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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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My wife and I receive approx $23,000.00 annualy from SS, my

Customer Question

My wife and I receive approx $23,000.00 annualy from SS, my part time work brings in approx $10,600, I would like to withdraw from my 401k. I have $78,000 available, how much can I withdraw without being "hurt" by excess taxes? I am 67 1/2 and my wife is 68 1/2. I need to find out quickly PLEASE!!
Submitted: 11 months ago.
Category: Tax
Expert:  Lev replied 11 months ago.

I assume that you receive $23,000 in social security benefits - correct?

That is not annuity income?

your other income is $10,600 in wages - so your social security benefits are not taxable and there is NO tax liability.
With additional 401k distribution - there will be two possible affects

- a part of your social security benefits might become taxable

- because of larger gross income - you might have tax liability.
Please stay with me while I am running calculations and will update you shortly...

Expert:  Lev replied 11 months ago.

Assuming you take 30,000 in distributions from 401k
in this case your adjusted gross income woudl be $53485

that includes

-- 30,000 401k distributions

-- $10,600 in wages

-- $12985 taxable part of social security benefits (out of $23,000)

Your standard deduction would be $15,100 (including additional deduction because you are above 65)

and Personal Exemptions $8,000
So - estimated Taxable Income $30,385

and expected federal income tax liability $3635

That woudl be fair if you need large distribution.
If you want to avoid any federal tax liability - you distribution should be lower...

Expert:  Lev replied 11 months ago.

For instance - with $20,000 distribution from 401k - your estimated federal income tax liability woudl be $1255.

Expert:  Lev replied 11 months ago.

But if you take ONLY $11700 out of your 401k plan - your estimated federal income tax liability woudl be just $10.
So if you do not need all your money - you may plan future distribution every year - and effectively avoid tax liability.

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