Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121189  
Subject: Re: tax in retirement Date: 6/22/2003 5:31 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
Roth account
401(k)
income from rental property
social security
income from the state retirement system

Now I figure that the money in the Roth account will have no impact at all on income tax and that the 401(k) money and any income from rental property will be taxed as ordinary income. But I'm not sure about the other two. Is there a certain amount of social security that is receivable tax-free? (Even if I have taxable income from my other sources?) And if there is a cut-off point or income level beyond which tax must be paid, I don't know whether this would include money from the state retirement system, social security--in addition to any other income (like from the 401(k), but not from the Roth account, which I think of as having no impact at all on income tax), or what...

If there is a publication about this that I should read, or a good website to visit, please let me know.


Hmm. Whatever happened to "trade date or settlement date"?

You're right about the Roth, the 401(k) and the rental income. Keep in mind that qualified distributions from the Roth do not affect your taxes in any way, including determining AGI (important later).

Taxation of your pension depends on whether or not you contributed to it in after-tax dollars. See IRS Publication 575 for information about the "simplified plan" (no, they're not being ironic), through which you recover your after-tax contributions tax-free.

The 401(k), net rental income, and taxable retirement income, along with any income from taxable investment accounts, all add to your Adjusted Gross Income (AGI). A portion of your Social Security income may also be taxable. It depends on the amount of your other income. There's a worksheet in the 1040 instructions that you use to calculate how much, if any, of your Social Security is taxable.

I suggest you dummy up a 1040 using the assumed numbers from your retirement. It's really the only way you're going to be able to estimate what your tax is going to be.

Now for the kicker. If your state has an income tax, check the "Adjustments to Federal AGI" section of the state instructions. Many states treat part or all of retirement income differently from the Federal.

Phil Marti
VITA Volunteer
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Back to the Future Buffalo Wild Wings
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement