From 24/7 Wall St. · David Beren · · 1m 20s
Retirement Tax Trap for Couples
Couples retiring at 62 with $650,000 in IRAs and a pension face rising IRS tax withdrawals by 80.
In brief
Couples retiring at 62 with $650,000 in IRAs and a pension face rising IRS tax withdrawals by 80. A couple retiring at 62 with $650,000 between two IRAs and a $48,000 pension will face required minimum distributions that grow from $42,000 at 73 to $57,000 by 80. Originally reported by 24/7 Wall St..
Retirement Savings Setup
A married couple stops working at 62 with $650,000 split between two traditional IRAs and a $48,000 annual pension.
First RMD at Age 73
The first required minimum distribution is about $41,952 at age 73.
RMD Growth by Age 80
By age 80, required minimum distributions climb to about $57,209, a 36% increase from the first RMD.
Comparison to Typical Retirees
This couple's savings exceed the median retirement balance of $270,000 for Baby Boomers.
IRA Growth Over 11 Years
With 5% annual growth, the couple's IRA balance reaches $1.11 million by age 72.
Tax Implications
The couple faces tax rates up to 22% as RMDs push income toward higher brackets.
Tax Planning Options
Couples can use Roth conversions, charitable distributions, or timing strategies to reduce tax impact.
Long-Term Tax Impact
RMDs grow alongside IRA balances, increasing tax burden for couples with high savings.
Here's the gist
A couple retiring at 62 with $650,000 between two IRAs and a $48,000 pension will face required minimum distributions that grow from $42,000 at 73 to $57,000 by 80.
