Police Officers with Pension Income Want to Minimize Taxes & Retire in 5 Years

Summary

Jessica and Mark, two police officers nearing retirement, are seeking strategies to minimize taxes on their pension income and retire in five years with additional travel funds.

Abstract

Jessica, aged 51, and Mark, aged 54, are both anticipating substantial monthly pensions in five years, with Jessica receiving $5,600 and Mark$ 5,100, all taxable. They have accumulated significant savings in their 457 plans, with Jessica contributing $28k/year to her$ 722k balance and Mark contributing $26k/year to his$ 600k balance. Their goal is to have an extra $40,000 annually for travel with their children post-retirement. With a combined guaranteed pension income of$ 10,700/month and approximately $1.8M in taxable retirement assets, they are exploring tax mitigation strategies. Their proposed plan includes shifting to Roth 457 contributions, performing annual Roth conversions to transfer$ 1.5M into a tax-free environment before Required Minimum Distributions (RMDs) begin, and using a fixed annuity to cover vacation expenses and taxes without dipping into their principal.

Opinions

The author suggests that despite the pension income preventing a completely tax-free retirement, Jessica and Mark can still significantly reduce their tax burden.
The strategy emphasizes the importance of converting taxable retirement funds to a tax-free status through Roth contributions and conversions.
The author implies that careful planning can allow Jessica and Mark to maintain their desired lifestyle, including travel, in retirement while optimizing their tax position.
The use of a fixed annuity is recommended as a method to fund additional expenses and pay taxes without affecting the retirement savings principal.
The author is optimistic about the couple's ability to achieve their retirement goals through the outlined tax mitigation strategies.

⭐️ Tax mitigation strategy ⭐️

✅ STEP 1: Shift all contributions to Roth 457 (if available) until retirement

This should move $300k to a tax-free environment

✅ STEP 2: Perform $100k Roth conversion every year for 15 years

🌟 The goal is to convert $1.5M of taxable retirement money to tax-free environment BEFORE the required minimum distributions kick in

🌟 This can all be done optimally in the 24% tax bracket

✅ STEP 3: Utilize a fixed annuity to fund the vacation budget AND pay all the taxes without touching a dollar of principle 😏

Let’s chat 💬😎

Connect With Me & Access All My Resources Here

To your success,

Matt

Police Officers with Pension Income Want to Minimize Taxes & Retire in 5 Years

⭐️ Here are the details ⭐️

⭐️ Total Assets & Income at Retirement ⭐️

⭐️ Tax mitigation strategy ⭐️