2007-03-11 03:15:52 · 4 answers · asked by Earl 1 in Business & Finance ➔ Taxes ➔ United States
No you do not pay Medicare or Social Security Taxs on your distributions from your 401K. If you are at least 59 1/2 you will only pay income tax on the taxable portion. This is not earned income subject to SS and Medicare tax
2007-03-11 04:28:19 · answer #1 · answered by Anonymous · 3⤊ 0⤋
No, you don't pay Social Security and Medicare taxes on distributions from retirement accounts.
If you check your old pay statements and W-2s closely, you'll discover that you already paid Medicare and Social Security tax on the CONTRIBUTIONS when you earned the money in the first place. You don't pay these taxes on investment earnings in any case.
2007-03-11 14:40:22 · answer #2 · answered by STEVEN F 7 · 1⤊ 0⤋
No, you don't pay Medicare or Social Security tax, just income tax, and if you're unde 59-1/2, an early withdrawal penalty.
2007-03-11 13:27:55 · answer #3 · answered by Judy 7 · 2⤊ 0⤋
Regular IRAs and 401Ks are TAX DEFERRED, not tax free.
You are deferring you taxes till your retirement. Usually you tailor your withdrawals so that you won't have to pay taxes. That amount would depend on any other income you may have at the time, and how much you have saved.
You are required to begin withdrawals by age 70 1/2 and to have depleted the savings by the estimate time of your death. This is a moving time frame and has to be changed from year to year.
For instance, one year your investments may increase or decrease substantially, this would require you to increase or allow you to decrease your withdrawals.
It has become common place for people to continue working well into retirement. If their earnings are substantial you could end up paying some additional taxes.
Good Luck
2007-03-11 10:32:26 · answer #4 · answered by A_Kansan 4 · 0⤊ 3⤋