Retirement Income Strategies: IRA vs. Brokerage Withdrawals (The Tax-Smart Choice for Retirees)

Mark asks a common question – What should I do regarding my withdrawal strategy? Should I first pull from my brokerage account or my IRA?

There is no one-size-fits-all answer, but James provides a framework for creating a strategy to increase your odds of getting the most out of your money saved. He walks through the pros and cons of first pulling from your IRA versus a brokerage account, taking into consideration required distributions, tax rates and strategies, capital gains, Roth conversions, tax gain harvesting, and charitable giving.

Questions answered:
What are the tax implications of giving to family members versus charities?

How should capital gains affect my withdrawal and tax strategy?

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⏱Timestamps:⏱
0:00 - Mark’s question
3:12 - Pros of pulling from IRA
7:24 - Lower tax rate today
9:27 - Cons of pulling from IRA first
11:38 - Charitable giving
13:58 - Pros of brokerage pulls
18:40 - Other potential pros
21:39 - Cons of pulling from brokerage
26:03 - Things to consider
30:50 - Wrapping up

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Worried about retirement?

[toddmaniatoddmania]

I love your videos! You leave no stone unturned, and I appreciate the depth in which you illustrate each scenario. Each time I watch one of your videos, I feel even better about my upcoming retirement years. Thanks!

[PH-mdxp]

Wow James! Great analysis, given scant details, you touched on just about every financial/tax aspect to consider while in retirement. 👍🏼

[Kat-rfgr]

Thank you James for another excellent video. This is exactly what my husband and I were talking about recently. Your video helps confirm our thinking. Much appreciated!

[janesmith]

Thank you, James, I’m impressed by how comprehensive your presentation was in only about 30 minutes. I have created spreadsheets to forecast our future income levels, asset levels, and taxes, but after listening to this podcast I feel challenged to try a few different scenarios. We have already done many ROTH conversions, but I haven’t thought about tax gain harvesting before Social Security kicks us into a higher federal tax bracket. Thanks again for spending so much time preparing and recording this presentation. I appreciate all you do. Hope you have a great summer.

[Jack]

Learned about 70.5 age minimum for QCD through your video. I simply donate appreciated assets every year vs setting up a DAF since I itemize each year. I had heard of QCD, but didn't know about the age limitation. That might be perfect for me to switch to when I reach the cutoff for my standard deduction to be as valuable as itemizing. Definitely when I get to 75 and RMD zone.

I appreciate you getting into the detail that you do -- helps much vs other more fluff videos such as "8 things to do before retiring". I also really appreciate the client examples. Keep those coming -- oh, and alot of us are divorced and single, so please don't make every example as a married couple. Great work.

[livezero]

What a timely video. I retired last month and have a very similar situation with a large holding of a single stock with a big gain in my brokerage. I’m still setting up a strategy for all of these variables. I’m about to turn 60, SS at 67 so I have some time to set up for rmd.

[kevinkanter]

Great review of the decision points recognizing the timelines, portfolio locations as well as the allcations of each account impacting the decisions. The scenario-driven approach you use to provide financial advice is a real aid to walkiing through the impacts / costs and savings.
This is a great video.

[jeanrogers]

That was excellent. Will be rewatching and taking notes!

[markb]

Thanks James for another very informative video! Since this topic applies to me, it was extremely helpful!

[aztecforlife]

What a fantastic video! Congratulations on a job well done!!! You have captured all the little details that have been bouncing around in my thoughts. Why is it so hard to find a financial fiduciary that gets it like you obviously do?

[sonnylovesfreddy]

This was so incredibly helpful. Thank you so much for your content and the time you put into it.

[katec]

Excellent video. I always learn so much from you.

[J--vi]

I am glad you brought up the fact hat having bonds in taxable is not always a “NO”, especially if you will be using the taxable account first in retirement especially when you retire before 59.5 when you don’t yet have access to your IRAs without a penalty, or when you try to keep your income low for ACA subsidies.
Also important to know that, although Roth conversions can be great on those few years of early retirement, more than just saying that ACA subsidies and gain harvesting competes with it, the effect is quite significant since, if you Roth convert a significant amount, not only you pay all the subsidies back at tax time, but also you need to pay the taxes for the conversion. These two extra taxes can deplete your taxable account and cash cushions much faster than you expected.

[mkmac]

James, good video, especially for those of us who appreciate info down in the weeds.

[richdewitt]

Great content and summaries James. Appreciate you! Rich

[rogermorsch-tobt]

Love your information, keep doing what you do.

[dancooper]

Great video, James, thanks! Only point I don’t think was touched on is, for those on Medicare, getting bumped into a higher IRMA bracket by withdrawing from IRA, all of which I believe would count when figuring IRMA, vs. taking from brokerage where only the gain would count.

[jackhughes]

Well done!!!🎉 thank you for your advice.

[BiggMo]

I plan on working part-time, for minimum wage for a few few years before retiring full time and doing roth conversations during those low income years.

[shanethompson]

Great channel, thank you - you have a gift for delivering complicated concepts in a clear and understandable manner.
My question relates to withdrawing income to cover expenses in retirement. Once the decision has been made to take funds from stocks - do you sell the whole position of a particular stock exhibiting gains or only harvest the gain and keep the original investment amount to continue growing?