What retirees can do right now to reduce next year's taxes
You’ve only just finished preparing your 2023 taxes — or you're close to being done. Since taxes are top of mind, it’s a good idea to start planning for next year’s return.
How you manage your retirement accounts in 2024 will have a direct impact on the tax bill you’ll face next April.
A surge in retirement account balances last year has started to roll out for retirees who are already taking their required minimum distributions (RMDs) from IRAs and workplace plans. Your RMD is generally taxed as ordinary income in the year it’s taken, so the taxes on that money will come due next April.
“The year-end retirement account balance, though, is key to retirees because their required minimum distribution is based on that balance,” Ed Slott, a certified public accountant in New York and an expert on IRAs, told Yahoo Finance. “So the first thing they're going to see is larger RMDs this year.”
While more income via bigger RMDs sounds like good news, it’s vital that you manage those withdrawals wisely so you don’t get a surprise at tax time.
Here are a few moves you can make to stay ahead of the game.