#10 Brilliant Ways To Reduce Your Taxes in Retirement

When you take money out of a tax-deferred retirement plan, you pay income taxes on the distributions at your marginal tax rate. The higher your marginal tax rate, the higher your tax bill on the distribution.

For example, if you are in the 10% tax bracket, a $10,000 distribution from your traditional IRA costs you $1,000 in taxes. But that same $10,000 distribution costs you $2,400 in taxes if you have more income and fall in the 24% tax bracket.

During years that you have more taxable income — such as when you sell stocks that generate large capital gains — minimize your distributions from pretax accounts.