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Section 6

Retirement Taxes

Did you know that you have a partner who owns part of your IRA,
your 401(K), your 403(B), and some other tax-deferred accounts?

I’m not talking about your spouse or other beneficiaries. I’m
talking about a distant relative that no one wants to give any

money to: Uncle Sam. When you retire and start taking income
from your investments, Uncle Sam will stick his hand in as often

as he possibly can.

Taxes on Retirement Plan Distributions

Your qualified retirement plans have grown, tax-deferred, over
the years. But when you start withdrawing from those accounts,

you will pay taxes on that money. Every dollar you take is taxed
as ordinary income in the year it’s withdrawn. This income will

be added to your other income that year and will be taxed at
your current tax rate. Even if you don’t need the money, you will

have to start taking withdrawals at age 70½.

Chapter 6: Your Action Plan