Here are some additional baby boomer tax tips for portfolio income in your retirement years. These tips are regarding IRA’s and how to withdraw money from them in the most tax advantage manner.
Boomers that have a substantial amount of appreciated securities should withdraw money from their IRA’s before taking the gains from those securities in taxable accounts. As long as the stocks produce small dividends, the tax burden will be minimal. The exception to this rule is when taxable accounts consist of mutual funds that generate capital gains distributions. When this occurs, the mutual funds need to be sold before withdrawing money from the IRA.
Typically a boomer should take IRA distributions after the age of 70 (70 and one half to be exact). The benefits of waiting are:
The IRA will continue to compound on a tax-deferred basis
There will be no change in the clients AGI (adjusted gross income)
The boomer can leave greater amounts of the IRA to heirs
IRA’s a great way to save money for retirement and tapping into them at the right time will produce benefits that won’t strain your budget at tax time. As always check with your financial advisor to see if these tips can work for you.
Until next time, keep your Business N Synergy.
Brian N. Stovall