Withdraw Money from Tax-Free Roths
If you’re withdrawing money from a Roth IRA or Roth 401(k), you should know that such tax-sheltered withdrawals are not included in your adjusted gross income. Therefore, if you’re required to use some of your retirement savings to cover your expenses, taking money from a tax-free Roth can reduce the income portion included in the Social Security tax calculation.
Another way to avoid taxes in retirement is by making rollovers from your traditional IRA or 401(k) to a Roth, long before receiving Social Security benefits. This makes a lot of sense since you already paid taxes on the contributions to the designated Roth account.
When you convert the account, you’ll still have to pay certain taxes but after that, the tax-free account is at your disposal. In addition, Roth IRAs do not require minimum distributions that might increase your taxable income levels so that your Social Security benefits become taxable.
