How to plug Social Security tax drain and keep more money



By Russ Wiles

Deciding when to start taking Social Security benefits depends on many factors, including how long you expect to live and the amount of financial resources at your disposal.

Income taxes and withdrawals from other retirement accounts also can influence the decision, yet these factors often don’t get as much attention as they should. So says a new report from Prudential that, among other things, looks at the potential tax bite on Social Security benefits.

IRA withdrawals — or those from 401(k) plans, annuities and other investment accounts — can trigger taxes on Social Security benefits that otherwise might go untaxed, said James Mahaney, a Prudential vice president for strategic initiatives who wrote the report. Investors who delay withdrawing from these other accounts “are only creating a greater deferred tax liability,” he contends, since taxes eventually must be paid.

Yet there’s often enough wiggle room regarding the timing of IRA withdrawals and Social Security benefits to minimize the tax bite. IRAs, 401(k) plans and Social Security itself provide flexibility on when to take income.

“Read the Full Article at >>>>”

Comments Closed