Protect · 25-page PDF
The Retirement Tax Traps Checklist
Most of us are trained to think about taxes one year at a time. Retirement is different.
How a decision you make this year can reach your Medicare premiums, a surviving spouse’s taxes, and your heirs, with eight checks to run while the choice is still yours.
Most of us are trained to think about taxes one year at a time. Retirement is different. A decision you make this year can affect your tax return today, your Medicare premiums later, the income a surviving spouse lives on, and eventually the tax treatment of money inherited by your children or grandchildren.
Why look past this year's tax bill?
Because today's decision doesn't stop on December 31. Say you're 62 and most of your retirement savings are in a traditional IRA. Leaving the account alone may produce the smallest tax bill this year, and that may be exactly the right decision.
But what could that account look like when required distributions begin? What happens if one spouse dies and the survivor's filing status changes? And if a large traditional IRA eventually passes to your children, what will the distribution rules mean for them?
A lower tax bracket is a reason to look. It isn't an automatic reason to convert.
What should you check before a retirement tax decision?
Eight things: the lower-income years after the paycheck stops, the year required distributions begin, the Medicare premium that looks back two years, how a withdrawal can make more of your Social Security taxable, the choices to check before money moves, the plan with only one spouse, what your beneficiaries inherit, and where you live.
You don't need exact answers 20 or 30 years in advance. The point is to know which choices are still yours to make, and what they could change later.
What this is, and is not
Eight short sections, each ending with a check you can fill in, with sourced charts of the current federal rules and a closing checklist you can work through on screen or print.
It is educational material, not individualized tax, legal, or investment advice. Tax laws, thresholds, agency guidance, and state rules can change. Verify the rules that apply when you make a decision.
Inside the guide
- How one decision travels. From this year's return to Medicare premiums later, a surviving spouse's income, and what your children or grandchildren inherit.
- The years when you have more control. The window after the paycheck stops, and why a lower bracket is a reason to look, not an automatic reason to convert.
- Required distributions and Medicare. The year the rules reach you, and how this year's income can show up in a premium two years later.
- Checks before the money moves. How a withdrawal can make more of your Social Security taxable, and company stock to review before a rollover.
- The plan with one spouse, and the next generation. The survivor's filing status and income, the 10-year rule, and the tax character of what you leave.
- Where you live, and your tax conversation. State taxes in the comparison, then a closing checklist to work through on screen or print.