Retirement Taxes

Are you looking for information on how we pay retirement taxes after retirement?

When you retire, you should be in a lower tax bracket since you no longer receive working wages, so even if you are lucky enough to get a pension, it should be less than your previous annual earnings.

However, what sometimes happens -- you receive a pension, then Social Security kicks in (and you might pay taxes there too depending on your income). Then you take withdrawals from your IRA, 401K, Deferred Compensation, which saved tax payments during working years, and now are taxable during your retirement years. It's quite possible that you could fall into a higher tax bracket than before you retired.... especially since there are fewer tax brackets than there were years ago when many of us got into pre-tax savings plans.

Of course, this is the last thing you want to have happen after planning and working your entire life.

OK, so there are a few different issues to look at:

401K Early Withdrawals -- you want cash, now. Don't do it!

Income tax on Social Security -- will you pay or not?

Required Minimum Distribution -- when are you forced to begin making withdrawals?

State Tax on Retirement Income --do you owe it on retirement income?

Bottom Line: you might consider seeking the help of a tax professional that understands the tax laws after retirement.