How Do I Keep More Of My Retirement Income After Taxes?Retirement Income Designed To Be Tax-Efficient.
Which account pays you, and in which year, decides how much income you keep. Maartin plans the order of withdrawals alongside your CPA, who has the final word on taxes.
The Short Answer
Retirement savings sit in accounts the IRS taxes differently. Traditional IRA and 401(k) withdrawals are taxed as income, qualified Roth withdrawals are tax-free, and required withdrawals generally start at 73. Drawing from each in a planned order, year by year, can lower lifetime taxes and Medicare premiums. Your CPA confirms every move.
Source: IRS.gov and Medicare.gov
Three Numbers Worth Knowing
- $218,000
- 2026 joint income above which Medicare Part B costs more, based on your tax return from two years earlier. Single filers: $109,000.
- 70½
- The age you can give from an IRA straight to charity, and the gift can count toward a required withdrawal.
- 25%
- The IRS excise tax on a required withdrawal you miss, reduced to 10% if you take it within two years.
Source: Medicare.gov and IRS.gov
Four Sources, Four Treatments
How Each Kind Of Retirement Income Is Taxed.
The same dollar of income can carry very different tax depending on where it comes from. These are the federal and California rules.
Social Security
Whether part is federally taxed depends on your other income, so IRA withdrawals can pull benefits into tax. California excludes Social Security entirely.
Traditional IRA And 401(k)
Withdrawals are taxed as income, except any part already taxed, and required withdrawals generally start at 73 whether you need the money or not.
Roth Accounts
Qualified withdrawals are tax-free, and the owner of a Roth IRA or Roth 401(k) has no required withdrawals while alive.
Annuities Bought With After-Tax Money
Taxes wait until you take money out. Then only the interest is taxed, as regular income.
Timing
The Birthdays That Change Your Tax Picture.
Each of these ages opens a door or starts a rule. A plan lines them up years ahead.
- Age 59½10% Early Tax Ends
- Age 63Income Sets Your 65 Premium
- Age 65Medicare Premiums Begin
- Age 70½IRA Gifts To Charity
- Age 73Required Withdrawals Begin
Why 63 Matters
Medicare sets your Part B premium from the income on your tax return two years earlier, so a large withdrawal at 63 can raise what you pay at 65.
Missed A Required Withdrawal?
The IRS can charge a 25% excise tax on the amount not taken, reduced to 10% if you withdraw it within two years.
Worth A Closer Look
Signs Your Withdrawal Order Deserves A Review.
If any of these fit, the order you draw income may matter as much as the amount.
- Most Of Your Savings Is In Traditional AccountsRequired withdrawals at 73 can lift your taxable income in years you don’t need the money.
- You Retire Years Before 73The years between your last paycheck and required withdrawals look very different on a tax return. Your CPA decides how to use them.
- You Expect A Large One-Time WithdrawalA home purchase, a family gift or a big IRA withdrawal can raise both your tax bill and your Medicare premium two years later.
- You Give To CharityAt 70½ or older, a gift paid straight from your IRA to a qualified charity can count toward your required withdrawal.
- You Own A BusinessA sale can bunch years of income into one tax return. See planning for business owners.
- You Plan To Leave Accounts To ChildrenRoth and traditional accounts pass to heirs with different tax rules, and beneficiaries follow their own distribution rules.
Working With Maartin
How Maartin And Your CPA Work Together.
- 01
Map Every Account
Maartin lists each account by how the IRS taxes it: traditional, Roth, annuity and taxable savings.
- 02
Project Income Year By Year
From retirement through 73 and beyond, so the jumps from required withdrawals and Medicare premiums show up early. See retirement income planning.
- 03
Hand It To Your CPA
Your CPA reviews the order and makes every tax decision. Maartin supplies the income map.
- 04
Revisit It When Rules Change
Thresholds and tax rules change most years, and the plan is updated with them.
MJR Financial & Insurance Services does not give tax or legal advice; your CPA and attorney do.
Questions
Common Questions
Does Maartin give tax advice?
Maartin plans the income and the order you draw it, and your CPA makes the tax decisions. MJR Financial & Insurance Services does not give tax or legal advice, and Maartin works alongside your CPA and attorney.
When do required minimum distributions start?
Generally at 73 for traditional IRAs, SEP and SIMPLE IRAs and workplace plans. Your first one is due by April 1 of the year after you turn 73, and the rest by December 31 each year. Read our guide to required minimum distributions.
Is Social Security taxed in California?
No. California excludes U.S. Social Security benefits from state taxable income. The federal rules differ: part of your benefits can be taxed when your modified adjusted gross income plus half your benefits passes a base amount for your filing status.
How can retirement income raise my Medicare premiums?
Part B costs more once your income, as shown on your tax return from two years earlier, passes a threshold: $109,000 for single filers and $218,000 for joint filers in 2026. Above it, you pay more than the standard $202.90 a month, so the timing of large withdrawals matters.
What is a qualified charitable distribution?
A gift paid directly from your IRA to a qualified charity once you are 70½ or older. It can satisfy all or part of your required minimum distribution, and when the full amount qualifies, the taxable amount reported is zero. Your CPA handles the reporting.
Sources
- Traditional withdrawals taxed as income except basis; qualified Roth tax-free
- Qualified Roth distributions are tax-free
- 59½ and the 10% additional tax
- Federal tax on Social Security depends on MAGI plus half of benefits
- California excludes Social Security
- After-tax annuity: only interest is taxed; payments taxed as regular income
- Part B premium based on tax return from 2 years ago; 2026 thresholds
- Medicare eligibility at 65
- QCD at 70½ paid directly to charity
Planning Withdrawals?
Plan The Order
You Draw It.
Bring your account statements and your CPA’s name, and see your withdrawal options lined up year by year.
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