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Retirement tax strategies

Plan for your retirement by investing in tax-advantaged accounts and by using efficient withdrawal strategies to prepare for your retirement. 

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Tax-deferred retirement plans.

The amount of taxes you owe at retirement depends not only on your income, but also on your type of retirement vehicle and your timing of withdrawals. You may want to consider retirement strategies that provide tax-deferred growth or tax efficiency.

  • With qualified retirement plans that provide tax-deferred accumulation, such as 401(k)s and traditional IRAs, the money you contribute is pretax, meaning it is not taxed until you make a withdrawal, often years later. In addition, any growth or gain is also tax-deferred.
  • Distributions from such qualified plans will begin between age 59½ and 72. The money you receive from distributions is always considered regular income and is taxed at a standard rate.
  • Be aware: Should you wish to withdraw cash from your retirement plan early (before age 59½), you may be subject to an additional 10% penalty tax on the amount.
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Tax efficient retirement planning. 

If you have an investment account outside of the tax-deferred retirement accounts discussed above, you should consider investments that are tax efficient.

  • Tax efficiency refers to how much you earn on an investment in comparison with the portion of the return that’s lost to annual taxes. Tax efficiency can be achieved in various ways. A qualified investment professional and your tax advisor can be a great resource in formulating such strategies.
  • Municipal bonds (which generate federally tax-exempt income) and U.S. savings bonds (which are exempt from state and local income taxes, and in which you have the choice of paying federal income taxes on the interest either every year or only when you redeem or cash in the bond) are also considered tax efficient.

Please note, investments may be offered only by properly licensed registered representatives. Product information is provided for informational purposes only and is not intended to advise or make recommendations on the purchase of a security. Always remember, the choices you make today can have a tremendous impact on both your current finances and your future retirement.

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Frequently-Asked Tax Questions

Want to learn more about financial strategies for retirement?

A NYLIFE Securities Registered Representative can help determine what’s right for you.  

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1 In some cases, the alternative minimum tax (AMT) may apply. 

Investments are offered through NYLIFE Securities LLC (member FINRA/SIPC), a Licensed Insurance Agency and a New York Life company.

This material is for informational purposes only. Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.