Tax amount to withdraw from 401k to buy property
I am thinking about buying some property and want to know how much I can withdraw from my 401k without it affecting taxes on my social security?
I did not have to pay taxes on my federal or state taxes last year because I have under $34,000.00
This year social security will be a little more but my yearly amount will still be under $34,000.
Thank you,
Terry Says
There are two issues here.
First, any withdrawals from a retirement plan are treated as ordinary income. Social Security benefits then may be partially taxed. Here’s a link to a chart that will show you how much you can earn and how your benefits may be taxed.
For example, if you’re single, up to 50% of your benefits could be taxed if you have income income between $25,000 and $34,000.
But that’s not the only impact of higher income. It could impact your Medicare Part B premiums, as well.
Here’s a chart of how additional income can increase those, in what’s called the IRMAA adjustment.
Bottom line: It could be far more expensive than you think to take a retirement plan withdrawal to pay for this real estate purchase!
