{"id":383,"date":"2022-09-14T20:08:05","date_gmt":"2022-09-14T20:08:05","guid":{"rendered":"https:\/\/gpswp.com\/legacyfa\/?page_id=383"},"modified":"2022-09-14T20:13:44","modified_gmt":"2022-09-14T20:13:44","slug":"newsletters","status":"publish","type":"page","link":"https:\/\/gpswp.com\/legacyfa\/newsletters\/","title":{"rendered":"Newsletters"},"content":{"rendered":"\n

 How your retirement may be taxed <\/strong><\/p>\n\n\n\n

Worried about taxes during retirement? Let\u2019s look at some of the ways different types of retirement income are taxed. <\/p>\n\n\n\n

Traditional 401(k)s and IRAs <\/p>\n\n\n\n

On the front end, these tax-deferred accounts often reduce your taxable income, thus saving you money in the current tax year. Savings, dividends and investment gains with these accounts grow tax-deferred. <\/p>\n\n\n\n

BUT. <\/p>\n\n\n\n

It can be easy to lose sight of the fact that you\u2019ll eventually pay taxes on this money when you retire and begin taking withdrawals. And those taxes apply to gains and pretax or deductible contributions. <\/p>\n\n\n\n

And you can\u2019t put off withdrawals forever. <\/p>\n\n\n\n

Required minimum distributions, or RMDs, currently begin at age 72 for those with traditional 401(k)s and IRAs. Folks who work past 72 may be able to delay taking RMDs from their current employer\u2019s 401(k) until they officially retire, as long as they don\u2019t own more than 5% of the company that employs them. <\/p>\n\n\n\n

You should also bear in mind the tax rate you pay on traditional 401(k) or IRA withdrawals would be your ordinary income tax rate. Additionally, if you take payouts before age 59 \u00bd, you\u2019ll often be smacked with a 10% penalty on top of your regular tax fee. <\/p>\n\n\n\n

Roth IRAs <\/p>\n\n\n\n

Roth IRAs come with one potential advantage: While contributions aren\u2019t deductible, but withdrawals are tax-free. <\/p>\n\n\n\n

Two important notes here. <\/p>\n\n\n\n

First, you must have had your Roth IRA account for a minimum of five years before you can begin tax-free withdrawals. The countdown begins the first time money is deposited into your Roth IRA, whether through a contribution or a conversion from a traditional IRA. <\/p>\n\n\n\n

Second, though you may be able to withdraw the amount you contributed at any time, tax free, in most cases you must be at least 59 \u00bd to withdraw any gains without facing the 10% early withdrawal penalty. <\/p>\n\n\n\n

Social Security <\/p>\n\n\n\n

Prior to 1983, Social Security benefits were tax-free. And while many recipients still don\u2019t pay taxes on their benefit, others are in a different boat, depending on their provisional income and some may end up paying federal income tax on up to 85% of their benefits. <\/p>\n\n\n\n

If your provisional income is under $25,000 or $32,000 for married couples filing a joint return, your Social Security benefits are tax free.<\/p>\n\n\n\n

If your provisional income is between $25,000 and $34,000 or between $32,000 and $44,000 for joint filers, as much as 50% of your benefits are taxable. <\/p>\n\n\n\n

If your provisional income is greater than $34,000, or $44,000 for joint filers, as much as 85% of your benefits are taxable. <\/p>\n\n\n\n

Annuities <\/p>\n\n\n\n

If you own an annuity, there\u2019s a strong likelihood that some \u2014 perhaps even all \u2014 of any income you get from an annuity will be taxable. <\/p>\n\n\n\n

If you bought an annuity that supplies you with retirement income, the portion of the payments that reflects your principal is tax-free, however, the rest is taxable. Here\u2019s an example. If you bought an annuity for $150,000 and after a decade its value is now $225,000, you\u2019d pay taxes on the $75,000 of earned interest.<\/p>\n\n\n\n

You should also be aware the insurance company that sold you the annuity is required to inform you what\u2019s taxable. <\/p>\n\n\n\n

Additionally, there are different rules if you purchased an annuity with pretax money, like from a traditional IRA, for example. In this scenario, 100% of your annuity payment is taxed as ordinary income. Moreover, you should be prepared to pay any taxes you owe on the annuity at your ordinary income rate, NOT the more advantageous capital gains rate. <\/p>\n\n\n\n

Sources<\/p>\n\n\n\n

https:\/\/www.kiplinger.com\/retirement\/602231\/how-10-types-of-retirement-income-get-taxed<\/a><\/p>\n\n\n\n

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View September’s Full Newsletter<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

 How your retirement may be taxed  Worried about taxes during retirement? Let\u2019s look at some of the ways different types of retirement income are taxed.  Traditional 401(k)s and IRAs  On the front end, these tax-deferred accounts often reduce your taxable income, thus saving you money in the current tax year. Savings, dividends and investment gains […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-383","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"\nNewsletters - Legacy Financial Advisors, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/gpswp.com\/legacyfa\/newsletters\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Newsletters - Legacy Financial Advisors, Inc.\" \/>\n<meta property=\"og:description\" content=\" How your retirement may be taxed  Worried about taxes during retirement? 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Savings, dividends and investment gains […]","og_url":"https:\/\/gpswp.com\/legacyfa\/newsletters\/","og_site_name":"Legacy Financial Advisors, Inc.","article_modified_time":"2022-09-14T20:13:44+00:00","twitter_misc":{"Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/gpswp.com\/legacyfa\/newsletters\/","url":"https:\/\/gpswp.com\/legacyfa\/newsletters\/","name":"Newsletters - Legacy Financial Advisors, Inc.","isPartOf":{"@id":"https:\/\/gpswp.com\/legacyfa\/#website"},"datePublished":"2022-09-14T20:08:05+00:00","dateModified":"2022-09-14T20:13:44+00:00","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/gpswp.com\/legacyfa\/newsletters\/"]}]},{"@type":"WebSite","@id":"https:\/\/gpswp.com\/legacyfa\/#website","url":"https:\/\/gpswp.com\/legacyfa\/","name":"Legacy Financial Advisors, Inc.","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/gpswp.com\/legacyfa\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/pages\/383","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/comments?post=383"}],"version-history":[{"count":3,"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/pages\/383\/revisions"}],"predecessor-version":[{"id":386,"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/pages\/383\/revisions\/386"}],"wp:attachment":[{"href":"https:\/\/gpswp.com\/legacyfa\/wp-json\/wp\/v2\/media?parent=383"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}