Retirement Income Taxation

Not all income is taxable. It’s especially important for retirees to know what income they can access that won’t be taxed. It’s equally critical for pre-retirees to understand retirement income taxation in helping with their planning…

First, we want to mention the 6 most common retirement income sources that are generally taxable.
 
Taxable

• Social Security (if income is above certain levels – click here for more)
• Pensions
• 401k/403b Withdrawals (assuming Traditional 401k)
• Traditional IRA Distributions
• Annuities (can vary depending on type)
• Rental Property Sales (you’ll be taxed on the gains, plus depreciation recapture)

 
Below are the 6 most common retirement income types you may receive without income taxes being levied.
 
Non-Taxable

• Social Security (if income is below certain levels – click here for more)
• Roth IRA Distributions (also applies to Roth 401k’s)
• Health Savings Account Distributions (if HSA withdrawals are for eligible medical expenses)
• Life Insurance Proceeds
• Muni Bond Interest (may still have state taxation if the bond is not from your resident state)
• Reverse Mortgage Proceeds

 
NOTE: there can be variances with certain income types that adjust the taxation.
 
If you have questions about your specific income and the corresponding taxation, don’t hesitate to contact us…we’re here to help!