Tax Strategies
In short
Most of what you have saved has probably never been taxed. When it comes out, and from which account, is a planning decision we work through with your tax professional rather than around them.
Tax planning in retirement decides when income appears on your return and which account it comes from. Tax-deferred, taxable and Roth accounts are taxed differently, and the choice affects your bracket, the tax on your Social Security, your Medicare premium two years later and your required distributions. Oliver Wealth Management does not prepare tax returns or give tax advice; we build the plan and coordinate with your CPA, who confirms it before you act.
What we do, and what your CPA does
Oliver Wealth Management does not prepare tax returns and does not give tax advice. We will not tell you how a rule applies to you or what belongs on a form; that is your CPA’s work. We model the decisions that have a tax effect, show you the result in plain numbers, and send it to your tax professional to confirm.
Florida does not tax the income of individuals, so there is no state layer here. Federal tax still applies in full, and residency has to be genuine and documented, which is a question for your tax professional.
Three kinds of accounts, three kinds of tax
Most people reach retirement with money in at least two of these. The same investment can leave you with a different amount after tax depending on which account holds it.
Tax-deferred: traditional 401(k), 403(b) and IRA balances. Withdrawals are generally included in your taxable income in the year you take them.
Taxable: a brokerage or bank account. Interest and dividends are taxed in the year they are paid, and a sale can produce a capital gain.
Roth: money that has already been taxed. Qualified distributions are tax-free, and the IRS does not require a Roth IRA owner to take withdrawals during their lifetime.
Withdrawal order, and the bracket you land in
Part of your income is fixed: a pension, interest and dividends, Social Security once you claim it, and required distributions once they begin. Everything above that is a choice, and it sets the bracket your last dollar falls into. The IRS taxes Social Security based on your other income, so a large withdrawal can raise the tax on a benefit you never touched.
Required minimum distributions begin at the age the IRS sets and are generally taxable, so a balance left alone for years can mean required withdrawals larger than you need. That is easier to plan for ten years early.
Roth conversions before required distributions
There is often a window between the last paycheck and the start of Social Security and required distributions, when income is lowest and most controllable. A Roth conversion then means paying tax now, since the IRS counts the converted amount as income, for an account whose qualified distributions are tax-free.
Converting too much can push you into a higher bracket or raise your Medicare premium two years later, and converting nothing is a legitimate outcome. Your tax professional confirms the decision before you act.
Who this is for
Most of what you saved sits in a 401(k) or traditional IRA, and none of it has been taxed yet.
You have retired, or you are close, and no paycheck decides your taxable income for you now.
Your CPA files the return in April, and nobody looks at the year while it can still change.
You moved to Florida from a state that taxed your income and are not sure what that changed.
Worth thinking about
Which account would your next withdrawal come from, and why that one?
Where does your income land this year, and will next year look different?
What will required withdrawals look like if your tax-deferred balance keeps growing?
Does your CPA hear about a large withdrawal or a conversion before the year ends, or after?
If you give to charity each year, which account does that money come from?
Common questions
Do you prepare my taxes?
No. We do not prepare returns and we do not give tax advice. We plan the decisions that end up on a return, such as which account a withdrawal comes from, and your CPA or tax professional confirms them. If you do not have one, we will work alongside whoever you choose.
Should I do a Roth conversion?
It depends on the year in front of you, the rest of your income and where the tax would be paid from. A conversion can help when income is unusually low, before Social Security and required distributions begin, and hurt if it lifts your bracket or your Medicare premium two years later. Sometimes the answer is to convert nothing.
Why does so much attention go to the first years of retirement?
Because that is often when income is lowest and most in your control: the paycheck has stopped, and Social Security and required distributions may not have started. Once required distributions begin, an IRS formula sets much of your taxable income.
Does living in Florida mean I can stop thinking about taxes?
No, it removes one layer. Florida does not tax individual income, so a withdrawal, a conversion or a gain is not taxed again by the state. Federal tax still applies in full, and so do its effects on your Social Security and your Medicare premiums.
I give to my church every year. Is there a better way to do it?
There may be. Once you reach the age the IRS sets, a qualified charitable distribution sends money straight from an IRA to a qualifying charity, leaves it out of your income and can count toward your required distribution. There are limits, and whether it beats writing a check is your tax professional’s call.
Sources
- Retirement topics: required minimum distributions (RMDs), Internal Revenue Service
- Roth IRAs, Internal Revenue Service
- Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), Internal Revenue Service
- Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), Internal Revenue Service
- Publication 550, Investment Income and Expenses, Internal Revenue Service
- Topic no. 409, Capital gains and losses, Internal Revenue Service
- Topic no. 423, Social Security and equivalent railroad retirement benefits, Internal Revenue Service
- Medicare costs, including the income-related monthly adjustment, Medicare.gov
- Constitution of the State of Florida, Article VII, Section 5, The Florida Senate
These public resources support the general educational context on this page. They are not endorsements of Oliver Wealth Management, and none of the material here is personalized investment, tax, or legal advice.
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