A basic approach to withdrawing assets would include liquidating bank accounts, non-qualified brokerage accounts, non-qualified variable annuities, IRA accounts, and Roth IRA accounts, in that order.

However, this general rule is usually outperformed by a tailored approach that simply requires a bit more attention paid to the order of your withdrawals. Here are a few examples of how your portfolio can be synced to specific withdrawal strategies.

Syncing Withdrawals to Change in Your Tax Rate

Will you be in a lower tax bracket once you retire?

Syncing your portfolio to your withdrawal strategy might require determining if it still makes sense to hold municipal bonds to the same degree. Many retirees do not change their portfolio when they retire, because there is so much going on during that time.

Will you be in a higher tax bracket when you retire?

If you are currently in the 10% tax bracket, you may find that once Social Security, pension, and required minimum distributions begin you will be permanently in the 24% (or higher) tax bracket. If so, syncing your portfolio to your withdrawal strategy might mean using the 10% spread between the 12% and 22% brackets to your advantage.

Determine whether you have large, long-term capital gains or losses. If so, then put a 3–5 year plan in place, to use losses or realize gains in a smart way that works with your other assets. It’s possible that taking gains while in the 12%–22% bracket could legally prevent the payment of capital gains taxes altogether.

Syncing Accounts of Varying Tax Qualifications

Some clients may be able to let IRA accounts defer as long as possible without needing the income. Using a stretch-IRA strategy, these assets could be passed on to your heirs in the form of inherited IRAs—which can be a very beneficial estate planning strategy. Syncing from a portfolio standpoint might mean holding more long-term, growth-oriented assets in your IRA than in other accounts, which will be used for income during your retirement.

Syncing Accounts and Asset Categories to Specific Goals

Many people do not have a plan in place for long-term care. For some clients, there could be a smart way to reposition the cash value of life insurance to cover long-term care. In the case of annuities purchased for income, where the income is no longer needed, this could also be repurposed. Also, if not needed for income, your taxable required distributions (RMDs) from an IRA could be leveraged into a larger, tax-free legacy for your beneficiaries.

We have the experience, resources, and knowledge to help you sync your portfolio with your retirement withdrawal strategy that best fits your needs.


Working With Janney

Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship is in your best interest based on the information you provide when you complete or update your client profile.

When you engage in an advisory relationship, you will pay an asset-based fee which encompasses, among other things, a defined investment strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory accounts.

For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs, which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

By establishing a relationship with us, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences.

Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

About the author

Martin Schamis

Vice President & Head of Wealth Planning

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For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

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