Many people spend their working years saving as much as they can for retirement, primarily through tax-deferred accounts such as traditional 401(k)s and IRAs. It’s a simple process, and the immediate tax break can encourage people to keep on saving. An employer match can add to that motivation.

But too often, investors fail to prepare for the tax hit that’ll come when it’s finally time to crack that nest egg.

Luckily, entering retirement opens the door to some key tax-saving opportunities. You may find yourself in what some financial experts call the gap years or an income valley.

This is generally the time between retiring and right before you must take required minimum distributions (RMDs) from pre-tax accounts.

RMDs are specific amounts of funds you must withdraw from accounts like traditional IRAs and 401(k)s when you reach age 73. The RMD will be treated as taxable income like any other distribution from pre-tax accounts.

But during the gap years, you may find yourself in the lowest income years of your life. You’re done collecting regular paychecks, and you may not have tapped into your retirement savings just yet. And you’re probably not collecting Social Security checks either.

This gives you plenty of control when it comes to your tax situation. So let’s take a look at some smart moves you can make.

Don’t Rush Into the Cookie Jar

Assuming you’re retired and not yet collecting Social Security, you can start funding the first few years of retirement from your checking account and taxable brokerage account. The money from your checking account won’t be taxed.

But selling assets that have grown in value from your brokerage account would trigger capital gains taxes. But if you’ve held these assets for more than a year, you can take advantage of the more favorable long-term capital gains rates: 0 percent, 15 percent, 20 percent.

And because you’re no longer collecting employment income or Social Security checks, your earned income for the year can be virtually zero.

Assuming you’re a single filer in this case, you pay zero percent federal tax on capital gains up to $49,450 after the amount of your deductions. This strategy is also known as tax-gain harvesting. It’s a way to strategically pay little or no taxes on capital gains. And it can be most effective in the low-income gap years.

But keep in mind, this won’t last forever. Your income would shift, and you’ll lose some control once you begin collecting Social Security and when RMDs begin.

Strategically Withdraw From Tax-Deferred Accounts

In our last example, we stressed the importance of resorting to sources like checking and brokerage accounts early in retirement to give tax-advantaged accounts room to grow.

But leaving money in there indefinitely isn’t always the best idea. That’s because RMDs will eventually kick in. Your RMD would be based on your account balance and a life expectancy factor determined by the IRS. So if it’s large enough, it can bump you into a higher tax bracket. As a result, it may trigger taxation on your Social Security benefits and surcharges on your Medicare premiums through IRMAA.

But by strategically drawing down money from traditional IRAs and 401(k)s, you could reduce the size of future RMDs.

Here, too, you can strategically make withdrawals to fill up lower tax brackets in the gap years.

Roth Conversions

Roth IRAs allow for qualified tax-free withdrawals.

But you may have overlooked a Roth IRA or Roth 401(k) in order to take advantage of their traditional counterparts, which help you lower your taxable income each year.

Still, you can jumpstart a Roth account through a Roth conversion. This is the process of transferring funds from an account like a traditional IRA and 401(k) to a Roth IRA.

You must pay ordinary income taxes on the amount converted in the year of the conversion. But here, too, you can have an upper hand in the gap years. You can essentially pay little to no taxes on the conversion.

And you don’t need to convert your entire pre-tax account into a Roth. You can convert as much or as little as you want each year. This is known as staggering conversions.

Each year before RMDs kick in, you could consider converting just enough to fill the 22 percent or 24 percent marginal tax brackets.

The 22 percent tax bracket peaks at $105,700 for single filers and $211,400 for married joint filers in 2026. The 24 percent marginal tax bracket tops out at $201,775 for single filers and $403,550 for married joint filers in 2026.

But although it sounds like a simple process, Roth conversions can be tricky. And doing it the right way depends on your unique circumstances. So it’s essential to approach a Roth conversion with the guidance of a qualified financial adviser and tax expert.

Consider Delaying Social Security

You can begin collecting Social Security benefits at age 62. But you can get your full benefit if you delay collecting until your Full Retirement Age. For most people working today, that’s age 67.

But waiting a bit longer helps even more. For every year you delay until you reach age 70, Social Security will increase your benefit by 8 percent. At that age, however, you’d collect your maximum amount in Social Security benefits.

The Bottom Line

For many investors, the time between retirement and before RMDs begin opens the door to major tax-saving opportunities. These are often called the gap years, the income valley, or the so-called retirement sweet spot. Before and during the gap years, you may want to think about making moves like delaying Social Security, making strategic withdrawals from different accounts, tax-gain harvesting, and Roth conversions. But the best move depends on your unique goals and needs. So it’s essential you discuss these with a qualified tax adviser.

The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.