A married couple avoids federal income tax on $145,000 annual spending by structuring withdrawals across tax-advantaged accounts.
A retired couple with $2.4 million in savings pays zero federal income tax on $145,000 annual spending by strategically withdrawing from three account types. The method leverages tax-deferred 401(k) funds, Roth IRA withdrawals, and brokerage gains within the 0% long-term capital gains bracket.
Their portfolio includes $1.1 million in a traditional 401(k), $700,000 in a Roth IRA, and $600,000 in a taxable brokerage account with $240,000 in embedded long-term gains. Deferring Social Security until age 70 prevents provisional-income calculations and preserves the standard deduction.
Key thresholds in 2026, including the $218,000 IRMAA limit, enable the tax-free structure. The strategy relies on timing withdrawals between retirement and Social Security eligibility to maximize tax efficiency.