Tax-Efficient Withdrawal Strategies

Cook, Kirsten A.; Meyer, William H.; Reichenstein, William

doi:10.2469/faj.v71.n2.2

Cited by 15 publications

(17 citation statements)

References 13 publications

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“…(), and Cook et al. (). The variation in income tax rates therefore becomes the sole consideration in optimizing TDA versus Roth withdrawals for retirees. We have shown for our deterministic financial model that there is an optimal withdrawal strategy that is remarkably simple from a geometric perspective: The TDA should be drained each year to satisfy consumption up to a constant value over time in real dollars for the total after‐tax withdrawals from accounts subject to income tax.…”

Section: Discussionmentioning

confidence: 98%

“…Cook et al. () give a convincing example of this phenomenon in discrete time (see Table of their paper). Our approach in Appendix works with general parameters in continuous time using a differential equation approach.…”

Section: Previous Tda and Roth Account Consumption Strategiesmentioning

confidence: 96%

“…(), and Cook et al. (). In particular, we show that if there is a flat tax rate for all TDA withdrawals, then both of the naïve strategies result in portfolios with equal longevity.…”

Section: Previous Tda and Roth Account Consumption Strategiesmentioning

confidence: 98%

“…Other sources, such as Horan (,b), Reichenstein, Horan, and Jennings (), and Cook, Meyer, and Reichenstein () disagree with both of these naïve strategies, stating that the order of withdrawals between a TDA and a Roth account is irrelevant if the tax rate is flat. They point out that tax brackets need to be considered, because TDA withdrawals are taxed as ordinary income.…”

Section: Previous Tda and Roth Account Consumption Strategiesmentioning

confidence: 99%

See 3 more Smart Citations

Optimal Strategies for Traditional versus Roth IRA/401(k) Consumption During Retirement

DiLellio

Ostrov

2016

Decision Sciences

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We establish an algorithm that produces an optimal strategy for retirees to withdraw funds between their tax‐deferred accounts (TDAs), like traditional IRA/401(k) accounts, and their Roth IRA/401(k) accounts, in the context of a financial model based on American tax law. This optimal strategy follows a geometrically simple, intuitive approach that can be used to maximize the size of a retiree's bequest to an heir or, alternatively, to maximize a retiree's portfolio longevity. We give examples where retirees following the approach currently implemented by major investment firms, like Fidelity and Vanguard, will reduce their bequests by approximately 10% or lose 18 months of portfolio longevity compared to our optimal approach. Further, our strategy and algorithm can be extended to many cases where the retiree has additional, known yearly sources of money, such as income from part‐time work, taxable investment accounts, and Social Security.

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Section: Discussionmentioning

confidence: 98%

Section: Previous Tda and Roth Account Consumption Strategiesmentioning

confidence: 96%

“…(), and Cook et al. (). In particular, we show that if there is a flat tax rate for all TDA withdrawals, then both of the naïve strategies result in portfolios with equal longevity.…”

Section: Previous Tda and Roth Account Consumption Strategiesmentioning

confidence: 98%

Section: Previous Tda and Roth Account Consumption Strategiesmentioning

confidence: 99%

See 2 more Smart Citations

Optimal Strategies for Traditional versus Roth IRA/401(k) Consumption During Retirement

DiLellio

Ostrov

2016

Decision Sciences

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“…E-government is also a part of techno logical development. E-government is a po tential way to modernize the public adminis tration, improve the accessibility and quality of public services, increase public resources management efficiency, improve governance, and strengthen the democratic transpa rency (Bhuasiri, Zo, Lee, & Ciganek, 2016;Chaouali, Yahia, Charfeddine, & Triki, 2016;Cook, Meyer, & Reichenstein, 2015;Hoxby, 2018;Sęk, 2017). One of the e-government developed is e-filing.…”

mentioning

confidence: 99%

What Are the Motivation of Taxpayers in Using E-Filling Information Systems?

Yefni

Murniati

Zifi

et al. 2018

jamal

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Penelitian ini bertujuan untuk mengidentifikasi persepsi wajib pajak menggunakan e-filing dalam melaporkan Surat Pemberitahuan Tahunan (SPT) mereka. Metode yang digunakan adalah analisis Structural Equation Modeling (SEM) terhadap 100 orang wajib pajak pribadi yang terdaftar pada periode 2017 di Kantor Pelayanan Pajak Pekanbaru. Hasil penelitian ini menunjukkan bahwa para pembayar pajak berniat menggunakan e-filing jika sistem yang dirancang memberikan sejumlah kenyamanan bagi mereka. Oleh karena itu, Direktorat Jenderal Pajak harus gencar mempromosikan e-filing kepada wajib pajak.

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Behavioral Finance, Decumulation, and the Regulatory Strategy for Robo-Advice

Baker¹,

Dellaert²

2019

The Disruptive Impact of FinTech on Retirement Systems

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This chapter examines the regulatory and market structure concerns raised by automated financial advisors, and arrives at two conclusions. First, the principles-based regulatory approach of the 1940 Investment Advisors Act in the U.S. appears adequate and sufficiently flexible to address the new issues raised by automation, at least for now. Second, there is a pressing need to develop new mechanisms for encouraging investment robo-advisors (and financial advisors generally) to provide high quality decumulation services to their customers, because neither of the two prevailing compensation approaches—assets under management and commissions—provides sufficient incentive at present, and consumers are poorly equipped to evaluate the quality of decumulation services on their own.

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Tax-Efficient Withdrawal Strategies

Cited by 15 publications

References 13 publications

Optimal Strategies for Traditional versus Roth IRA/401(k) Consumption During Retirement

Optimal Strategies for Traditional versus Roth IRA/401(k) Consumption During Retirement

What Are the Motivation of Taxpayers in Using E-Filling Information Systems?

Behavioral Finance, Decumulation, and the Regulatory Strategy for Robo-Advice

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