November is when a lot of my retired clients start working through their year-end checklist.
Take the required IRA distribution. Make the charitable gifts. Review the investments. Think about a Roth conversion. Set some money aside for the holidays.
Each of those decisions can look perfectly reasonable on its own. But I've seen it happen more than once: several individually sensible decisions land on the same tax return and produce a result nobody was expecting.
Before you make your next move, I'd rather you ask one question first:
What happens when we put all of these decisions together?
One Household, Several Sources of Income
During your working years, your paycheck probably accounted for most of your income, and tax planning was relatively simple. In retirement, money tends to arrive from several different places, and each one carries its own tax treatment.
A traditional IRA withdrawal generally creates taxable income, except to the extent it represents contributions you already paid tax on. Selling an investment in a taxable account can generate a capital gain or loss. A Roth conversion generally adds the previously untaxed amount you convert to your income for the year. Qualified Roth distributions get different treatment altogether.
Those differences are exactly why coordination matters. The account that's easiest to withdraw from isn't necessarily the right source for your next expense.
Three Reasonable Decisions Can Add Up Fast
Here's a hypothetical that illustrates the point. Imagine a retired couple sitting down in November to plan their year-end moves. They're considering:
Withdrawing another $20,000 from their fully pretax traditional IRA. Converting $40,000 of pretax IRA money to a Roth IRA. Selling investments in their taxable account, realizing a $15,000 long-term capital gain.
Individually, each of those looks fine. Together, they add $60,000 of ordinary income and $15,000 of long-term capital gains to this year's return, before you even factor in other income, deductions, or offsets.
That doesn't mean all $75,000 gets taxed at the same rate. It means the household needs to look at the combined picture before moving forward.
The conversion might still make sense. The investment sale might reduce an uncomfortable concentration. The withdrawal might fund something important. But the analysis needs to account for all three moves together, not each one in isolation.
This hypothetical example illustrates income recognition only and does not calculate an actual tax liability.
Start With What You're Required to Take
If you have a required minimum distribution coming due, confirm exactly what's left to withdraw before deciding how much additional income to layer on top of it.
RMDs generally need to be completed by December 31st. There's a special deadline for your first distribution, but pushing that one off can leave you with two required distributions in the same following calendar year — which stacks up income fast. Your exact deadline depends on your personal circumstances, so this is worth confirming rather than assuming.
One more thing worth knowing: a required distribution cannot be converted into a Roth IRA. Satisfying your RMD and completing a Roth conversion are two separate steps, not one combined move.
Knowing exactly what's required helps clarify how much flexibility you actually have left for everything else on the list.
Review Charitable Giving Before the Money Moves
If you're 70½ or older and IRA-eligible, a qualified charitable distribution lets money move directly from your IRA to an eligible charity and be excluded from your income, subject to the applicable limits and requirements. A qualifying QCD can also count toward your RMD for the year.
The sequence here really matters. Withdrawing the money into your own bank account first and then writing a personal check to the charity generally does not produce the same QCD treatment. If charitable giving is part of your plan this year, that's a conversation to have before requesting the withdrawal — not an adjustment to make after the money has already moved.
Look Past This Year's Tax Bill
Additional income doesn't just affect what you owe next April.
Higher-income Medicare beneficiaries can end up paying additional premiums for Part B and prescription drug coverage. Social Security generally uses your tax information from two years earlier to determine those adjustments, which means a decision you make this November could show up as a higher Medicare premium down the road.
That doesn't automatically make an income-producing transaction a mistake. It just means the potential cost belongs in the analysis before you act, not after.
The same goes for a Roth conversion. It should be weighed against your future withdrawal needs, your expected tax circumstances, and whether you have the funds available to pay the tax the conversion generates. Under current rules, a completed Roth conversion can't be reversed through recharacterization — so this is one decision worth getting right the first time.
Make November Your Planning Month
There's still time to work through these choices before December gets crowded with travel, holidays, and processing deadlines.
When you sit down with your financial and tax professionals, bring the complete picture: your required distributions, any charitable giving plans, potential capital gains, and any Roth conversion you're considering. Looking at all of it together, rather than one decision at a time, is what actually protects you from an unpleasant surprise come tax season.
If you'd like to walk through your own year-end picture before the calendar gets away from us, that's exactly the conversation I'd welcome having with you.
To play the game, you've got to know the rules.
Sources: IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs); IRS Topic No. 409, Capital Gains and Losses; IRS, Retirement Plan and IRA Required Minimum Distributions FAQs; IRS, Retirement Plans FAQs Regarding IRAs; Social Security Administration, Medicare Premiums rules.
This material is provided for educational purposes only and does not constitute individualized investment, financial, tax, or legal advice. Tax laws and IRA, Roth conversion, QCD, and Medicare premium rules are subject to change and depend on individual circumstances. Consult qualified tax and financial professionals regarding your own situation. Hypothetical examples are illustrative only and do not represent actual tax outcomes.