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?
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.
13 years ago. Rating: 0 | |
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