Spiky Bugger
Well-Known Member
- Joined
- Jan 5, 2014
- Messages
- 6,310
A good news (you have $)/bad news (you owe taxes) thing.
Traditional IRA or a deferred comp plan or a 401b (or whatever it’s called) or a 403b or a 457 is where they told us to put income we could live without, so that we wouldn’t have to pay income taxes until we retired and had lower incomes.
But if the money went into a well-managed plan, and/or if your retirement income isn’t QUITE as small as you thought it would be…well, then, this is what happens:
•you turn 70 1/2 and have to start making withdrawals that will, over your expected lifetime…which they say is until age 99, use up all the money.
•and you have to pay income tax on that money.
•so if you put $100/mo into your account, from age 21 to 60, you’ve deposited $46,800. And maybe, over 39 years it grew, but not phenomenally, and you ended up with $70,000.
•and there are +/-28 years between 70 1/2 and 99.
•now you have to withdraw [$70,000/28=$2600] and pay taxes on it.
•next year, it will be whatever the new balance is (it could be more or less) divided by 27 years.
Anyway, there IS an option to have the fund where your money is withhold taxes for you. That might help. And if there are two of you and/or you put more money into that account, it may be the only way to avoid a shock at tax time!
I think I need to be a church. And there are likely math errors here. But I’m having issues my colorectal surgeon needed to prescribe for…so I’m just generally Incompetent & cranky.
Traditional IRA or a deferred comp plan or a 401b (or whatever it’s called) or a 403b or a 457 is where they told us to put income we could live without, so that we wouldn’t have to pay income taxes until we retired and had lower incomes.
But if the money went into a well-managed plan, and/or if your retirement income isn’t QUITE as small as you thought it would be…well, then, this is what happens:
•you turn 70 1/2 and have to start making withdrawals that will, over your expected lifetime…which they say is until age 99, use up all the money.
•and you have to pay income tax on that money.
•so if you put $100/mo into your account, from age 21 to 60, you’ve deposited $46,800. And maybe, over 39 years it grew, but not phenomenally, and you ended up with $70,000.
•and there are +/-28 years between 70 1/2 and 99.
•now you have to withdraw [$70,000/28=$2600] and pay taxes on it.
•next year, it will be whatever the new balance is (it could be more or less) divided by 27 years.
Anyway, there IS an option to have the fund where your money is withhold taxes for you. That might help. And if there are two of you and/or you put more money into that account, it may be the only way to avoid a shock at tax time!
I think I need to be a church. And there are likely math errors here. But I’m having issues my colorectal surgeon needed to prescribe for…so I’m just generally Incompetent & cranky.
