Withdrawing From 401K While Contributing to Spouse's

[sgt-loudmouth]

Is there ever a circumstance where it makes tax-sense to withdraw from one spouse's 401K while contributing to the other spouse's 401K? 

In a few years, I will retire, but my spouse will continue to work. We both have 401K accounts to which we contribute.  We won't afford to live on her salary alone. I'm thinking we'll need to budget for an increase in our taxes on her salary to account if we stop her 401K contributions.  But if we don't stop her 401K, we'll be paying taxes on the withdrawals from my tax-deferred account.

Is there ever a circumstance where it makes tax-sense to withdraw from one spouse's 401K while contributing to the other spouse's 401K? 

[dmertz]

If your intent is to defer taxes as long as possible (which may or may not be the best long term tax strategy), withdrawing from the older spouse's 401(k) an amount equal to the 401(k) contribution of the younger spouse's 401(k) instead of making neither the distribution nor the contribution will mean that RMDs will be lower for the older spouse and higher for the younger spouse when the younger spouse becomes subject to RMDs than they would otherwise be.

[NCperson · Accepted solution]

If her employer is matching the 401k contributions, then it would make sense for her to continue to contribute while you are doing withdrawals.   You don't want to give up the 'free money' from her employer.

Otherwise, I don't see the benefit.