Q & A

When we start retirement, which asset (or a combination of assets) do we spend down first? I believe filing jointly, we should not have more than $74,000 or so to claim as income each year, otherwise we will no longer be in the 15% tax bracket and most likely be penalized further by Social Security.

Answer: Many people approach this issue from the same angle I think you have. They want to stay in a tax bracket of 15% or less. Because distributions from pretax retirement plans are taxable as ordinary income, long-term capital gains are taxed at lower rates or not at all, and distributions from Roths aren’t taxed at all when certain criteria are met, you can control current taxation by picking and choosing to take from certain types of accounts. Read more…

SourceDan Moisand, MarketWatch

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