Retire with Power: The Next Ten Years™
Dominic Cespino
Introduction
Taxes don’t stop when you retire—they just change. Understanding how your retirement accounts are taxed can make the difference between a comfortable retirement and unnecessary tax burdens. That’s where the Tax Control Triangle comes in: a simple framework to help you manage your money across three key tax categories.
What Is the Tax Control Triangle?
The Tax Control Triangle organizes your assets into three buckets:
- Taxable Accounts
- Examples: Brokerage accounts, savings accounts
- Taxes: You pay annually on interest, dividends, and capital gains
- Tax-Deferred Accounts
- Examples: Traditional IRA, 401(k)
- Taxes: Contributions grow tax-deferred, but withdrawals are taxed as income
- Tax-Favored Accounts
- Examples: Roth IRA, Roth 401(k), Health Savings Accounts (HSAs)
- Taxes: Contributions may be after-tax, but qualified withdrawals are tax-free
Why It Matters
- Flexibility in Retirement
Having money in all three buckets gives you options to manage taxable income each year. - Strategic Withdrawals
Pulling from the right account at the right time can reduce your tax bill and keep you in a lower bracket. - Legacy Planning
Tax-favored accounts can pass wealth more efficiently to heirs.
Expert Perspective
"The Tax Control Triangle isn’t just a concept—it’s a strategy. Diversifying your tax buckets now can save thousands later."
— Dominic Cespino, Chief Investment Officer
Practical Steps
- Review Your Current Allocation
Identify how much you have in each tax bucket. - Consider Roth Conversions
Moving funds from tax-deferred to tax-favored accounts can reduce future taxes. - Maximize HSA Contributions
HSAs offer triple tax benefits: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. - Plan for RMDs
Required Minimum Distributions start at age 73—don’t let them surprise you.
Call to Action
Want to see how the Tax Control Triangle applies to your retirement plan?
Schedule your no-obligation Retire with Power Evaluation today.
contactus@mcknightadvisory.com