Scire
Why are so many Social Security (ss) recipients penalized in the tax code for taking a Traditional IRA withdrawal (thus: IRA withdrawal becomes a penalty to SS income which effectively pushes the IRA withdrawal into a disproportionally high % of tax due on it relative to the tax bracket that the recipient is actually in for a given year?
1 Answer
Chiangmai
Scire, do you realize you just answered your own question? The Social Security checks you receive are deemed as income, hence, subject to income tax. When you make a withdraw on your pre-taxed IRA money, you effectively add more taxable income for that tax year. Why? Both incomes are taxable. If you're talking about a Roth IRA, then it is another matter since Roth IRA contributions are after-tax contributions. Finally, the higher the combined incomes from your IRA and SS money, the higher the tax bracket you belong to.
We thank you for supporting Uncle Sam, Scire.
| 14 years ago. Rating: 0 | |
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