by Michael A. Ippoliti, MBA, CFP^®, Vice President

Strategies to Maximize Tax Deferral for Married Couples With one or Both Spouses Working
Required Minimum Distributions (RMDs) from retirement accounts begin when the owner reaches age 70-1/2. Naturally the younger spouse’s RMDs will begin later and therefore have the opportunity to remain tax-deferred longer.

Strategy 1 — Employer Retirement Plans: During working years, after taking advantage of employer matching funds, maximize subsequent contributions to the younger spouse’s retirement account first and then save any remainder to the older spouse’s account.

Strategy 2 — Contributions to Roth IRAs: Roth IRAs are not subject to RMDs for the original owner. If a couple desires to contribute a portion to Roth IRAs, the initial savings should go to the older spouse’s Roth IRA, then the younger spouse’s Roth IRA or Traditional IRA.

Strategy 3 — Roth Conversions: Logic is similar to Strategy 2. Converting a Traditional IRA to a Roth IRA results in the assets becoming tax deferred for life — no RMDs. For couples with an age gap, converting the older spouse’s IRA will reduce the older spouse’s future RMDs and retains the younger spouse’s RMDs.