Save in a Roth IRA
Distributions from Roth 401(k)s and Roth IRAs after 59 years and a half from a particular account that is a minimum of five years old aren’t taxable, and they also don’t contribute to the taxation of the well-known Social Security benefits.
Saving for your golden years in the after-tax Roth account will set you up for tax-free withdrawals in retirement, but will also allow you to minimize taxes on all of your Social Security payments.
So the money that comes out of your Roth IRA account won’t count in the formula that establishes exactly how much of the Social Security is subject to taxation. So by the time you’ll initiate your Social Security, you’ll have more money in Roth IRAs, and much less in tax-deferred accounts.
Also, there will be more flexibility if you decide to withdraw money from any account. With a bit of planning, you could even draw money out in such a manner, that you will avoid any tax liability throughout all of your retirement years.
