if my retirement money saved is tax deferred and my total is?

Question

230,000 by the time I retire in 12 years - can i get it all in a lump sum check or do i have to get it monthly minus taxes? The $$ amount sounds awesome but too good to be true maybe? Thanks! Oh, and also, in 12 years i will have 30 yrs of service, but will be younger than the age (65) required to get "maximum" benefits. What does that mean? I don't get all of my money? I don't understand that at all. Thanks in advance to all that try to help/explain.

Wow.... the first three (and only so far) answers that I received were ALL very informative and helpful. I will let Yahoo pick the "best" answer, as I don't want to step on any toes. I thank each of you very much!!!

Answer 1

You can take it in a lump sum, but be careful how you do it. Assuming you are talking about a tax qualified plan, such as a 401(k), you can roll the funds into an IRA and continue to enjoy tax deferral. When you withdraw funds, they are taxed as ordinary income, and if you're less than age 59.5, there's a 10% penalty.

Answer 2

Typically term "maximum benefit" applies to annuities and defined benefit plans. It means that in order to obtain the greatest monthly benefit you have to work until Normal Retirement Age which may be 65 or now even 67. It's not that you wouldn't get all your money, but that the annuity would be larger on a monthly payment basis when you retire simply because you've let it sit for 2 additional years.

You can take it lump sum if you want (less taxes). Some plans only allow lump sums distributions. Others allow for installments such as you mention, annuity purchases, or a mixture. I don't recommend lump sum as you typically won't use all that in one year (woe to you if you do) so why take it and push yourself into a higher tax bracket. Better to roll it into an IRA and have them either start you on installments or take out only a portion of your account each year on your own.

Just want you to know that the assumption is that you can't take more than 4% of your balance each year if you want to ensure that your account will last your entire life. Anything more than that could deplete the account if there is a down market soon after you retire.

Answer 3

Yes: All looks good; but I find that too many things happen. If you can acquire an income producing real estate property during the 12 years, you can roll the retirement money over and pay it off when you are close to retirement. The income from the property, would be taxable current income when you leave your job. The level would be good enough to let you live well. The value of the property would be your retirement, and it would have grown (about 20% per year since leaving the company).

You really need to check into this scenario with a tax accountant.

Answer 4

You seem somewhat perplexed related to what's taxed, and what may well be "written off". you may not basically write off funds you make investments. in case you purchase shares, costs which contain broking provider costs, and volume initially invested, is subtracted once you sell it to determine your taxable income, yet not written off once you purchase it - you had $30,000 before you got the inventory, then you definately've something (the inventory) nicely worth $30,000, so which you're even. in case you purchase inventory and its cost is going to 0, you may take a loss, yet that would fairly defeat your purpose - and you're able to be able to basically deduct $3000 per 365 days from non-investment earnings so it would take 10 years to get it decrease back - after which you won't get the $30,000 decrease back, purely the tax on $30,000. And in case you place funds right into a tax-deferred account, what gets deferred is the earnings from that when it fairly is interior the tax-deferred account, not the money you put in. on the different hand, as somebody else reported, the IRS taxes earnings, not possessions, so having $30K in mark downs would not cost you extra desirable taxes apart from any interest or dividends you earned during the 365 days on the quantity. something would not upload up right here. you assert you grossed $40 5,000 this 365 days, stored $30,000 and paid $10,000 in taxes. once you're speaking approximately having $10,000 withheld, you had way too plenty withheld and you have have been given a $4000+ refund coming. yet in spite of if that's so: earnings $40 5,000, much less the $30,000 stored and the $10,000 withheld for taxes - did you relatively survive $5000? would not sound probably.