5 tax-saving moves to make before age 72

A note on SECURE Act 2.0 

The content in this article may not reflect the latest information on retirement accounts and the Required Minimum Distribution age due to a recently passed law known as SECURE Act 2.0. Learn about key provisions of this legislation and reach out to us with questions. 

Key Points



  • Many retirees are in a lower income tax bracket before required minimum distributions begin at age 72.
  • Five specific actions could help you manage taxes.
  • Talk with your tax and financial advisors about which ones could benefit you.

Because many retirees are in a lower federal income tax bracket before required minimum distributions (RMDs) begin at age 72, they have an opportunity to manage the impact of taxes on their income.

There are a few tax-related considerations for retirement planning. Talk with your tax and financial advisors about whether any of these five actions could benefit you. 

1. Converting taxable assets to a Roth IRA

If you expect to be in a higher tax bracket when your RMDs begin, consider converting taxable investments to a Roth IRA before then. Think about your ability to pay the taxes on the conversion as well as your timeline before you would need to access the Roth IRA. Converting to a Roth IRA generates a tax bill, but it could be less expensive now because of your temporarily lower income tax bracket— and the temporarily lower federal income tax brackets that are set to expire after 2025.

2. Selling investments that have appreciated

The tax rate on long-term capital gains — assets held beyond one year — is based on your taxable income. If you have stocks, mutual funds, bonds or other taxable investments, it may make sense to sell appreciated long-term investments while your taxable income is lower. Some, or all, of net long-term capital gains may be taxable at the 0 percent capital gains tax rate if your taxable income lower income falls below the threshold. Talk to your tax professional to see if this applies to you. 

3. Redeeming older savings bonds

While you’re in a lower tax bracket, you may want to cash in savings bonds issued when interest rates were higher. If you have bonds issued more recently, talk to your advisor about whether to hang on to them, given rising interest rates.

4. Exercising employee stock options

If you own employee stock options,1 exercising them while you’re in a lower tax bracket may benefit you — especially if the current stock valuation is high.

5. Revisit your withdrawal strategy

Because withdrawals from tax-deferred accounts are neither penalized nor required between ages 59 1/2 and 72, you have more flexibility and control with your withdrawal strategy for retirement savings. Your advisor can help you make a plan to determine how much money to withdraw each year while managing your tax liability across the years. 

Talk to us

Work with your financial advisor to decide how and when to withdraw money in retirement. A personalized retirement distribution strategy could help make your money last longer.