Baby boomers must feel a little like lab rats when it comes to retirement.

After all, their generation is the first to truly feel the effects of the shift from traditional pensions to employee-contribution plans that started in the 1980s.

We’ve heard plenty about the failures: According to a 2016 PWC survey, roughly half of all baby boomers have set aside $100,000 or less for retirement. And without a pension, that could leave them overly dependent on Social Security checks.

What we haven’t heard nearly as much about are the people who get to the end of the savings maze with hundreds of thousands of dollars growing tax-deferred in 401(k)s and 403(b)s.

Maybe that’s because the experiment isn’t over for them just yet.

“There are many people out there with 401(k)s who suddenly must think about how those savings will be taxed by Uncle Sam,” says Ben Schrock, an Investment Adviser Representative and president of B.A. Schrock Financial Group.

“The government can hardly wait to get its hands on all the money people didn’t pay taxes on while they were working.”

When savers take distributions from those accounts in retirement, it’s taxed as ordinary income, just like a paycheck, he says. “And retirees are often surprised to see the effect it can have on their bottom line.”

Here are a few ways you can avoid being caught unprepared by taxes in retirement:

  • Think twice before withdrawing 401(k) funds to cover a big expense. “I never want to discourage people from making a big buy – a new car, a trip or some other big-ticket item,” Schrock says. “I just want to make sure they’re aware of the consequences. If they pull out a chunk of money from a tax-deferred account, it might increase their current tax bracket, triggering more taxes that year.”
  • Be aware of how all your retirement income streams will be taxed. Taxes on your 401(k) distributions are a factor all on their own, but you also must keep tabs on how those distributions will affect the taxes on other income streams, including Social Security, Schrock says. In addition, if you withdraw money from a tax-deferred account before you reach age 59½ you will be charged a 10 percent penalty along with taxes.
  • Watch out for required minimum distributions. Ready or not, when you reach 70½, the government is going to get its share of your tax-deferred savings, Schrock says.  That’s because you’re required to withdraw a minimum amount each year and that withdrawal is taxed. “I often do Roth conversions for clients in their 50s and 60s to limit their exposure to RMDs,” Schrock says.
  • Consider where you’ll put your money when you take your RMDs.

Many people make the mistake of putting those RMDs into investments that don’t make any money or where the gains could be taxed again, Schrock says. “Your adviser can help you pick the path that’s best for you,” he says.

Because they’re largely invested in 401(k)s, many baby boomers never get around to hiring a financial advisor. Schrock says you probably can get away with being hands-off during the years you’re contributing to those funds.

“But in retirement,” Schrock says, “a specialist is needed to give you the strategies you’ll need to take control of your investments and avoid surprises.”