For 30 or 40 years, the wealth management and tax side of saving for retirement stayed simple. You put money into a 401(k) or an IRA, took the deduction, and didn’t think about it again until April. Then the paychecks stop and you decide which account to pull from, in what order, and in which year. Every one of those decisions impacts your tax return.
Many of the retirees who sit down with us can name their account balances to the dollar. But far fewer can say what their tax bill will look like at 75, or why it may be larger than it is today.
Here are five strategies we return to often.
1. Decide Which Account You Draw From
Many households arrive at retirement with three kinds of accounts, each taxed differently:
- Taxable accounts (brokerage, savings, CDs): Tax is owed on interest, dividends, and realized gains each year.
- Tax-deferred accounts (traditional IRAs, 401(k)s, 403(b)s): Every dollar you withdraw counts as ordinary income.
- Tax-free accounts (Roth IRAs, Roth 401(k)s): Qualified withdrawals come out free of federal income tax.
Spending taxable money first, tax-deferred second, and Roth last is the common advice; it has logic behind it, but it can also leave a large traditional IRA untouched until required minimum distributions begin, depending on your birth year, at which point the income arrives whether you need it or not.
Drawing a measured amount from a traditional IRA each year, alongside taxable savings, can work better. In 2026, a married couple filing jointly stays in the 22 percent bracket up to $211,400 of taxable income, and the standard deduction for a couple who are both 65 or older starts at $35,500 before any temporary senior deduction you qualify for. Both figures are adjusted each year, so check the current numbers before planning around them.
2. Look at Roth Conversions Before Required Distributions Begin
A Roth conversion moves money from a traditional IRA into a Roth IRA. You pay ordinary income tax on the converted amount that year, and qualified withdrawals later are free of federal income tax, with no required distributions during your lifetime.
The typical window to look at is the stretch between the year you stop working and the year required distributions begin. Income is often lower then, so a conversion can be taxed at a rate below what you would face later. Converting in pieces can keep each year’s amount within a bracket you’ve chosen.
A conversion is permanent once completed, and the converted amount also counts as income for Medicare calculations.
3. Give From Your IRA With a Qualified Charitable Distribution
If you’re 70½ or older and you give to charity, a qualified charitable distribution (QCD) is often a tax-efficient way to do it. The money moves directly from your IRA custodian to the charity, never appears on your return as income, and counts toward your required distribution.
Gifts from your bank account only reduce taxes if you itemize, and many retirees take the standard deduction. A QCD keeps that amount out of your adjusted gross income either way, and that figure drives how much of your Social Security is taxed and which Medicare tier you fall into.
Two details to keep in mind: the eligibility age is 70½ rather than the age required distributions start, and the payment must travel from the custodian to the charity. A distribution paid to you first and then donated doesn’t qualify, and gifts to donor-advised funds and private foundations are not eligible. The IRS has the current rules and worksheets available.
4. Understand the Medicare Income Thresholds
Medicare Part B and Part D premiums rise once income passes certain levels. The surcharge is called the income-related monthly adjustment amount, or IRMAA, and it runs on a two-year delay: your 2026 premium is set by the income reported on your 2024 return. So a large conversion or a property sale this year shows up in your premium two years from now.
In 2026 the first threshold is $109,000 for a single filer and $218,000 for a couple filing jointly, and crossing that line by even a dollar moves you into a higher surcharge tier. The standard Part B premium in 2026 is $202.90 a month. CMS (Centers for Medicare and Medicaid Services) resets both the thresholds and premium each year, and Medicare.gov posts the current figures.
None of this means you shouldn’t convert to a Roth or sell appreciated property. It simply means you need to know where the lines are first. If your income fell because you retired, Form SSA-44 lets you ask Social Security to use a more recent year.
5. Plan for the Year One Spouse Is Filing Alone
Families often haven’t planned for this one, and the cost can be significant. When one spouse dies, the survivor generally files jointly for that year and as a single taxpayer afterward. Household income usually doesn’t drop by half. The brackets and the standard deduction do, and the Medicare thresholds shift to the single-filer levels at the same time.
The result is often a surviving spouse paying a higher tax rate on similar income. Roth conversions completed while both spouses are living can help, and so can a review of account titling and beneficiary designations. If you’re already in this situation, our insight into managing your finances after losing a spouse covers the first steps.
See Where You Stand Before December 31
These strategies all interact with each other.
A Roth conversion could change what you pay for Medicare two years later. A QCD can reduce the taxable portion of a required distribution. The order you draw from accounts sets the baseline for both.
Coordinating those pieces is part of what T. Ray Baker, CFP®, Gavin Baker, CFP®, Jackson Baker, and Chelsea Darrah, our Senior Client Relationship Manager, do with client families working alongside their CPAs. What that looks like depends on the engagement.
Whether you’re deciding whether you’re ready to retire or want a second look at income you’re already drawing, we’re glad to talk. Schedule a complimentary 15-minute call with The Baker Team by calling (972) 502-9340, emailing jackson.baker@parkwayteam.com, or booking online here. This call is a chance to see whether our services fit what you need, not personalized investment or tax advice.
Frequently Asked Questions
Which retirement account should I withdraw from first?
There’s no single correct order, though most plans start with taxable accounts, then tax-deferred, then Roth. A blended approach can work better: drawing a set amount from a traditional IRA each year alongside taxable savings can fill a lower bracket now and may reduce the required distributions you face at 73 or 75.
How much can I give through a qualified charitable distribution in 2026?
Up to $111,000 per person in 2026, or $222,000 for a married couple where each spouse has their own IRA and is at least 70½. The IRS raises that limit for inflation most years, so confirm the current one before you give. The money must move directly from your IRA custodian to the charity, it is excluded from your taxable income, and it counts toward your required minimum distribution for the year.
Is a Roth conversion a good idea after I retire?
It can make sense in the years between retiring and the start of required distributions, when income is temporarily low. Two things to weigh:
- The tax is due in the year you convert, and the decision cannot be reversed.
- The converted amount raises the income Medicare uses to set your premium two years later.
How do Roth conversions and large withdrawals affect Medicare premiums?
These actions increase the income Medicare uses to calculate your Part B and Part D premiums on a two-year delay. In 2026, surcharges begin for single filers earning over $109,000 and joint filers earning over $218,000, based on your 2024 tax return. Going over by even a dollar moves you into a higher surcharge tier. CMS sets these amounts each year.
Why do taxes usually go up for a widow or widower?
Because the survivor generally files as a single taxpayer starting the year after the death, with roughly half the brackets and standard deduction, while household income often stays similar. Our team works through this shift with clients in advance, since conversions and account titling are easier to address while both spouses are living.
About Jackson
Jackson Baker is a financial advisor at The Baker Team (located in Plano and Nacogdoches, Texas) who blends fresh insights with his family’s decades of experience to serve retirees and pre-retirees throughout Texas. Jackson is committed to a fiduciary standard and focuses on personalized strategies for retirement income, tax planning, and sequence-of-returns risk. He is not a licensed tax professional, and works alongside clients’ CPAs on the side. He aims to provide the long-term continuity as part of his multigenerational family practice.
Disclosure: This article is provided for informational and educational purposes only and does not constitute investment, tax, or legal advice, or a recommendation of any specific strategy. The strategies discussed are not suitable for every investor and their results depend on individual circumstances. Tax, Social Security, and Medicare rules change; figures cited reflect 2026 amounts published by the IRS, the Social Security Administration, and CMS and are subject to change. Please consult a qualified tax or legal professional regarding your particular situation. Advisory services offered through Parkway Wealth Management Group, LLC, an SEC-registered investment adviser. Registration does not imply any certain level of skill or training.
