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Tax-Aware Drawdown

Also called: TAD, bracket filling

A RetIQ strategy that voluntarily withdraws from pre-tax accounts in low-bracket years, before RMDs begin, and reinvests the after-tax proceeds in a brokerage account.

The aim is to pay tax at today's lower rate rather than at the higher rate expected once RMDs and Social Security stack up. Unlike a Roth conversion the money lands in a taxable account, where heirs may receive a step-up in basis.

It stacks with Roth conversions: the conversion fills bracket room first and the drawdown fills what remains.

Sources

RetIQ term — RetIQ User Manual and Features page, Tax-Aware Drawdown
The current-year figures and the numbers from your own plan appear inside RetIQ. Open the app →

Related

tax-valleyroth-conversionsmart-fillstep-up-in-basis

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