You’ve contributed to your JRB account for many years. Now you’re ready to retire. As you transition from the “accumulation” phase, where you built financial resources, to the “distribution” phase, where you use these funds to create a financially secure retirement, you will be asking a new set of questions.
- How much income can I sustainably withdraw from my retirement account(s)?
- What income can I expect from Social Security?
- What is a Required Minimum Distribution?
- I have assets in addition to my JRB retirement account. How should I prioritize withdrawals from these accounts to minimize taxes and maximize my income?
How Much Income Can My JRB Retirement Account Provide?
The following table allows you to estimate how much you can withdraw from your retirement account annually and reasonably expect the money in the account to last your and your spouse’s lifetime.
The table below uses a simple rule of thumb often called the “4% rule.” It estimates a first-year annual withdrawal of about 4% of your retirement account balance. It allows for small annual increases due to inflation and has a high likelihood of lasting through retirement. But, it is not a guarantee. Projected income does not consider taxes and fees. Based on a 4% withdrawal rate, here’s what income your account can provide.
| Account Balance at Retirement | Estimated Annual Distribution |
|---|---|
| $100,000 | $4,000 |
| $250,000 | $10,000 |
| $500,000 | $20,000 |
| $1,000,000 | $40,000 |
| $2,000,000 | $80,000 |
What Will Social Security Provide?
For most of us, Social Security will make up a significant portion of our retirement income. Your Social Security benefit is based on the number of years you contributed and the amount you earned during those years. You must contribute to Social Security for at least 40 quarters (10 years) in order to be eligible. Social Security averages your highest 35 years of earnings to determine your benefit. The formula also accounts for inflation.
Starting Social Security at age 62 (the earliest age possible) reduces your monthly benefit by about 25% to 30% compared with your full retirement age benefit, depending on your year of birth. Delaying your benefit until after your full retirement age increases your benefit by about 8% per year until age 70.
The Social Security Administration provides an on-line calculator that allows you to estimate your benefit based on your date of birth, estimated annual earnings and planned retirement date.
When you begin Social Security has a big effect on the size of your benefit. Determining when to start is one of the most important decisions you will make. For more information, see:
Required Minimum Distributions (RMDs)
A Required Minimum Distribution (RMD) is the least amount you must withdraw from your tax-deferred Traditional pre-tax retirement account each year. Federal law requires most JRB participants to begin taking an RMD the year in which they reach age 73. Your first RMD can generally be taken by April 1 of the following year, and subsequent RMDs are due by December 31 each year. RMDs are not required from Roth accounts during the account owner’s lifetime. Participants may be exempt from the RMD from their JRB account if they are still working within the Conservative Movement.
Prioritizing Retirement Plan Distributions
Many JRB participants have sources of retirement income beyond Social Security and their JRB retirement Plan, which may include both Traditional pre-tax and Roth after-tax savings. These include a spouse’s retirement accounts (such as a 401(k), 403(b), or IRA), your own IRAs or other retirement accounts from prior employers, and after-tax brokerage or other investment accounts. How can you prioritize withdrawals from these accounts to minimize taxes and maximize your income? Below is a general framework people often discuss with their advisors.
- For Clergy – Clergy are eligible for the parsonage allowance in retirement, but only on funds withdrawn from a denominational plan such as the JRB’s. Note that you can only claim a parsonage allowance from your Traditional pre-tax contributions and earnings, not Roth after-tax contributions and earnings. Consider withdrawing an amount from your Traditional, pre-tax JRB account equal to the value of your housing allowance. Distributions used to cover your housing allowance are tax free. In addition, retired clergy do not have to pay Social Security taxes on their housing allowance withdrawals.
- Once you reach the age where Required Minimum Distributions (RMDs) are mandatory (currently age 73), you must take these withdrawals from any retirement accounts to which they apply.
- Next, consider taking distributions from cash and cash equivalent accounts such as money market funds, checking and savings accounts. You’ve already paid taxes on these assets so there are no tax consequences for using these funds.
- If you have Roth after-tax savings, you paid income taxes when you deposited the funds. Your earnings grew tax-free. As long as you’ve owned the account for at least five years and are 59½ or older, withdrawals are tax free.
- If you have an after-tax investment (brokerage) account, you’ve been paying taxes on the interest and dividends you receive every year. When you withdraw money from your after-tax investment account, you will only owe taxes on the capital gains. Long-term capital gains tax rates are lower than ordinary income tax rates.
- Withdrawals from a tax-deferred retirement account, such as your Traditional pre-tax JRB account, 401(k), 403(b) accounts from other employers, or traditional IRAs, are subject to ordinary income taxes. Because these accounts continue to grow tax deferred, it makes sense to withdraw these assets last. Note: RMD’s and tax brackets can influence timing.
We’re Here to Help
Switching from the “accumulation phase” of your retirement journey to using these funds to support your retirement requires a major change in mindset. How much income can your retirement savings provide? How much income can you expect from Social Security? What are federal requirements for retirement plan withdrawals? How can you plan distributions to minimize taxes?
When you begin thinking about structuring your retirement income, set up a Complimentary Financial Consultation with the JRB. We will work with you to understand your financial needs and goals in retirement. Based on your objectives, we will work with you to develop a distribution strategy that meets your needs.
This information is for general purposes only and does not constitute legal, tax or investment advice.
February 2026