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What is the tax rate on retirement distribution?

asked by SammyL (27)

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Tags:  retirement  taxes

answers

It is taxed along with your other income, so whatever your current rate of tax is (depending on the amount of the distribution it may go up) is the tax you'll pay. If you are under 59 12 and do not meet any exceptions, you will also pay a 10% early withdrawl penalty in additon to the tax.

7 votes

If a distribution is taken from a qualified plan of a taxpayer age 59. 5 or older, income tax is owed at the taxpayer's regular rate. If the taxpayer is under age 59. 5, an additional 10% penalty is owed unless an exception applies. The taxable part of pensions is also taxed as ordinary income when it is received.

7 votes

First, some of your retirement distribution might not be taxable at all. Return of your investment and previously taxed contributions are not taxable. For the rest, a retirement distribution is taxed like other ordinary (non-preferred) income. No special rates; just the normal 10 to 36 percent brackets

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posted by Att4372 (851)
6 votes

Withdraws are taxed on your ordinary tax rate. Earlier withdraw will lead in a tax penalty of 10% unless they are used for first time homebyers, education or jobloss.

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posted by Jutta (13)
5 votes

Generally, distributions from an IRA or 401(k) are taxed at ordinary income tax rates. If you withdraw money early, before age 59 1/2, then you will pay an additional 10% penalty unless an exception applies. If you have company stock in your 401(k), you may be eligible for special tax treatment of the Net Unrealized Appreciaiton. See your financial advisor.

5 votes

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