How Arkansas Pre-Retirees Can Build a Tax-Efficient Retirement Plan

By Roxanne Martens, MS, CFP®

Retirement may be on the horizon, but that doesn’t mean your tax bill disappears. For Arkansas residents within 10 years of retiring, now is an ideal time to explore how tax-efficient planning can shape your financial future.

From the rolling hills of the Ozarks to the executive offices of companies like Walmart and Tyson Foods, many Arkansans approaching retirement often find themselves juggling complex financial decisions. Whether it’s required minimum distributions (RMDs), Social Security timing, deferred compensation, or healthcare premiums, each of these can affect your tax landscape in ways that aren't always obvious.

However, with strategic planning, it’s possible to maximize Arkansas’s favorable tax environment and develop a strategy that supports your retirement lifestyle. This article outlines several tax-smart moves you can consider now to help you navigate that next chapter with greater clarity—and fewer surprises.

Why Tax Efficiency Matters in Retirement

Taxes don’t magically disappear when you retire. They just change places. Constructing a tax-efficient retirement plan now can help you keep more of what you’ve earned before required minimum distributions (RMDs) and Social Security kick in. 

High earners in Arkansas have a lot of incentive to begin tax planning in advance of retirement. Taxable income can increase once RMDs, Social Security payouts, and deferred compensation become factors. Delaying retirement plans could result in being moved into a higher tax bracket.

Smart Moves to Make Now

Here are some actions you can take right now to build a tax-efficient retirement plan.

Make Roth Conversions in Lower Tax Years

You are likely going to have some “gap years” between your retirement date and the start of mandatory RMDs. This means you’ll have a temporary tax window during this period of lower income. Consider converting a traditional IRA to a Roth IRA, spreading your tax liability over a few years and building tax-free income for later. 

Use Deferred Compensation Plans Wisely

Arkansas executives at corporations like Walmart and Tyson Foods can adopt non-qualified deferred compensation (NQDC) plans to hold off income and trigger tax breaks. Postponing some of your current pay to future years can lower your present tax bill and make regular taxable income more manageable in the future.

Make Strategic Charitable Gifts

When you hit age 70½, you can make qualified charitable donations (QCDs) from your IRA to champion your favorite causes while reducing your adjusted gross income. You can also utilize donor-advised funds and charitable remainder trusts to minimize your tax exposure.

Sequence Withdrawals Tax-Efficiently

Time your withdrawals to streamline tax liabilities. A typical strategy is to start with your taxable accounts, then take from tax-deferred accounts, and end with Roth accounts. Depending on your specific situation (and how many dollars you have in each tax bucket), this can help prevent you from being pushed into a higher tax bracket solely because of RMDs.

Arkansas-Specific Planning Advantages

Arkansas does not tax Social Security benefits. The state also gives partial exemptions on qualified pension income. If you’re supporting grandchildren bound for college, you can set up a 529 savings plan and enjoy income deductions on your state tax return. 

Remember Healthcare and Medicare Planning

The Medicare surtax and income-related monthly adjustment amounts (IRMAA) are important to monitor now, as your income can affect your Medicare premiums just as it does your taxes. Working to reduce your modified adjusted gross income before age 65 can limit future healthcare expenses and optimize cash flow in retirement.

The Value of Professional Guidance

As a fee-only fiduciary financial advisor based in Rogers, I work closely with Arkansas pre-retirees to help them build tax-efficient retirement plans that reflect both their goals and the realities of our state’s tax landscape.

While I’m part of a broader team headquartered in Manhattan, Kansas, I serve local clients with personalized guidance drawing on both professional expertise and an understanding of Arkansas-specific retirement considerations. From tax planning and investment management to estate strategy, I provide clear, coordinated advice that supports your financial well-being now and into retirement.

If you’re within 10 years of retirement and want to explore your options for building a more tax-efficient future, I’d be happy to talk. You can reach me at our Rogers, AR, office by calling (479) 335-1034 to schedule a conversation.

FAQ

What is the most tax-efficient way to retire in Arkansas?

Strategies may include Roth IRA conversions during low-income years, using qualified charitable distributions (QCDs), and taking advantage of Arkansas's exemptions on Social Security and pension income.

Does Arkansas tax retirement income?

Arkansas does not tax Social Security income and offers partial exemptions on qualified pension income. Strategic planning can help reduce overall tax burdens in retirement.

When should I start planning for retirement taxes in Arkansas?

Ideally, within 10 years of retirement. This allows time to take advantage of Roth conversions, withdrawal sequencing, and other strategies that can reduce taxes later.

About Roxanne

Roxanne Martens is a CERTIFIED FINANCIAL PLANNER® professional and serves as a Lead Financial Advisor on the team at CGN Advisors, a Fee-Only, financial advisory firm based in Manhattan, Kansas. Roxanne works out of CGN’s Arkansas location, serving clients in the Rogers, Bentonville, Springdale, and Fayetteville areas. An advisor since 2020, she works with corporate executives, young professionals, and those approaching retirement by helping them utilize their growing income efficiently and facilitating strategic cash flows once their regular earned income ends. She enjoys using her skill set to educate and guide clients through life as they make financial decisions and set goals. Roxanne says, “Comprehensive financial planning and investment management takes a lot of trust from the client, and I don’t take that lightly. I genuinely want each of my clients to succeed.” Her favorite aspect of her role is connecting with clients on a personal level, providing clarity and peace, and being able to witness them realize their dreams.

Roxanne obtained her master’s degree in personal financial planning from Kansas State University and holds the CFP® designation. Prior to becoming a financial advisor, she taught in the Personal Financial Planning program at Kansas State University for seven years. As a mom with young children, most of her free time is spent with her husband, John, and two sons, Johnny and Judd. They enjoy living life outdoors—bike rides and spending time at the lake or pool. To learn more about Roxanne, connect with her on LinkedIn.

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