AboutCarole Dunton Expertise Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions.
General knowledge of schedule C for small sole proprietorships.
No experience in corporate, estate, partnership or large business returns.
Experience 9 years as tax preparer for major national firm.
Carole,
I have 137,000 in a 401k account
I owe 120,000 on my house
If I retired in three months I would receive a company
pension of 2100.00 each month.
Combined SS for my wife and I would be 2000.00 each month.
I am 62
My wife is 68.
What would the tax liability be if I used the 401k
to pay off the house?
Thanks
Answer Hi,
You would pay about 28% of the retirement distribution in Federal tax plus whatever your state tax may be.
Adding a large amount to your other income causes most of your social security to be taxable and puts you in a higher tax bracket.
If you could take the distribution over 2 or more years it would lessen the tax bite.
