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Income Tax in Retirement Questions
Posted on 5/26/16 at 3:48 pm
Posted on 5/26/16 at 3:48 pm
How do taxes work when you are in retirement at an age old enough to withdraw from your retirement accounts without penalty? So all or a large part of your income is coming from stocks/ bonds and taxed at long term gains? It is possible to have no income outside of long term gains right? So if I have say 100,000 in long term gains income and I work for myself for 10 hours a week to make say 25,000 a year what income level is that taxed at? In other words, do long term gains increase your tax bracket for what regular income you do make?
I mean I know this seems stupid obvious, but is it? I feel like it is rarely discussed.
To make it easy let's say I have no debt and I have $3 million in retirement accounts, 1.5 in roth IRA and 1.5 mil in 401k/ SEP IRA type of post tax account.
If I need $75,000 a year to live would I not just eat up my Roth first and let my 401k keep growing since that's the most tax efficient?
Any other thoughts and comments especially from any retirees currently doing this?
I mean I know this seems stupid obvious, but is it? I feel like it is rarely discussed.
To make it easy let's say I have no debt and I have $3 million in retirement accounts, 1.5 in roth IRA and 1.5 mil in 401k/ SEP IRA type of post tax account.
If I need $75,000 a year to live would I not just eat up my Roth first and let my 401k keep growing since that's the most tax efficient?
Any other thoughts and comments especially from any retirees currently doing this?
This post was edited on 5/26/16 at 3:50 pm
3
Posted on 5/26/16 at 4:19 pm to baldona
Withdrawals from a 401K retirement account are taxed as ordinary income, not capital gains.
This post was edited on 5/26/16 at 4:20 pm
Posted on 5/26/16 at 4:36 pm to baldona
its a good bit more complicated than that. How old are you? If you are not close to retirement, then I wouldn't bother worrying about this. If you are nearing retirement, then I would talk to a financial professional on how to meet your income needs.
Posted on 5/26/16 at 11:24 pm to baldona
quote:
If I need $75,000 a year to live would I not just eat up my Roth first and let my 401k keep growing since that's the most tax efficient?
Because you are going to want to eat up the fund that you will have to pay taxes on one way or another to spare the one that is tax free.
I don't see how you consider killing your tax free growth to be "tax efficient."
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