When it comes to retirement planning, one of the key factors that many planners focus on is minimizing their clients’ taxes each year. This allows retirees to keep more of their hard-earned dollars in their pockets and enjoy a better standard of living. Tax efficiency can in some cases mean the difference between having adequate retirement savings and running short.

Here are some suggestions that you can follow in order to keep the tax man at bay when you file your return.

Take Distributions Now

Although it may seem counterintuitive, taking distributions now may make more sense than taking them later, when you are forced to take RMDs from all of your traditional IRAs and qualified plans. If you have finished your career and are now in a lower tax bracket, then consider working a part-time job in order to generate enough income to allow you to contribute to a Roth IRA for you and, if you are married, your spouse (this may not be necessary if your spouse is still working). Earn enough income to make the maximum allowable Roth IRA contributions each year until you begin taking your required minimum distributions. This will lower the amount of RMDs that you must take and declare as income, and it will also help you to build or enlarge a pool of tax-free dollars.

Taking a regular stream of taxable distributions also helps you to anticipate and plan for the amount of tax that you will owe. “If you have assets in the three different pools of money – tax-free, taxable and tax-deferred – you have more control over your taxes. Investors can look at their tax bracket and distribute enough money out of each plan to make sure they are minimizing their tax bracket each year,” says Joe Anderson, CFP®, president, Pure Financial Advisors, Inc., in San Diego, Calif.

If you need to take a larger lump-sum withdrawal from your savings, your Roth IRA will be a better source for you than anything else, because it will not generate a tax bill. If you are taking $1,000 a month from your previous 401(k) plan and having some tax withheld, then you probably won’t owe much – if anything – when you file your return. But if you have to take $25,000 out of a traditional plan or account in order to buy a new car, then be prepared to see a substantial tax bill when you file.

Even taking money from a taxable account may not be a good idea if you will have to sell some assets in order to raise your cash. Doing so could create taxable capital gains that you will have to report as income in the same manner as your distributions, although you will pay a lower rate of tax on them for long-term gains. If you have a year where your income is going to be abnormally low, then you might consider converting one or more of your traditional retirement plans or accounts to a Roth IRA. This can generate some taxable income against which you can use credits and/or deductions that might otherwise be wasted. (For more, see Best Strategies for Managing Taxes on Distributions.)

Think Locally

If you are in a higher tax bracket at retirement, then it may be wise to start investing in municipal bonds that generate tax-free interest. You will have to calculate the bond’s tax-equivalent yield in order to determine whether you are better off buying taxable issues that pay a higher rate or tax-free offerings that pay less.

If you are in one of the top two tax brackets, you will probably be better off buying munis. Some of these bonds are federally insured, so that there is virtually no risk of default. (For more, see The Basics of Municipal Bonds.)

Social Security

There is not necessarily one best answer when it comes to filing for Social Security. Waiting until the maximum age will increase your benefit substantially, but it may also increase your taxes when you add in your RMDs and other income. Taking Social Security early will reduce your benefit, but it may also give you a source of income that you can use to fund a Roth IRA if you are also still generating any kind of earned income.

“Depending on how much income you are earning or taking from other retirement accounts, the tax rates on Social Security benefits can change. Those who are right on the bubble in terms of having 50% or 85% of their Social Security benefits taxed need to be very careful in terms of taking other sources of income, like RMDs from a traditional IRA,” says Mark Hebner, founder and president of Index Fund Advisors, Inc., in Irvine, Calif., and author of “Index Funds: The 12-Step Recovery Program for Active Investors.”

Think Charitably

If you are receiving RMDs and would like to give money to charity, you are now able to funnel up to $100,000 of distributions to the qualified charities of your choice and exclude them from your income. “By transferring an RMD directly to a nonprofit charity, a retiree can fulfill the IRS requirement to take a distribution while keeping the taxable income off of their 1040 completely,” says David S. Hunter, CFP®, president of Horizons Wealth Management, Inc., in Asheville, N.C.

This rule had been renewed every year at the last minute by Congress. In 2015, Congress finally made the rule permanent so you can plan ahead. You also do not have to itemize deductions in order to qualify for this exclusion.

The Bottom Line

Tax planning is a key component of retirement planning for advisors and their clients. Many taxpayers would be wise to have a planner run them a comprehensive plan in order to see how they can best minimize their taxes and maximize their income during retirement. For more information on tax and retirement planning, visit the Financial Planning Association website or consult your tax or financial advisor.