Your account balance isn't all yours. Every dollar in a traditional IRA or 401(k) is taxed when it comes out. See your potential retirement taxes in about 60 seconds.
Why It Matters
Most people focus on how much they've saved. Fewer look at how much of it they'll actually get to keep. These four factors drive your taxes in retirement.
Starting at age 73 or 75, the IRS requires you to withdraw a minimum amount every year, whether you need the money or not. Every withdrawal is taxable income.
Today's tax brackets are set by current law, and Congress can change them. Your rate in retirement could be higher, lower or the same as it is today.
Up to 85% of your Social Security benefits can become taxable as your other income rises, and IRA and 401(k) withdrawals count toward that income.
Higher income in retirement can raise your Medicare Part B and Part D premiums through IRMAA surcharges, based on your tax return from two years earlier.
How It Works
Your age, your IRA or 401(k) balance and an estimated tax rate in retirement.
Your potential retirement taxes appear on screen right away.
A detailed PDF report is emailed to you, and you can book a free consultation to talk through your options.
How It Works
Money in a traditional IRA, 401(k), 403(b) or 457 plan went in before taxes, so it is taxed as ordinary income when you withdraw it. Each withdrawal is added to your other income for the year, such as Social Security, pensions and investment income, and taxed at your federal income tax rate.
You can choose when to withdraw for a while, but not forever. Required minimum distributions (RMDs) force withdrawals each year once you reach your RMD age, and the required amount grows as a percentage of your balance as you get older. Florida has no state income tax, so for Florida retirees the federal tax is the main one to plan for.
RMD Rules
| Year you were born | RMDs start at age |
|---|---|
| 1950 or earlier | Already required (72 or earlier under prior rules) |
| 1951 through 1959 | 73 |
| 1960 or later | 75 |
Based on the SECURE 2.0 Act. Roth IRAs have no RMDs for the original owner. Read our complete RMD guide.
Example
A 60-year-old with $750,000 in an IRA, using a 25% federal tax rate:
Hypothetical illustration assuming 5% annual growth, a flat 25% federal tax rate and taxes on any balance left at 95. Your results will be different.
Planning Ideas
These are some of the most common strategies. They are only part of the picture, and none of them is right for everyone.
There are many other strategies that may help, and the right mix is different for everyone. A few more we look at:
Which strategies make sense, in what order and how much, depends on your income, your accounts, your tax bracket now and later, and your goals. Using the right strategy at the wrong time can cost you. That is why the best next step is a free consultation to analyze your situation and build a plan that fits you.
Book My Free ConsultationFAQ
Withdrawals from a traditional IRA or 401(k) are taxed as ordinary income in the year you take them, at your federal income tax rate. How much you pay depends on how much you withdraw each year, your other income and future tax rates. This calculator estimates the total across your lifetime and your heirs, based on the rate you choose.
An RMD is the minimum amount the IRS requires you to withdraw from traditional IRAs and most employer plans each year. Under current law, RMDs start at age 73 if you were born from 1951 through 1959, and at age 75 if you were born in 1960 or later. Every RMD is taxable income.
Florida has no state income tax, so Florida residents generally owe only federal income tax on IRA and 401(k) withdrawals. That is why this calculator focuses on federal taxes. If you live in another state, your total tax could be higher.
If you are not sure, 25% is a reasonable starting point for many retirees. A more precise estimate starts with your expected taxable income in retirement, including Social Security, pensions and required withdrawals. We can help you estimate it in a free consultation.
They can for some people. A Roth conversion moves money from a pre-tax account to a Roth account. You pay tax on the amount converted now, but qualified Roth withdrawals later are tax-free and Roth IRAs have no RMDs for the original owner. Whether it makes sense depends on your tax bracket now versus later.
Your beneficiaries generally pay income tax on what they withdraw from an inherited traditional IRA. Under the SECURE Act, most non-spouse beneficiaries must empty the account within 10 years, which can push withdrawals into higher tax brackets during their working years.
Roth conversions, withdrawal order, Social Security timing and many other strategies can change how much you pay. The right mix is different for everyone, so the best next step is a free consultation to analyze your situation.
About this calculator: This calculator provides a hypothetical estimate for educational purposes only and is not tax, legal or investment advice. Results assume 5% annual growth, a flat federal tax rate equal to the rate you select, required minimum distributions beginning at age 73 (or 75 if born in 1960 or later) based on the IRS Uniform Lifetime Table, and that any pre-tax balance remaining at age 95 is taxed at the same rate when withdrawn by you or your beneficiaries. It does not account for state taxes, taxes on Social Security, Medicare surcharges, withdrawals above the required minimum, changes in tax law or your personal circumstances. Actual results will vary.
Roth conversions are taxable in the year of conversion and may not be appropriate for everyone. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified tax professional before making any decisions.
