The one-minute version
Here's the part most people miss: in retirement, you control where your income comes from — which means you have far more control over your tax bill than you ever did while working. Pulling from a traditional IRA, a Roth, a brokerage account, or Social Security each gets taxed differently. Coordinating which dollars you spend, and when, is where retirement tax planning lives.
How your income gets taxed
Your retirement money sits in three "tax buckets," each treated differently:
- Taxed as ordinary income: traditional IRA and 401(k) withdrawals, pensions, and most of Social Security. Taxed at your regular rate.
- Taxed at capital-gains rates: long-term gains in a regular brokerage account may qualify for lower rates; short-term gains are generally taxed as ordinary income.
- Tax-free: qualified Roth IRA/401(k) withdrawals and HSA funds used for qualified medical expenses. Roth qualification rules, including applicable five-year requirements, matter.
Most people retire heavy in the first bucket. The planning opportunity is shifting the balance over time so you're not forced into high-tax withdrawals later.
Required Minimum Distributions (RMDs)
The government eventually makes you withdraw from tax-deferred accounts whether you need the money or not. Under current law, RMDs start at age 73 (rising to 75 for those born in 1960 or later). Miss one and the penalty is steep — up to 25% of the shortfall.
The trap: large RMDs can push you into a higher bracket, increase how much of your Social Security is taxed, and even raise your Medicare premiums. Planning ahead in your 60s — before RMDs begin — is often where the biggest savings are won.
Estimate your required minimum distribution (RMD)
Once RMDs begin - age 73, or 75 if you were born in 1960 or later - the IRS requires a minimum withdrawal each year from tax-deferred accounts. This estimate is for 2026 owner RMDs from traditional IRAs using the Uniform Lifetime Table. Enter your age in 2026 and your December 31, 2025 balance. It does not cover inherited accounts or employer-plan exceptions.
Roth conversions
A Roth conversion means moving money from a traditional IRA to a Roth, including the taxable portion in income now in exchange for potential tax-free growth and qualified withdrawals later — with no lifetime RMDs for the Roth IRA owner. After-tax IRA basis and Roth five-year rules can affect the result. The sweet spot is often the lower-income window between retiring and when Social Security and RMDs begin, when you may be able to convert at a surprisingly low rate. Done well, it can shrink a lifetime tax bill meaningfully; done carelessly, it can increase income taxes in the conversion year and Medicare premiums generally two years later.
The window and the amount are specific to your situation. We'll model it.
How Social Security gets taxed
Whether your benefits are taxed depends on your "combined income" (adjusted gross income, plus tax-free interest, plus half your Social Security):
| Filing status | Up to 50% taxable | Up to 85% taxable |
|---|---|---|
| Single | $25,000–$34,000 | Over $34,000 |
| Married filing jointly | $32,000–$44,000 | Over $44,000 |
At most 85% of your benefit is taxable — never 100%. These thresholds aren't adjusted for inflation, so more retirees drift into taxation each year. How you draw from your other accounts directly affects how much of your benefit gets taxed.
Charitable giving: the QCD
If you are 70½ or older on the distribution date, a Qualified Charitable Distribution (QCD) lets you send funds directly from an eligible IRA to an eligible charity. The 2026 annual exclusion limit is $111,000 per person. A qualifying QCD can count toward your RMD and exclude the otherwise-taxable distribution from income, subject to IRS rules. Donor-advised funds and certain other organizations do not qualify, and you cannot also claim a charitable deduction for the excluded amount.
Beginning in 2026, eligible taxpayers who take the standard deduction may separately deduct up to $1,000 of qualifying cash gifts ($2,000 if married filing jointly). QCDs can still be valuable because an excluded distribution does not increase adjusted gross income. The right approach depends on the gift, account, and tax situation.
A QCD can satisfy your RMD and cut your tax bill at the same time — if it's done in the right order.
The ripple effects: IRMAA and the senior deduction
Two things worth building into the plan. First, IRMAA: high income raises your Medicare premiums two years later, so a big income year at 64 shows up as higher premiums at 66. Second, for 2025 through 2028, eligible people age 65 or older may claim an additional senior deduction of up to $6,000 each. It is available to eligible itemizers and nonitemizers and is separate from the age-based addition to the standard deduction. It phases out when modified adjusted gross income exceeds $75,000 for single filers or $150,000 for joint filers; married taxpayers must file jointly to claim it.
RMDs, Roth timing, Social Security, and Medicare all connect — let's map yours.
2026 numbers at a glance
Reflects SECURE 2.0, IRS 2026 inflation adjustments, and the 2025 tax law. Educational only; not investment, tax, or legal advice. Last reviewed: 2026.
Your employees keep asking you this, don't they?
These aren't questions HR should have to field. We teach this exact material to your team onsite or virtually — as a genuine employee benefit.
Free guidebook
Retirement Tax Guidebook
Your plain-English guide to RMDs, Roth conversions, QCDs, and keeping more of your retirement income.
Sources & review
These figures come from official government sources and are reviewed regularly. Figures are subject to change.
Last reviewed: June 2026 · Figures are subject to change. This page is educational only and is not personalized investment, tax, legal, or Medicare advice.