Retirement tax planning at Green State Credit Union maps your pension, 403(b) and IRA withdrawals year by year to age 75, using current tax law instead of guesses about future markets or rates. The first step is listing every pre-tax dollar by account, along with the year the IRS forces it out. Required minimum distributions start at 73, or at 75 for anyone born in 1960 or later.
Maybe you've already sat down with HR or the plan administrator. You left with a pension estimate, a rollover packet and a vague warning that "taxes will matter." Nobody said how much to take from the 403(b), in which year, or what a larger withdrawal does to your Medicare premium. That gap is what this page covers.
This page isn't for you if your pension and Social Security already cover your spending and your pre-tax savings are small. Have your latest pension estimate and last year's Form 1040 nearby, because the examples below use the same numbers those papers show. All investing carries risk, and you can lose money, including part of what you put in.
A full pension fills the low tax brackets first
Take a hypothetical $50,000 pension and subtract the 2026 standard deduction of $16,100 for a single filer. That leaves $33,900 of taxable income before a single dollar leaves the 403(b). Any 403(b) dollar you take out later is taxed starting from that $33,900.
The household that usually has this problem is a teacher with a full pension plus $500,000 or more in pre-tax 403(b), 457(b) and IRA money, often widowed or single. A single filer reaches the same tax rates at about half the income a married couple can have, so the same savings are taxed harder.
Some moves save tax and some only shift it. Delaying 403(b) withdrawals while the balance grows toward required distributions is a shift. Paying tax in a year when your rate is lower than the rate you or your heir would pay later is a saving.
Before Green State Credit Union suggests any withdrawal or conversion, it writes out projected income for each year to 75 under the tax rules as they stand today. It doesn't bet on what Congress or the market might do. If a plan only works when stocks rise or rates fall, the firm rebuilds it with smaller conversions.
What should an advisor's answer about a 403(b) tax bill sound like?
A good answer names your actual accounts, gives a dollar amount to withdraw or convert in a specific year, states the Medicare IRMAA threshold it stays under ($109,000 single or $218,000 joint MAGI, 2026 tiers) and says what happens to your heirs. A weak answer says "it depends on your bracket" and stops there.
Ask for the numbers in writing, and ask what the planning costs. Green State Credit Union clients know the exact planning cost from a signed written agreement before any work starts.
How does Wanda's inherited IRA change her son's tax bill?
Wanda (hypothetical) is a widowed 64-year-old reading specialist, and pre-tax money her son inherits is taxed at his higher rate within 10 years, on top of his salary. Converting $200,000 for her costs $44,000 in tax. Leaving it costs him $64,000.
She has $780,000 in three pieces: $430,000 in a 403(b), $250,000 in a rollover IRA and $100,000 in an IRA inherited from her mother. The inherited IRA has six years left on its 10-year clock. Her pension is $50,000.
She withdraws about $17,000 per year from the inherited IRA ($100,000 over six years) and converts $25,000 per year from the rollover IRA to a Roth for eight years. Her MAGI each year is $50,000 + $17,000 + $25,000 = $92,000, under the $109,000 single IRMAA line. Medicare sets each year's premium from MAGI two years earlier, so the income she reports at 64 sets her Part B premium at 66. Her income at 63 already set the premium for her first Medicare year at 65.
The eight conversions total $200,000. At an assumed 22 percent rate (for illustration), the tax is $44,000. If she leaves that $200,000 pre-tax, her son inherits it and withdraws it within 10 years at an assumed 32 percent: $64,000. The family keeps $20,000 more, before any growth.
Roth money is still invested, can fall in value and can lose part of what was put in. Conversions also have a trade-off. If Wanda joins a DROP and keeps her salary, her low-income years start later and the conversion room shrinks. The DROP decision itself belongs on its own page.
Notice that most checklist items come from paper she already receives: the pension letter, the 1099-R and last year's Form 1040. The IRS sends nothing special for this.
The arithmetic, step by step
The trade-off, and the paper you already have
Before any Roth conversion or extra IRA withdrawal from age 63 on, add it to all your other income for that year. Keep MAGI under the next IRMAA threshold ($109,000 single, $218,000 joint, 2026 tiers) unless the tax saved clearly exceeds the yearly surcharge.
| Item | Why it matters | Where to find it |
|---|---|---|
| Pension estimate letter | Sets the income floor each year | State retirement system |
| Form 1040, taxable income | Shows room left at current rate | Last year's tax return |
| Inherited IRA death date | Starts the 10-year withdrawal clock | Custodian beneficiary paperwork |
| Form 1099-R | Confirms what was taxed and codes | Each custodian, every January |
| Birth year | Sets RMD age: 73 or 75 | Your own records |
What does waiting until RMDs at 75 cost?
Waiting rarely avoids tax. It moves the tax to years when RMDs, Social Security and the pension all land at once, or into an heir's 10-year window. In Wanda's numbers, waiting turns a $44,000 bill paid at her assumed rate into $64,000 paid at her son's.
Saving the whole inherited IRA for the final year is a timing error with a real price. A $100,000 withdrawal on top of her $50,000 pension makes a $150,000 MAGI. That lifts her Part B premium two years later from $202.90 to $405.80 per month, an extra $2,438.80 for that year.
Questions about retirement tax planning
My 1099-R for the inherited IRA shows distribution code 4. Does that mean I owe no 10 percent penalty?
Code 4 on Form 1099-R marks a death distribution, and the IRS doesn't charge the 10 percent early-withdrawal penalty on withdrawals from an inherited IRA, whatever your age. You still owe ordinary income tax on pre-tax money. Check that the custodian's code matches the account type before you file.
How many years do I have to withdraw everything from an IRA I inherited from my mother?
Most adult children must empty an inherited IRA by December 31 of the 10th year after the owner's death. If your mother had already started required distributions, you may also owe a withdrawal each year before then. Check the custodian's paperwork and the current IRS rules for your case.
Should I convert part of my rollover IRA myself, or leave the tax for my children to pay later?
Converting yourself usually wins when your rate now is below your heirs' rate later. In the hypothetical example, $200,000 converted at an assumed 22 percent costs $44,000, while the same money withdrawn by a son at 32 percent costs $64,000. Add the conversion to your income first and watch the $109,000 single IRMAA line.
Can I send part of my RMD straight to my church to lower my tax bill?
Yes, if you're 70½ or older and the money goes directly from an IRA to a qualified charity, the transfer can count toward your RMD without being taxable income. Check the current IRS annual limit. It works for IRAs, not for a 403(b), so a rollover may come first.
Your own tax checks before Green State Credit Union runs the numbers
You can do three things alone. Find the taxable income line on last year's Form 1040. Add up every pre-tax balance. Write down the year each account forces withdrawals: age 73 or 75 for your own accounts, and the year-10 deadline for an inherited IRA.
Then use the 10-year clock as a self-test. Divide the inherited IRA balance by the years left. If one year's share plus your pension tops $109,000 single or $218,000 joint, spreading the withdrawals matters.
Year-by-year planning usually saves little if your pension and Social Security already pay your bills and your pre-tax balances are under about $150,000. Either way, you still need a tax preparer to file your return each spring.
Call Green State Credit Union when two or more of these overlap: a DROP or retirement-date choice, an inherited IRA with a clock running, and pre-tax balances above about $300,000. The firm's client minimum is $500K in investable assets. Use the request form to book an intro call; no phone number is published. Green State Credit Union works with clients nationwide, by video and by phone.
Three checks to run alone
When a call makes sense
A weak answer says it depends on your bracket and stops there; a good one names the account, the dollar amount and the year.
Where the rules come from
Related Green State Credit Union services
This is general information, not personalized investment, tax, or legal advice. Investing involves risk, including loss of principal. Before making decisions about your retirement or investments, consult a qualified professional about your own circumstances.