How to minimize taxes on a large pre-tax retirement account and RMDs
Large traditional pre-tax balances and required minimum distributions create a heavy tax burden and anxiety about future rates upon retirement. Mixing pre-tax and post-tax money in these accounts also complicates strategies like the backdoor Roth conversion.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
How to minimize taxes on a large pre-tax retirement account and RMDs
- 1Doing Roth conversions to pay taxes graduallyDid this help you?
- 2Delaying Social Security until age 70 to open up tax spaceDid this help you?
- 3Building cash or CD ladders to live off during early retirement yearsDid this help you?
- 4Consulting a CPA or tax advisor for customized withdrawal strategiesDid this help you?
- 5Thinking about combining traditional IRAs at Vanguard and using Fidelity to backdoor Roth IRADid this help you?
- 6Rolling all traditional IRA funds into a current employer 401k plan if the plan allows itDid this help you?
- 7Splitting withdrawals across calendar years to stay under specific income thresholdsDid this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“I have over 800k sitting in a pre tax 401k. I am going to be retiring in 5-6 years at age 66 or 67. Is there some way to avoid or minimize a large tax burden-especially when RMD's kick in....”source ↗
“I want to stop paying fees and move to an index fund”source ↗
“I realized I have created some weird mix of pre tax and post tax money iny IRA.”source ↗
“Something about since it's mixed pre tax and post tax I can't do the backdoor now because it's a weird tax situation or is that wrong.”source ↗
“Some things I read made it seem like I couldn't just put in $7k then backdoor Roth it because the account has pretax and post tax money”source ↗
Where this came up
People with this problem also raised
- 16What do I do with an inherited IRA?
- 3How to cash out an inherited IRA without paying huge taxes
- 2How do you plan for retirement when your spouse isn't a saver?
- 4How do 401(k)s and retirement accounts actually work?
- 4Can my retirement contributions exceed my earned income?
- 4How to plan for retirement when you're living in the red and have debt