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How the “Conventional Wisdom” May Cost You in Taxes

I’m Damon Accardi, President and Wealth Strategist at Accardi Financial Group. Many believe the typical financial advice for retirees to spend taxable funds first and let tax-deferred accounts like IRAs grow untouched until Required Minimum Distribution (RMD) age is sound. However, this “conventional wisdom” could be costing you significantly in taxes.

Waiting to access your retirement funds may not be wise

Why is deferring taxes considered beneficial? Most people dislike paying taxes and prefer to delay them as long as possible. But under our progressive tax system, where tax rates increase with income, this strategy can lead to higher taxes later. By using lower tax brackets more effectively now, you might keep your overall tax expenses lower in the future.

By challenging the conventional approach and starting to withdraw from your tax-deferred accounts in the first year of retirement, you could significantly lower your tax expenses over the long haul. Reducing your IRA balance early on instead of letting it grow untethered can diminish the amount you will need to withdraw at age 73 or 75, thereby managing future tax impacts more effectively.

Large balances in IRAs can force retirees to withdraw more than needed once RMDs kick in, taxed at ordinary income rates. This excess income can increase your tax liability on other income sources, like Social Security, due to the “ripple effect.” Proactively reducing your tax-deferred balances before RMD age can prevent this scenario.

How adjusted withdrawal strategies can benefit you

At Accardi Financial Group, we specialize in tailored tax management strategies that defy outdated norms. We can help evaluate whether this approach fits your unique financial situation. If you’re interested in possibly saving significantly on taxes by steering clear of conventional wisdom, our advisors are here to conduct a thorough review and guide you through optimizing your retirement planning.

Are you ready to rethink your retirement tax strategy? Contact us today! We’re prepared to answer your questions and help you prevent a larger tax bill in the future. Let us show you how a personalized approach to tax management can lead to substantial savings.


Important Information

The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. 

Examples cited are hypothetical, are for illustrative purposes only, are not guaranteed and subject to potential federal and state law amendments. There is no guarantee that you will achieve the results discussed or illustrated.

IRA withdrawals will be taxed at ordinary income rates. Withdrawals prior to age 59½ may also be subject to a 10% penalty tax. 

Roth IRA distributions of principal from a Roth IRA are tax-free; however, any earnings will be taxed at ordinary income rates and a 10% penalty tax will apply if withdrawn prior to age 59½ or within five years of the date the Roth IRA was established, whichever is longer. 

401(k) benefits may be subject to change at your employer, the governing pension, or benefit organization’s discretion.

The information provided is based on current laws, which are subject to change at any time. Accardi Financial Group is not affiliated with or endorsed by the Social Security Administration or any government agency.

Social Security rules can be complex. For more information about Social Security benefits, visit the SSA website at www.ssa.gov, or call (800) 772-1213 to speak with an SSA representative.

This material was prepared by Lucia Capital Group.

Damon Accardi is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the respective names Lucia Capital Group and Accardi Financial Group which are separate entities from LPL Financial. LPL ART-???? (08/24)