Most people think the key to lowering taxes in retirement is simple: use Roth accounts.

But what if the real strategy is more nuanced than that?

In this episode of The Divorce the IRS Podcast, we break down one of the most important concepts in retirement tax planning: finding your “ideal number” in tax-deferred accounts and using a combination strategy to minimize taxes over your lifetime.

While Roth IRAs and Roth 401(k)s are powerful tools, their value goes far beyond tax-free growth. When used correctly, they can help reduce your retirement tax rate, avoid Social Security taxation, limit Medicare premium increases, and even help sidestep issues like the widow’s penalty.

But here’s the key insight: maximizing Roth alone is not the full strategy.

We explain why having some money in pre-tax accounts can actually work in your favor, especially when you understand how to use your standard deduction each year. By coordinating withdrawals between tax-deferred and tax-free accounts, you can potentially generate income in retirement while paying little to no tax.

Using a simple example, we show how the standard deduction allows you to withdraw from pre-tax accounts tax-free, and how going beyond that threshold triggers taxes at the lowest brackets.

This episode introduces the “ideal number”, the amount you should have in tax-deferred accounts by retirement to fully use these rules without exposing yourself to unnecessary taxes from required minimum distributions later on.

If your goal is to build wealth while paying the least amount of tax possible over your lifetime, this is a conversation you cannot afford to miss.

Calculate your ideal number:
https://baobabwealth.com/ideal-number/

Watch the Ideal Number Video:
https://baobabwealth.com/the-ideal-number-for-tax-efficient-retirement-what-most-people-miss/

In This Episode

• Why Roth accounts are powerful but not a complete strategy
• How combining tax-free and tax-deferred accounts lowers lifetime taxes
• How the standard deduction creates tax-free retirement income
• The concept of the “ideal number”
• Why too much in pre-tax accounts creates future tax risk

What’s Coming Next

• Roth conversion strategies to reduce future taxes
• How to shift assets toward tax-free income
• Advanced strategies to minimize taxes in retirement

• Visit Divorce-the-IRS.com
• Visit Baobab Wealth
• Visit Baobab Wealth Abroad
• Buy a copy of Jimmy's book, Divorce the IRS
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What happens to your money after you pass away?

For many families, the answer is more complicated and more costly than expected.

In this episode of The Divorce the IRS Podcast, we break down the final tax time bomb, often described as paying taxes from the grave. It is a hidden risk that can leave your heirs with a significant tax burden, even if your intentions were to pass along as much wealth as possible.

We walk through how tax-deferred accounts like IRAs and 401(k)s are treated when inherited, and why recent rule changes have made this issue even more important. For non-spouse beneficiaries, the requirement to withdraw funds within a limited timeframe can create a tax spike, especially if those heirs are in their peak earning years.

We also explore how this tax burden can be larger than expected, depending on who inherits your assets and what their financial situation looks like. Without proper planning, what you leave behind could be taxed at a higher rate than what you experienced during your lifetime.

The good news is there are ways to prepare. We discuss strategies that may help reduce or eliminate this burden, including the use of Roth accounts and how certain types of life insurance can be structured to offset future taxes for your heirs.

This is not just about what you leave behind, it is about how efficiently it is passed on.

If leaving a legacy matters to you, this is a conversation worth having as part of your overall financial plan.

In this episode, you will learn:

• How inherited retirement accounts are taxed
• Why the 10-year withdrawal rule can create a tax spike
• How your heirs’ tax bracket impacts what they actually keep
• The difference between passing assets to a spouse versus other beneficiaries
• Strategies that may help reduce or eliminate taxes for your heirs

Make sure to subscribe so you do not miss the next episode, where we begin to tie these strategies together and show how to apply them within your financial plan.

• Visit Divorce-the-IRS.com
• Visit Baobab Wealth
• Visit Baobab Wealth Abroad
• Buy a copy of Jimmy's book, Divorce the IRS
• Follow us on Facebook
• Subscribe to us on YouTube
• Connect with us on LinkedIn

What happens to your taxes when one spouse passes away?

For many couples, the answer is surprising and costly.

In this episode of The Divorce the IRS Podcast, we break down one of the most overlooked risks in retirement planning, often called the widow’s or widower’s penalty. It is a tax shift that can increase your tax burden even as your income declines, creating a difficult financial situation during an already emotional time.

We walk through a real-world example to show how a surviving spouse can end up paying more in taxes despite having less income. From changes in filing status to reduced deductions and tighter tax brackets, the impact can be significant if it is not planned for in advance.

The good news is there are ways to prepare. We explore two strategies that may help reduce or offset this risk, including the role of tax-free income sources and how certain planning tools can help maintain flexibility in retirement.

This is not a topic many people want to think about, but it is one that deserves attention as part of a well-rounded financial plan.

If you are married and thinking about retirement, this is a conversation worth having sooner rather than later.

In this episode, you will learn:

• What the widow’s or widower’s tax penalty is
• Why taxes can increase even when income decreases
• How filing status and deductions change after a spouse passes
• A real example showing the financial impact
• Strategies that may help reduce the long-term tax burden

Make sure to subscribe so you do not miss the next episode, where we cover the final tax time bomb and how taxes can continue even after you are gone.

• Visit Divorce-the-IRS.com
• Visit Baobab Wealth
• Visit Baobab Wealth Abroad
• Buy a copy of Jimmy's book, Divorce the IRS
• Follow us on Facebook
• Subscribe to us on YouTube
• Connect with us on LinkedIn