Is Your Tax Bill Too High? Learn These Strategies To Achieve A Tax Efficient Estate And Retirement Plan.

There have been key changes to tax efficient estate and retirement planning.

A team that focuses on retirement tax strategies, Chris Dixon Jr. and Samuel J. Dixon from Oxford Advisory Group shared with me some basics for those looking to avoid overpaying taxes in their retirement.

Here are things you should keep in mind as you look to secure you and your family’s financial futures.

The Secure Act, passed in 2019 and made several changes to estate and retirement planning, including the elimination of the stretch IRA. The stretch IRA allowed non-spouse beneficiaries to stretch the required minimum distributions (RMDs) from an inherited IRA over their lifetime. Under the new law, most non-spouse beneficiaries must now withdraw the entire balance of the inherited IRA within 10 years of the account owner’s death. This often means that the beneficiary will be taking distributions during their peak earning years, potentially causing significant tax events. 

This change has significant tax implications for retirement planning, particularly for those who intended to use an inherited IRA as part of their estate plan.

Here are a few ways the elimination of the stretch IRA could change retirement planning:

Reconsidering IRA as an estate planning tool: Individuals who have named their children or other non-spouse beneficiaries as IRA beneficiaries may need to reconsider their estate plan.  It may be beneficial to explore other tax planning strategies.

Rethinking distribution strategies: Individuals who are approaching retirement or already in retirement may need to rethink their distribution strategies. With the elimination of the stretch IRA, beneficiaries will need to withdraw the entire balance of the inherited IRA within 10 years, which could result in a significant tax burden. It may be beneficial to explore strategies such as using a Roth conversion strategy.

Reassessing retirement income goals: The elimination of the stretch IRA could also have an impact on retirement income goals. Individuals who were counting on an inherited IRA to provide additional income in retirement may need to adjust their expectations or explore alternative sources of retirement income.

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Taxes can often be a significant cause of stress through both retirement and passing of generational wealth.  Here are three tax reduction strategies worth looking into with a professional:

Roth Conversions: This involves taking money from a traditional IRA or 401(k) and moving it to a Roth IRA. You’ll pay taxes on the amount you convert now, but you’ll never pay taxes on the money again in the future. This can be especially effective for those who expect to be in a higher tax bracket in retirement than they are currently.

Tax-Efficient Withdrawals: Another strategy for reducing taxes in retirement is to be strategic about when you withdraw money from your retirement accounts. By taking withdrawals from taxable accounts first and tax-deferred accounts later, you can lower your tax bill. This is because taxable accounts are subject to capital gains tax, which is generally lower than income tax.

Charitable Contributions: Finally, making charitable contributions can be a tax-efficient way to reduce your tax bill in retirement. By donating to a qualified charity, you can deduct the contribution from your taxable income. This is especially effective if you’re in a high tax bracket and don’t need the money you would otherwise have paid in taxes.

There are uncommon or lesser-known tax reduction strategies for retirement that individuals may consider to reduce their tax bill in retirement. Here are two examples:

Health Savings Accounts (HSAs): Health Savings Accounts (HSAs) are a type of tax-advantaged account that can be used to pay for qualified medical expenses. HSAs are available to individuals who are enrolled in a high-deductible health plan, and contributions to the account are tax-deductible. In retirement, HSAs can be used to pay for medical expenses tax-free..

Harvesting Capital Losses: Capital losses can be used to offset capital gains in retirement, reducing the tax impact of investment gains. By harvesting capital losses through the sale of investments that have declined in value, individuals can reduce their tax bill and improve their overall investment returns.

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It’s important to note that the effectiveness of these strategies can vary based on individual circumstances and it’s always a good idea to consult a tax professional or financial advisor to see which strategies are best suited for your specific situation.


Oxford Wealth Group, LLC is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The communications of an adviser provide you with information about which you determine to hire or retain an adviser. Information about Oxford can be found by visiting the SEC site and searching by our firm name.

The information herein was obtained from various sources. Oxford Advisory Group does not guarantee the accuracy or completeness of information provided by third parties. The information in this report is given as of the date indicated and believed to be reliable. Oxford Advisory Group assumes no obligation to update this information, or to advise on further developments relating to it.

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