Well, first of all...congrats on getting near full retirement. I hope you are able to fully enjoy that time of your life.
You will pay tax on a maximum of 85 percent of your Social Security income...this maximum is triggered on your other income...other pensions, IRA withdrawals, 401k distributions, etc plus any taxable interest, dividends or capital gains.
- if you file a joint return, and you and your spouse have a combined income* between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits more than $44,000, up to 85 percent of your benefits may be taxable.
- Check the SS tables for more info on this.
If you have money save in ROTH, your distributions on this are NOT subject to tax and will not trigger the income discussed above. ROTH is a savings vehicle that is utilized during the years you were working...not so much in retirement. There are some strategies available to rollover retirement funds into a ROTH, but that isn't something that initially makes sense for you now.
I hope this is helpful.
Kelly C, CPA
