2007-10-07 07:00:17 · 5 answers · asked by stanley c 1 in Business & Finance ➔ Taxes ➔ United States
There is no tax break for taking your retirement money in a lump sum. Whatever you take out is going to be taxed as regular income. For example, if you are in the 25% tax bracket your tax may be as high as $25,000.
You may be able to save a lot on your taxes by rolling some of this money into an IRA if you don't want to leave it in your employer's plan. Contact any of the financial institutions that have IRAs (bank, brokerage, mutual fund company) to discuss your options.
2007-10-07 11:22:16 · answer #1 · answered by ninasgramma 7 · 1⤊ 0⤋
You do not provide enough information to appropriately answer this question. Are you married or single? What other income do you have? Etc. If you have no other income a single person pays $15,698.75 plus 28% of any amount over $77,100 on the $100,000. A married person filing jointly pay $8,772.50 plus 25% of any amount over $63,700 on the $100,000. Of course, you get a standard deduction and personal exemption to calculate taxable income.
The smarter thing to do would be to spread taking the $100,000 over several years when you retire. You can work with an advisor on controlling you taxes while reaching your retirement objectives.
2007-10-07 07:10:53 · answer #2 · answered by dcholsted 2 · 0⤊ 0⤋
That will depend upon your other income as well for that year. It will be added to your other income for the year and taxed appropriately. Depending upon your other income, the Federal bite alone could be as high as 35%.
In most cases you can save a lot of money in the long term by NOT taking a lump sum distribution. Take what you need to meet expenses but leave the rest of it in the account to continue to earn tax-deferred interest.
2007-10-07 08:09:19 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Not enough info to tell. Depends on a number of things - your total income for that year, your filing status, deductions among others.
If you are married, and that's your only joint income for the year, your federal income tax on the $100K withdrawal would be between $13,000 and $14,000.
Is there a reason you plan to pull it all out in a lump sum? You'd probably save on taxes by taking it out over several years.
2007-10-07 07:11:28 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
Usually about 28 per cent.This is a rule of thumb not exact.
2007-10-07 07:10:57 · answer #5 · answered by wanna know 6 · 0⤊ 1⤋