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I have a question regarding estimating a tax withholding on

retirement distribution JA: The Accountant will...
I have a question regarding estimating a tax withholding on retirement distribution
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: sure... I'm 58 and had to retire early because I have parkinsons disease. I receive social security disability benefits and collect about 13,000 from my schools pension plan.
JA: Is there anything else the Accountant should be aware of?
Customer: I have about $245,000 to use and am going to put that into CD Ladders so I can withdraw about $50,000 a year to cover the balance of my assisted living expenses and medical expenses that medicare does not pay for. My question is... how much should I set up to withhold for that $50000.
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Answered in 1 minute by:
7/22/2017
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,362
Experience: Certified Public Accountant
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Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

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Customer reply replied 4 months ago
Ok

What type of account is the retirement contribution coming form? Do you know how much with be allotted to medical expenses for the assisted living expense?

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Customer reply replied 4 months ago
The 13000 comes from a KPERS Kansas State retirement. The 245000 that I will be drawing from is ***** ***** mutual funds account and im trying to move it to CDs that I can use

Is the $245,000 in a retirement account?

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Customer reply replied 4 months ago
It was money I saved by putting in to mutual fund thru Financial advisor.
Customer reply replied 4 months ago
It was my retirement fund not employer.

Is it a IRA?

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Customer reply replied 4 months ago
I believe so.
Customer reply replied 4 months ago
I would imagine my assisted living med expenses would likely be 25000 a year

There is an early distribution penalty from a IRA if you are under 59 1/2. There are exclusion for medical expenses and disability. You should be excluded from the penalty. Will you have any other itemized deductions (property taxes, mortgage interest, auto tax, charitable donations)?

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Using $25,000 of medical expenses the taxes would come to just over $5,600. I used retirement income of $63,000.

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Using the standard deduction the taxes would just be above $8,900.

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Customer reply replied 4 months ago
Do I qualify for disability credit

You would qualify for the disability exclusion.

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Customer reply replied 4 months ago
Ok. I probably have another*****and medicare premium and med expenses

The additional medical expenses would decrease the the liability by about $750 reducing is to $4850.

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Customer reply replied 4 months ago
I think you are saying I'd better have them withhold 10% to cover taxes
Customer reply replied 4 months ago
Resend last response

If you have them withhold 10% of the $5,000 you should be pretty close? What state do you live in? You would also want to make sure that your state taxes are covered.

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Customer reply replied 4 months ago
I love in Iowa.
Customer reply replied 4 months ago
Live in Iowa

You would want to withhold about $1,000 for state taxes.

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Customer reply replied 4 months ago
of the $50000, 2% for state and 10% for federal.

If you use those amounts you should be covered for taxes. This is assuming that $25,000 of the assisted living expense is allocated to medical expenses.

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Customer reply replied 4 months ago
Yep...ok thx. I think that answers my question

I was happy to help. If you would take a moment to rate my response I would greatly appreciate it. This is the only way that I will receive credit for helping you today. There should be stars located above the question. If you have additional questions or need clarification I would be happy to continue the conversation. Thank you.

Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,362
Experience: Certified Public Accountant
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Mark Taylor
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