Tax Diversity Strategy Reduces Lifetime Tax Burdens and Medicare Surcharges

Individuals who fund pre-tax accounts, tax-free Roth accounts, and taxable investment accounts can control their taxable income during retirement to stay in a lower tax bracket. This tax diversity prevents dependence on a single account type by using pre-tax accounts for upfront deductions and Roth accounts for tax-free income. Taxable investment accounts provide flexible cash access and no required minimum distributions. Controlling taxable income allows a retiree to avoid Medicare surcharges and reduce the taxation of Social Security benefits.