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Only from the inherited traditional IRAs before retirement. I am receiving disbursements from my TSP account now, but that withdrawal isn't an RMD. The "government" didn't set tax withholding for my TSP disbursements, I did.
We pay far more taxes in retirement than we did working. During our working years, we used the long tax forms with many tax deductions using side businesses such as RE and Transportation.
Just remember your tax federal tax bill is based on your social security plus your retirement accounts.
If you pay 20% and your total federal income was lower, when you do your federal income taxes, you'll be refunded for any overpayment. They might take out more each month, but you'll get a lump sum back.
It is more than just social security plus your retirement accounts.
It includes dividends, capital gains, interest payments, business income, and employment income.
Quote:
Originally Posted by TaxPhd
What does the highlighted sentence mean?
That is what the highlighted sentence is about.
I had much more than just pension income and social security.
My goal is to withhold enough money that my final tax payment or refund is plus or minus 1,000 dollars.
The goal of the Federal government is for you to LOAN them thousands of dollars at ZERO percent interest. My objective is to loan them as little money as possible at zero percent interest.
I have a business and for 15 years after retirement also worked in emergency management for the Federal government. I did withhold money there to cover my tax liability, including the distributions from my traditional IRA.
It was always a guess on how much income I would make from emergency management assignments and my business.
I left my money in the TSP until the RMD requirements kicked in and the cluster started!!
Fortunately, my RMD's from the TSP are minimal so it is easier just to be quiet than make a big issue about having the Federal government follow the law.
It isn't so. You may be confusing the automatic tax withholding on distribution versus your actual year end tax obligation. Many institutions will automatically withhold a certain amount unless you tell them not to withhold or specify a different percentage.
20% Federal Tax Rate is the default recommended rate at the investment company which holds my Work 401k, converted to an IRA. But I can select whatever Federal rate I want, in 1% intervals. Same for my State Tax rate.
20% Federal Tax Rate is the default recommended rate at the investment company which holds my Work 401k, converted to an IRA. But I can select whatever Federal rate I want, in 1% intervals. Same for my State Tax rate.
I believe 401k withdraws have a mandate, states vary with some requiring a min amount and others letting you specify
I believe 401k withdraws have a mandate, states vary with some requiring a min amount and others letting you specify
The IRS mandates a 20% withholding on 401K withdrawals. The service provider is required to withhold 20% for federal income tax. If you effectively only owe, say, 15% at tax time, then you have to wait until you file your taxes to get that 5% back. One can avoid that by rolling the 401k withdrawal into an IRA.
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