{"id":1111233,"date":"2019-04-16T16:17:06","date_gmt":"2019-04-16T16:17:06","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=107200"},"modified":"2019-04-16T16:17:06","modified_gmt":"2019-04-16T16:17:06","slug":"401k-ss-which-is-top-dog","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1111233","title":{"rendered":"401(k) &amp; SS: Which Is Top Dog?"},"content":{"rendered":"<p>This post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/401k-ss-which-is-top-dog\/\">401(k) &amp; SS: Which Is Top Dog?<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n<p class=\"p1\"><span class=\"s1\">Your monthly Social Security benefit is determined by your age when you begin taking it and your lifetime earnings. Only annual income up to the maximum taxable earnings is counted, which includes money you put into a 401(k) plan. For 2019, that maximum is $132,900.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">The longer you wait to take the benefits and the more you earned, the bigger the monthly payout. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">The maximum monthly benefit in 2019 is $2,861 for someone who files at full retirement age (currently 66). Holding off as long as you can, for instance until 70, would boost that benefit to $3,770.<\/span><\/p>\n<p class=\"p1\"><span class=\"s2\"><a href=\"https:\/\/www.ssa.gov\/benefits\/retirement\/estimator.html\"><b>Click here<\/b><\/a><\/span><span class=\"s1\"> to estimate your benefits.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">So the simple answer is: No. Your 401(k) will not directly affect your benefits. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">However, withdrawals from your 401(k) could make some of your Social Security benefits taxable, which affects the net amount you end up with. <\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>To Determine If Your Benefits are Taxable\u2026 <\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">Take one-half of your benefits plus all other income, including tax-exempt interest and 401(k) withdrawals. If that sum is more than your base amount, part of your benefits will be taxable. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Your base amount is:<\/span><\/p>\n<ul class=\"ul1\">\n<li class=\"li4\"><span class=\"s3\">$25,000 if your are single, head of household, or a qualifying widow(er)<\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">$25,000 if you are married filing separately and lived apart from your spouse for all of 2018<\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">$32,000 if you are married filing jointly<\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">$0 if you are married filing separately and lived with your spouse at any time during 2018 <\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">How much is taxable is based on your filing status and income &#8230; <\/span><\/li>\n<li class=\"li4\"><span class=\"s1\">I<\/span><span class=\"s3\">f you file as an individual and your base amount is between $25,000 and $34,000, you may have to pay tax on up to 50% of your benefits. If it\u2019s more than $34,000, up to 85% may be taxable. <\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">If you file a joint return and have a base amount between $32,000 and $44,000, you\u2019ll pay tax on up to 50% of your benefits. And if it\u2019s more than $44,000, expect up to 85% of your benefits to be taxable. <\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">And if you\u2019re married and file a separate tax return, you\u2019ll probably pay taxes on all of your benefits. <\/span><\/li>\n<\/ul>\n<p class=\"p1\"><span class=\"s2\"><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p915.pdf\"><b>Click here<\/b><\/a><\/span><span class=\"s1\"> for a worksheet to check if your benefits are taxable. <\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>5 Ways to Ease the Pain<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">Required Minimum Distributions (RMDs) are part of what makes up your base amount for calculating tax on Social Security benefits.\u00a0<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">However, some planning could help shrink your 401(k), which will make the RMDs smaller and ultimately cut or eliminate the tax on your benefits &#8230;<\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>1.<span class=\"Apple-converted-space\">\u00a0<\/span>Start Taking Distributions While Working<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">When you turn 59\u00bd you can withdraw money from your 401(k) without paying the 10% early-withdraw penalty. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">You\u2019ll have to pay income tax on those dollars. At the same time you\u2019re reducing the amount in your 401(k). And that could mean smaller RMDs down the road. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Make sure though, that the additional income won\u2019t kick you into a higher tax bracket. <\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>2. Use 401(k) to Pay Living Expenses<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">If you retire say at 65, use 401(k) withdraws to pay your living expenses rather than beginning Social Security benefits. That accomplishes two things:<\/span><\/p>\n<ul class=\"ul1\">\n<li class=\"li4\"><span class=\"s3\">You\u2019ll shrink the size of your 401(k) and ultimately the RMDs <\/span><\/li>\n<li class=\"li4\"><span class=\"s3\">By postponing Social Security you could significantly boost the payouts. For every year past your full retirement age that you delay, your benefits go up by about 8% until age 70. <span class=\"Apple-converted-space\">\u00a0 \u00a0<\/span><\/span><\/li>\n<\/ul>\n<h2 class=\"p3\"><span class=\"s1\"><b>3. Convert to a Roth IRA<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">Roth IRAs aren\u2019t subject to RMDs. Moreover, you can take unlimited tax-free distributions from a Roth without worrying about any impact on the taxation of your Social Security benefits. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">However when you convert to a Roth, the amount converted is taxable at your ordinary rate. Take note: <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">A large conversion could push you into a higher tax bracket and make some of your Social Security benefits taxable, although it would only be for the year of conversion. <\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>4. Charitable Contributions<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">You can\u2019t give RMDs from your 401(k) tax-free to a charity. That only applies to IRAs. But there is an indirect way to make a tax-free transfer. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Simply roll over funds from your 401(k) to an IRA and then donate it to charity. Taxpayers age 70\u00bd or older can transfer up to $100,000 a year to charities. And those donations count towards your RMDs. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Smaller RMDs could keep your income below base amounts in which Social Security benefits become taxable.\u00a0<\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>5. Go Back to Work or Keep Working<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">You must begin taking RMDs from your 401(k) at age 70\u00bd. Miss one and you\u2019re looking at a 50% penalty on the amount that should have been withdrawn. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">But that doesn\u2019t apply if you\u2019re still working. <\/span><\/p>\n<p class=\"p4\"><span class=\"s1\">So if you\u2019re not quite sure you want to retire or you\u2019re considering going back to work, a position that offers a 401(k) gives you two benefits: <\/span><\/p>\n<ul class=\"ul1\">\n<li class=\"li4\"><span class=\"s1\">The ability to delay RMDs\u00a0<\/span><\/li>\n<li class=\"li4\"><span class=\"s1\">The potential for additional tax-deferred growth <\/span><\/li>\n<\/ul>\n<p class=\"p4\"><span class=\"s1\">And if you have a 401(k) from a previous employer, rolling it into your current employer\u2019s plan (assuming the plan allows rollovers) will let you postpone RMDs on that money, too. <\/span><\/p>\n<h2 class=\"p3\"><span class=\"s1\"><b>Bottom Line<\/b><\/span><\/h2>\n<p class=\"p1\"><span class=\"s1\">Keep in mind that if you take large distributions from your 401(k) while receiving Social Security benefits, those withdrawals could push you past the base amount and increase your income tax bill for the year. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Also, watch for any changes to the Social Security base amounts. And include income tax when planning your retirement.<\/span><\/p>\n<p>To a richer life,<\/p>\n<p><img decoding=\"async\" class=\"align-none\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/signature-nilus-mattive.png\" alt=\"Nilus Mattive\" \/><\/p>\n<p>\u2014 Nilus Mattive<br \/>\nEditor, <i>The Rich Life Roadmap<\/i><\/p>\n<p>The post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/401k-ss-which-is-top-dog\/\">401(k) &amp; SS: Which Is Top Dog?<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/401k-ss-which-is-top-dog\/\">401(k) &amp; SS: Which Is Top Dog?<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n<p>Does your 401(k) actually affect your Social Security benefits?<\/p>\n<p>The post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/401k-ss-which-is-top-dog\/\">401(k) &amp; SS: Which Is Top Dog?<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2372,1618,366,1645,1813,659,923],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1111233"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1111233"}],"version-history":[{"count":3,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1111233\/revisions"}],"predecessor-version":[{"id":1111305,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1111233\/revisions\/1111305"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1111233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1111233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1111233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}