White Coat Investor Podcast #446: Managing Taxes in Retirement with Sean Mullaney

Date: November 20, 2025
Host: Dr. Jim Dahle
Guest: Sean Mullaney, CPA, President of Mullaney Financial and Tax Inc., co-author of "Tax Planning to and Through Early Retirement" | fitaxguy.com

Overview

In this rich and practical episode, Dr. Jim Dahle welcomes tax expert Sean Mullaney to explore how retirees — especially physicians and high-income professionals — should plan for and manage taxes throughout retirement. Sean breaks down the “five phases of retirement,” shares critical tax strategies (including Roth conversions, sequence of withdrawals, and the importance of the widow’s tax trap), and dispels some of the fear-driven myths surrounding RMDs and retirement taxation.

Key Discussion Points & Insights

1. Five Phases of Retirement (06:07)

Sean Mullaney introduces a novel framework for viewing retirement through key “phases,” each with distinct tax planning opportunities and considerations.

• Phase 1: Retirement through 65th Birthday

  • Pre-Medicare years, often includes early retirees.
  • Focus on keeping ordinary income low: "That's going to help with whatever sort of planning we're doing." (Sean, 13:01)
  • Take advantage of Affordable Care Act (ACA) premium subsidies — manage taxable income to maximize credits.
  • Evaluate use of taxable accounts, Roth conversions (as appropriate), and avoid unnecessary early withdrawal penalties.

• Phase 2: The 'Golden Years' (66-69)

  • "The world is our oyster when it comes to tax planning in our golden years." (Sean, 16:23)
  • No more ACA premium credits or RMDs, and Social Security can be deferred; time to optimize Roth conversions and harvest tax-free capital gains.
  • Opportunities to live off taxable accounts and thoughtfully convert to Roth IRAs within 0% or low tax brackets.

• Phase 3: Age 70 to RMD Onset

  • Likely start of Social Security; RMDs still have not kicked in (for most, now at 75 for those born in 1960 or later).
  • Qualified Charitable Distributions (QCDs) become available at age 70½ — a key strategy for charitable giving.
  • Roth conversion opportunities diminish as Social Security fills more of the lower tax brackets.

• Phase 4: RMDs to First Death

  • Begin taking Required Minimum Distributions.
  • Effective tax burden on RMDs isn’t as high as feared, given raised standard deductions and lower brackets: "A lot of misperception and outdated thinking when it comes to just how harmful these RMDs are." (Sean, 37:39)
  • QCDs remain a valuable tool.

• Phase 5: Widowhood (The Widow’s Tax Trap)

  • Taxes may rise as survivor files single, but generally the “trap” is more of a modest inefficiency: "It's really the widow's tax inefficiency, not a trap." (Sean, 42:57)
  • IRMAA (income-based Medicare surcharge) bites more here,

Notable: For singles, phases four and five combine.

2. Early Retirement & Withdrawal Penalties (07:49)

• The 10% early withdrawal penalty (before age 59½) is "dramatically overblown for most people" (Jim, 09:16).
• Retirees can use strategies like:
  • Rule of 55 withdrawals from 401(k)
  • 72(t) SEPP (now more lenient with a 5% floor interest rate)
  • Taxable accounts and governmental 457(b) plans, which offer flexibility.
• "Assets become income very efficiently in the United States." (Sean, 12:02)

3. ACA Premium Tax Credit vs. IRMAA (13:01 & 23:58)

• ACA premium tax credit offers significant dollar savings (worth thousands) for pre-Medicare retirees—prioritize keeping income low before Medicare starts (age 65).
• Roth conversions during ACA years can reduce or eliminate credits—careful planning needed.
• IRMAA (income-related Medicare surcharge):
  • Affects Medicare premiums in higher income years, "a minor nuisance," and less impactful than lost premium tax credits.
  • "IRMAA can be a touchdown...but it tends to occur to those who very much can bear it...it rarely has that much impact on lived experience." (Sean, 23:58)
  • Larger concern for singles/widows due to lower thresholds.

4. Social Security Timing & General Wealth Realities (28:22)

• Delaying Social Security (ideally until age 70 for high earners) has many benefits:
  • "It keeps our income tax return clean in our 60s to help with golden age planning." (Sean, 28:22)
  • Reduces long-term volatility and increases longevity insurance.
• Most retirees don’t wait until 70 — reflecting overall median net worth and financial realities, not tax optimization.

5. QCDs: The Charitable Planning Tool (31:41)

• Qualified Charitable Distributions from traditional IRAs at age 70½:
  • “Very, very, very powerful planning.” (Sean, 31:41)
  • Satisfy RMDs and provide a real tax advantage for the charitably inclined.
• Not available from 401(k)s, only IRAs.

6. RMDs: Myths and Realities (37:39 & 47:55)

• RMDs are less threatening due to:
  • Delayed start age (now 75 for many)
  • More favorable actuarial tables (2022 update)
  • Increased standard deduction and lower tax brackets.
• "There's this huge fear of RMDs. Apparently, it's not a problem for us to have a higher taxable income during our earnings years. But heaven forbid you have some huge RMD because you did such an awesome job saving for retirement." (Jim, 47:14)
• Most retirees “win” compared to their accumulation-phase tax rates.

7. Roth Conversions: When (Not) to Use Them (51:30)

• Roth conversions are not universally needed:
  • Best used in years with very low taxable income (e.g., golden years or “income disruption” years).
  • “In the book we say: Pay tax when you pay less tax.” (Sean, 51:30)
  • Most retirees are lightly taxed in withdrawal years thanks to system structure.
  • Roth conversions for legacy/wealth transfer may make sense for ultra-wealthy with high-earning heirs.

8. Buy, Borrow and Die: When Does This Work? (55:03)

• A high-net-worth strategy: Borrowing against appreciated assets versus selling (to get a step-up in basis at death).
• For most, unnecessary: Taxes on long-term capital gains are often minimal, with a generous 0% bracket below ~$99,000 MFJ.
• "Wealth is a threshold, not interest rates." (Sean, 55:49)

9. On Fear-Based Financial Advice (62:14)

Sean criticizes fear-based messaging in financial content:

• "Too much of our content boils down to five words: 'You are rich, start worrying.'"
• Calls for more quantitative, practical, less fear-driven planning and evaluation.

Notable Quotes by Segment

| Timestamp | Quote | Speaker | |-----------|-------|---------| | 06:07 | "For married people, I generally look at five phases of retirement and it's mostly based on the planning considerations of those five phases." | Sean Mullaney | | 12:02 | "Assets become income very efficiently in the United States." | Sean Mullaney | | 16:23 | "The world is our oyster when it comes to tax planning in our golden years." | Sean Mullaney | | 23:58 | "[IRMAA] boils down to about a 1% to 3% surcharge... it rarely has that much impact on lived experience." | Sean Mullaney | | 28:22 | "I tend to really like delay, delay, delay [Social Security] because it keeps our income tax return clean in our 60s..." | Sean Mullaney | | 31:41 | "If you're charitably inclined, this is the way to go... Very, very, very powerful planning." | Sean Mullaney | | 37:39 | "A lot of misperception and outdated thinking when it comes to just how harmful these RMDs are." | Sean Mullaney | | 47:55 | "Why is there such a fear of RMDs... where no one seems to hate having a high income, you know, prior to retirement?" | Dr. Jim Dahle | | 51:30 | "In the book we say: pay tax when you pay less tax." | Sean Mullaney | | 62:14 | "Too much of our content boils down to five words: you are rich, start worrying." | Sean Mullaney |

Segment Timestamps

• Overview of Retirement Phases & Key Planning Points — 06:07
• Early Retirement Withdrawal Strategies — 07:49–12:10
• Taxable Accounts, ACA, and Roth Conversions Before 65 — 13:01–15:57
• Golden Years Tax Planning — 15:57–23:38
• IRMAA and Transition into Medicare — 23:38–26:48
• Social Security Timing — 28:22–31:33
• QCDs and Charitable Giving — 31:41–34:32
• RMDs, Roth Conversions, Spending, and Tax Planning — 34:32–37:20
• Widow’s Tax Trap — 42:27–47:14
• RMD Myths and the 'Roth Lobby' — 47:14–51:30
• Roth Conversion Decision-Making — 51:30–55:03
• Buy, Borrow & Die, and Wealth-Based Planning — 55:03–60:06
• Book Audience & Practical Drawdown Planning — 60:06–62:14
• Financial Media and Fear — 62:14–63:23

Memorable Moments

• Dispelling Early Withdrawal Fear: Both agree the 59½ penalty is manageable for savvy savers, with many lawful workarounds [07:49–12:10].
• "Hidden Roth IRA": Even six-figure IRA withdrawals can see a large portion federally tax-free in retirement thanks to deductions [16:23].
• IRMAA vs. ACA Credit: IRMAA is often a minor annoyance compared to the massive impact of lost ACA tax credits [23:58].
• Roth Conversion Hype: Contrasting “Roth lobby” enthusiasm (Ed Slott’s dynamic, pro-Roth keynote) with Mullaney's balanced, quantitative realism [50:03–51:30].
• "You Are Rich, Start Worrying": Mullaney’s take on fear-based media and advice [62:14].

Final Takeaways

• Retirement tax planning is phase-specific: Understand your sequence and tailor your tactics.
• Most retirees, even affluent ones, face less tax risk than financial media often implies.
• Roth conversions and “buy, borrow, die” tactics hold value only in select cases; most need tailored, moderate plans.
• Charitable giving from IRAs (QCDs) is a major tax advantage in later retirement.
• Don’t let fear-based financial advice cloud what should be a period of opportunity and enjoyment.

For more insights, see Sean Mullaney’s blog fitaxguy.com or check out “Tax Planning to and Through Early Retirement.”