Clients don’t always understand the interactions of different types of retirement income and how they are taxed. During a recent webinar, Joe Elsasser, president and founder of Covisum, a software company focusing on Social Security claiming strategies and tax efficiency, discussed ways to improve retirement income strategies.
Generally, withdrawing from traditional IRAs and 401(k) plans first and delaying Social Security benefits until full retirement age or later can reduce future required minimum distributions, extend portfolio longevity and optimize inflation-adjusted Social Security benefits for life.
Tapping the wrong accounts first can trigger higher taxes on capital gains and Social Security benefits and lead to Medicare premium surcharges.
