Permanent Value

Week in Review 01/03/2017

Bruce Doole
January 3rd, 2017

9 Ways to Save on Taxes in Retirement (6/9)


If you’re taking required minimum distributions from one or more traditional IRAs, and if you don’t need that money to live on during the year, you can wait until December to take it – and at the same time ask the IRA sponsor to hold back enough to pay the IRS not just for the estimated tax on the RMD, but also to cover the taxes on your other taxable income.

Estimates tax payments are considered to be made when you send the IRS a check, but amounts withheld from IRA distributions are considered paid throughout the year, even if you make them in a lump sum at the end of the year.

So if your RMD is well-enough funded to pay your whole tax bill, the money can stay sheltered for most of the year and still not expose you to the underpayment penalty.


You may not realize, after years of an employer automatically deducting your taxes, that you have a choice about when to fork over the money.

But, of course, that comes with pitfalls.

Since taxes are due when income is earned, if you stall on sending tax payments till the April 15 after you receive income, you’re going to find an astonishing array of penalties and interest await you.

But you can control, to an extent, tax payments- through withholding from regular payments from a company pension or annuity, or from an IRA. In fact, you’d have to file a Form W-4P to stop it.

And you should bear in mind that IRA withholding is at a flat rate of 10%, unless you either block it or request a different rate. If you have to pay taxes on Social Security benefits, you’ll need to file a Form W-4V, since Social Security doesn’t withhold taxes by default.


Just because one of you is retired doesn’t mean the other has to stop saving for retirement.

If you’re half of a couple and one of you is still working and at least 50 years old, he or she can contribute up to $6,500 a year to an IRA that you own. Traditional IRAs allow spousal contributions up to the year you hit age 70½, while there are no age limits on a Roth.

As long as your spouse has enough earned income to fund the contribution to your account (and any deposits to his or her own), you can continue to save to boost your retirement funding levels. For both 2016 and 2017, that $6,500 cap applies.
Source: Marlene Y. Satter


  • U.S. consumer confidence in December reached its highest level since August 2001, the Conference Board said.
  • Japan’s industrial output rose 1.5% in November, boosted by growth in electronics and automotive parts.
  • U.S. pending home sales fell 2.5% in November, after rising slightly in October, on a sudden increase in mortgage rates and limited inventory.

Source: Ivy Weekly