Time Your Retirement Plan Income

If you are able to plan your withdrawals from your retirement plan, you can save considerable tax dollars. This is not always possible, but the basic premise is to take distributions and pay the resulting tax in years when your marginal tax rate is low. Also watch for years when your taxable income is unusually low and some amount of distributions can be taken tax-free at ages 59½ and over. The early withdrawal penalty applies only to those under 59½.