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What will be my (income) tax rate for 401K withdrawal after retirement? |
Let's say I'm 65 years old now, not yet retiring. My current income is about $200K, so my income tax rate is the highest (state & federal.) In a few years, I will retire and plan to withdraw about $50K per year from my tax-deferred 401K account. What will be my tax rate then? It is ordinary income and is taxed at the same rate as money earned at a job. It would be the same rate as having a job paying 50k a year. At 65 you get an extra exemption which lowers your tax a little. There would not be any taxes withheld other than federal and state tax (no ss or med, etc) If you are single a very rough estimate would be $6000 federal tax plus state tax. idk i say u should call tiffs hes good wit taxes look in da phone book if u live on Long ISland Whatever the current enacted rates are at that time for that level of income - probably about 15%. Of course, that is the rate on the gross of $50K, you will still have certain deductions and exemptions that will lower the actual amount you will apply the % on (so you will end up with a lower effective tax rate). Different than it is now. It's hard to say exactly what your tax rate will be but I found the following article VERY enlightening. Basically, it claims that most of the "Employer match" will end up as taxes and you will get nothing from it. http://assetbuilder.com:9669/blogs/scott... What will your total income be? What is your filing status (married filing jointly, single, etc.)? Will you be taking the standard deduction, or itemizing? Will you have other income from your investments outside of the 401K (such as dividends and interest)? Without this info, no one can give you an estimate. After the elections, there may be a move to change tax rates/tax laws. The impact of those (possible) changes can't be quantified. The money withdrawn from your 401k will be taxed as ordinary income. If you will be getting social security, between 50% and 85% of your social security will be taxed as income. A good starting place to determine you probable tax rate is the IRS webside. Download the current Form 1040 and the instructions. (The instructions are long so it is best to save the file to your hard drive.) Work through the tax form entering all the relavent info and calculate your taxes. The form is not that difficult for a retired person. |
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