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IRA holder weighs withdrawing now to cut future RMD taxes
The article outlines an alternative strategy, converting part of a traditional IRA to a Roth each year to potentially reduce future RMD withdrawals and taxes.
A 67-year-old with about $215,000 in a traditional IRA is asking whether withdrawing money before required minimum distributions begin at age 73 would reduce taxes, after planning to delay claiming Social Security until age 70.
The writer notes that withdrawing amounts that fall within the standard deduction could reduce near-term taxable income and may help avoid taxes on Social Security benefits once RMDs start.
The piece also highlights that once a retiree is required to take RMDs from traditional retirement accounts, the amount can affect both taxes and how much remains invested, particularly when the goal is to minimize future tax exposure.
As part of that planning, the article points to Roth conversions as one potential approach, describing how converting a portion of an IRA each year can reduce future required withdrawals but may create tax consequences for certain withdrawals, according to guidance discussed in the piece from Yahoo Finance and SmartAsset.