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    Why are so many Social Security (ss) recipients penalized in the tax code for taking a Traditional IRA withdrawal (thus: IRA withdrawal becomes a penalty to SS income which effectively pushes the IRA withdrawal into a disproportionally high % of tax due on it relative to the tax bracket that the recipient is actually in for a given year?

    0  Views: 152 Answers: 1 Posted: 9 years ago

    1 Answer

    Scire, do you realize you just answered your own question?  The Social Security checks you receive are deemed as income, hence, subject to income tax.  When you make a withdraw on your pre-taxed IRA money, you effectively add more taxable income for that tax year.  Why?  Both incomes are taxable.  If you're talking about a Roth IRA, then it is another matter since Roth IRA contributions are after-tax contributions.  Finally, the higher the combined incomes from your IRA and SS money, the higher the tax bracket you belong to. 


    We thank you for supporting Uncle Sam, Scire.


     



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