In this episode of The Divorce the IRS Podcast, we continue our series on retirement tax time bombs by breaking down one of the most overlooked triggers of higher taxes later in life—Required Minimum Distributions (RMDs).

While many retirees assume they can leave their tax-deferred accounts untouched for as long as they’d like, the reality is very different. Once you reach age 73, the IRS requires you to begin withdrawing a portion of your IRA and traditional 401(k) balances each year—whether you need the income or not. And every dollar withdrawn is subject to taxation.

We explain how RMDs are calculated using IRS life expectancy tables, how the required withdrawal percentage increases over time, and what this looks like in a real-world scenario. More importantly, we highlight how these forced withdrawals can create unintended consequences, including higher overall tax exposure, increased taxation of Social Security benefits, and rising Medicare premiums.

We also explore the challenge many retirees face when they don’t need the income—yet are still required to take it. Once those funds leave the tax-deferred environment, they are often placed into accounts where earnings are taxed annually, potentially compounding the long-term tax burden.

Finally, we introduce strategies that may help reduce or avoid the impact of RMDs altogether, including the role of tax-free accounts like Roth IRAs and Roth 401(k)s. By understanding how and when to shift assets, you can begin to take more control over how your retirement income is taxed.

If you want to avoid being forced into higher taxes later in retirement and better understand how to plan around RMDs, this is an episode you won’t want to miss.

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In this episode of The Divorce the IRS Podcast, we continue our series on retirement tax time bombs with a surprise many people encounter around age 65—Medicare premium surcharges.

While many assume Medicare is free, the reality is far more complex. Your premiums for Medicare Part B and Part D are based on your income, and for higher earners, those costs can increase significantly. These surcharges, known as IRMAA (Income-Related Monthly Adjustment Amount), can quietly add thousands of dollars in additional expenses throughout retirement.

We break down how Medicare works, including the different parts, what you can expect to pay, and the costly penalties that can apply if you delay enrollment. We also explain how income from two years prior determines your current premiums—and why many retirees are caught off guard.

Most importantly, we explore strategies that may help reduce or avoid these higher premiums. By understanding how different income sources are treated, including tax-deferred and tax-free withdrawals, you can begin to make more informed decisions about how to structure your retirement income.

If you want to avoid unnecessary surprises and keep more of your money working for you in retirement, this is an episode you won’t want to miss.

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• Visit Baobab Wealth
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• Buy a copy of Jimmy's book, Divorce the IRS
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In this episode of The Divorce the IRS Podcast, we continue our series on the retirement tax time bombs that can quietly increase your tax bill later in life.

Today’s focus is Tax Time Bomb #4: Social Security taxation.

Many retirees assume that once they begin collecting Social Security, the income will simply supplement their retirement savings. But depending on how your income is structured in retirement, up to 85% of your Social Security benefit may become taxable.

The key factor behind this surprise is something called provisional income. When the IRS calculates provisional income, it includes sources such as withdrawals from traditional IRAs and 401(k)s, investment income, rental income, and even half of your Social Security benefit itself. If that number exceeds certain thresholds, your Social Security benefits may suddenly become taxable.

In this episode, we walk through how these rules work, why many retirees accidentally trigger Social Security taxes, and how different retirement income strategies—particularly the use of Roth accounts—can potentially help reduce or even avoid this tax time bomb.

What You’ll Learn in This Episode

• Why Social Security benefits can be taxed in retirement
• What provisional income is and how the IRS calculates it
• The income thresholds that trigger Social Security taxation
• How withdrawals from traditional retirement accounts can increase your tax bill
• Why Roth IRA withdrawals do not count toward provisional income
• A real example showing how retirees can accidentally trigger thousands in Social Security taxes
• The latest discussion around potential changes to Social Security taxation
• How proper retirement planning can help you avoid this tax time bomb

Understanding how Social Security interacts with the rest of your retirement income is a critical part of building a tax-efficient retirement strategy.

Visit the resources page at divorce-the-irs.com to access tools and calculators that can help you estimate potential Social Security taxes.

• 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