often done with what’s called a Roth conversion.

This a valuable way to position yourself for a tax-free retirement! 😎

But, that doesn’t mean you want all of your money in a tax-free environment, like a Roth IRA or a cash value insurance policy.

The absolute best place for you to save is in your tax-deferred vehicles (like 401k’s, IRA’s, 403b’s, 457’s, etc.)

But only to a certain point… 🤯

That’s because these vehicles can be used to:

✅ Offset your income while you’re working (with a tax-deduction)

✅ Grow tax-deferred (meaning you push taxes out until retirement)

✅ AND, they can be taken out in retirement completely tax-free by leveraging your standard deduction. 🙌🏻

If you’re married your standard deduction is $27,700 and if you’re single it’s $13,850

That means that in any given year of retirement you can take that amount out of your TAXABLE environment completely tax-free.

You just have to be sure that the required minimum distributions that you are going to be forced to start taking (at age 72) aren’t higher than your standard deduction…

AND…. that the taxable money that you are taking out doesn’t push your provisional income high enough to trigger taxation on social security.

Let’s chat 💬😎

Connect With Me & Access All My Resources Here

Enjoy this blog? You’ll probably enjoy this one as well: Retirement Planning: Maximize Income First, Then Minimize Taxes

To your success,

Matt