Experts say that up to 70% of retirement funds can be eaten up by income, estate and state taxes if you’re not careful. How do you avoid costly traps? To start with, sell any long-term capital gains assets first, so you don’t pay what will likely be short-term cap gains rates on other investments. Let those continue to grow.

Here are some other key strategies:
Follow the rules for RMDs. Take the required minimum distributions. Some people forget, and the penalties can be severe. Note that your RMD changes yearly, calculated by age, life expectancy, and account balance.

Spend accounts in the right order. You have an IRA, a 401(k), a Roth IRA and need funds to get by. How should you proceed? The Roth IRA withdrawal will be tax-free, but you may pay more in lost opportunity. It’s usually a good idea to withdraw from taxable retirement accounts first and leave the Roth IRA alone because you don’t have to take an RMD from it.

Know the distribution details. If you own traditional IRAs, you can withdraw from each, but it’s easier to add assets from all accounts and take one withdrawal from one IRA. Note that 401(k) plans can’t be pooled, but once you leave a company, you can roll them into an IRA. By consolidating into a single account, you’ll simplify paperwork, make computing withdrawals easier and gain greater control over your assets.

Take advantage of being married. Are you married? Sometimes it’s best to have a younger spouse inherit an IRA. You can reduce RMDs and trim taxes, making your retirement funds last longer. RMDs are calculated based on life expectancy. If your spouse is your IRA’s sole beneficiary and is at least 10 years younger, your RMD is computed using a joint life expectancy table, reducing what you’ll need to withdraw in any given year.

Make a charitable contribution. Use retirement funds to make tax-free donations of up to $100,000 directly from your IRA for your RMD, reducing income tax liability. You forgo itemizing charitable deductions but pay less in taxes.

RMDs can be delayed. If you’re working at 70 1/2 and contributing to a 401(k), you’ll get an RMD reprieve, although the calculations can be complex. The delay counts only for the 401(k) plan of the company you’re working for.

Do a Roth conversion in semiretirement. Let’s say you’re at least 59 1/2 and earn little income: Take distributions from your retirement plan. Convert a portion of your IRA to a Roth if your marginal rate is lower than it will be after you turn 70 1/2, when RMDs kick in.

This is just an introduction to a complex topic. Your situation may be different. For example, you or your spouse may have a traditional pension, and that will change the equation. The idea is to take a big-picture view of your situation and get professional advice.

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