"He has accumulated $2.5M in Apple stock that was purchased three decades ago. Now, it is almost all capital gains. He wants to draw on this income to fund his first few years of retirement, but doing so would count as Modified Adjusted Gross Income (MAGI). This would likely trigger higher taxes. So, how does he get around it? Let's look at his situation and see what others can learn from it."
"This poster's main issue is that he plans on selling a large portion of this appreciated stock, which would increase his MAGI. This would result in higher taxes and likely push him into a higher Medicare bracket. Neither of those factors is a thing to scoff at. There are some things he can do to help lower his bill. It's important to note that this tax bill cannot be avoided completely."
A 55-year-old investor holds $2.5M in Apple stock purchased three decades ago, with nearly all value as capital gains. Selling large portions would increase Modified Adjusted Gross Income (MAGI), raise capital gains taxes, and likely push Medicare premiums into a higher bracket. The tax bill cannot be entirely avoided, but several tactics can lower or spread the liability. Options include timing sales across years, harvesting losses elsewhere, using tax-efficient withdrawals from other accounts first, gifting shares, employing tax-advantaged accounts or charitable donations, and consulting tax professionals to tailor strategies to retirement goals and income needs.
Read at 24/7 Wall St.
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