B.O.S.S. Retirement Solutions Offers Free Tax Analysis for Savers With $300,000+

Q: Why might leaving your 401(k) untouched early in retirement actually cost you thousands in future IRS penalties?

Leaving a 401(k) untouched early in retirement can backfire because it may allow the balance to keep growing until required minimum distributions, or RMDs, begin, forcing larger withdrawals later that are taxable and easier to mishandle. For most retirees, RMDs from traditional 401(k)s and IRAs begin at age 73, with later ages applying to some younger cohorts. Those withdrawals are taxed as ordinary income. If the account has grown for years without any strategic drawdowns or partial Roth conversions, the future RMD can be much larger than necessary. That can push a retiree into a higher tax bracket, make more of Social Security taxable, and trigger higher Medicare premiums through IRMAA. It also creates a direct penalty risk. If the required amount is missed or underpaid, the IRS can impose an excise tax of 25% on the shortfall, reduced to 10% if corrected promptly. A retiree who delays the first RMD until April 1 of the following year may also have to take two taxable distributions in one calendar year, increasing the chance of mistakes and a larger tax hit. That is why advisers often urge retirees to use the lower-income years after work ends but before Social Security and RMDs begin to plan withdrawals intentionally. In some cases, taking measured 401(k) withdrawals earlier, or converting part of the balance to a Roth before RMD age, can shrink future forced withdrawals and reduce the risk of costly IRS penalties later.

3 articles · Updated · KSL.com · Aug 7

B.O.S.S. Retirement Solutions is offering a free customized Retirement Tax-Savings Analysis for people with more than $300,000 in savings, comparing projected taxes now with potential savings from a coordinated withdrawal plan.
Up to 85% of Social Security benefits can become taxable when retirees draw from the wrong accounts or in the wrong order, the firm said, potentially also raising tax brackets, Medicare premiums and later required minimum distributions.
The firm says many retirees learned how to build IRA and 401(k) balances but not how to spend them tax-efficiently, making withdrawal sequencing a key driver of lifetime retirement taxes.
B.O.S.S., which says it has helped more than 55,000 families and operates seven Wasatch Front offices plus one in St. George, is using the offer to highlight broader retirement-income planning such as Roth conversions and RMD timing.