Can there be zero taxes in retirement

[cspfire2024]

Hello Experts,

This may be silly/stupid question but just wanted to do a quick sanity check 🙂

Let's say during my retirement, I withdraw $80,000 per year from my 401K.  Please assume no other income.

With this - my taxable income would be $80,000 - Standard Deduction($25K), this will leave us with net taxable income of $55K.  Would be this $55K considered as regular income and taxed accordingly OR it is considered as long term gain?  If the entire amount is considered as Income (not LT Gain), I am wondering how is that reasonable, since some part of that withdrawl could be gains out of investments? No?  I am sure, I am missing something obvious, please help!

[Bsch4477]

Withdrawals from your retirement account are taxed as ordinary income no matter what the source when transacted within your retirement portfolio. 

[fanfare]

You are coming to realize the downside of RMD at age 72. It is all ordinary income.

As some (?) relief, you can take out stocks in-kind and move them into your regular investment account.

something will have to be liquidated to pay the amount you owe or the custodian's minimum withholding amount.

[cspfire2024]

Thank you so much for the response and insights.  If you don't me asking can you please elaborate on "take out stocks in-kind and move them into your regular investment account".  I am not aware of this method, appreciate your time and help. 

[fanfare]

tell your custodian you want to transfer certain shares out of your IRA. It's on the RMD form.

That can satisfy all or part of your RMD.

[10301231]

Distributions from your 401-K or IRA are taxed as ordinary income. You could reduce this by instructing the trustee/firm that manages your account to withdraw some shares of stock. Or, you could have them transfer either part of the required minimum distribution (RMD) to a charity, including a religious organization, of your choice. You could help the charity even more by having the transfer be of stock.

[Bsch4477]

Understand that transferring stock as opposed to withdrawal of cash from your retirement account for your RMD does nothing to your tax liability which I understand is your concern. You pay the same tax on a withdrawal of $80,000 cash as you would on $80,000 of stock.