Blending Distributions Between Taxable and Tax-Deferred Accounts

Based in New Jersey, Robert M. Ryerson functions as a Certified Financial Fiduciary and Certified Identity Theft Risk Management Specialist, serving the needs of clients ranging from families to small business owners. One of Robert M. Ryerson’s areas of extensive knowledge is retirement distribution planning to meet individual goals and expectations. 

One of the foundational strategies for retirement accounts is to liquidate taxable investments first and allow tax-deferred accounts to compound for as long as possible. Unfortunately, this approach can potentially boost the retiree into a higher tax bracket if the account has grown too large. 

One way of mitigating this centers on taking out a certain amount of money from IRA accounts earlier than necessary. Taking out an amount such that the current tax bracket is unaffected, the total amount of the account is then reduced to a level where future withdrawals will not result in paying higher taxes. Through a blended approach, both taxable accounts and IRA distributions are taken out in tandem and the ideal mix of present and future taxes on account earnings is achieved.