Social Security taxation
Up to 85% of Social Security benefits can be federal-taxable depending on your total income. The threshold is based on 'combined income' (AGI plus non-taxable interest plus half of SS benefits). Many retirees can keep SS largely untaxed with careful income timing.
Required Minimum Distributions
RMDs start at age 73 (or 75 for those born in 1960 or later under SECURE 2.0). The first RMD can be deferred to April 1 of the following year, but doing so creates two RMDs in that year. Missing an RMD is a 25% penalty, reducible to 10% with timely correction.
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Roth conversion windows
The years between retirement and age 73 are often the best Roth conversion opportunity of a taxpayer's life. Income is typically lower than peak earnings and RMDs haven't started filling the brackets yet.
Common questions
- Is my Social Security taxable?
- Depends on your combined income. Below $25,000 (single) or $32,000 (MFJ), no. Up to 50% taxable between those and $34,000/$44,000. Up to 85% taxable above.
- When should I convert to Roth?
- Typically in the low-income years between retirement and age 73, filling up to the top of your current tax bracket each year.