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LEARN MORE ABOUT: 401k Plans
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Withdrawing funds from your 401(k) before reaching the age of 59 ½ can result in an early withdrawal penalty, as well as income taxes. Many people worry that these withdrawals could also negatively impact their early Social Security benefits, but in fact, this is not the case.
The age at which one can start collecting Social Security benefits varies depending on one’s birth year. However, it typically ranges from age 62 to 67. Many individuals consider withdrawing funds from their 401(k) before they start receiving Social Security benefits, as they may need the extra income to cover living expenses or other financial obligations.
The good news is that withdrawals from your 401(k) will not reduce your early Social Security benefits. Social Security benefits are based on your lifetime earnings, and the age at which you start collecting benefits. Withdrawing funds from your 401(k) will not impact either of these factors. In fact, your 401(k) withdrawals are considered separate from your Social Security benefits and will not be factored into the calculation of your early Social Security benefits.
It is important to note, however, that any income you receive from your 401(k) withdrawals may still impact the taxation of your Social Security benefits. If your combined income exceeds a certain threshold, up to 85% of your Social Security benefits may be subject to income tax. Therefore, it is important to consider the potential tax consequences of your 401(k) withdrawals when planning for your retirement income.
Ultimately, withdrawing funds from your 401(k) before receiving early Social Security benefits can be a viable option for those who need additional income in retirement. It is important to consult with a financial advisor or tax professional to ensure that you fully understand the potential impacts of your 401(k) withdrawals on your overall retirement income strategy.
In conclusion, withdrawing funds from your 401(k) before receiving early Social Security benefits will not reduce your benefits. However, it is important to consider the potential tax consequences of your withdrawals and to seek professional guidance when planning for your retirement income.
This video should be amended to state that traditional 401ks are taxable while Roth 401ks are not. Employees should look into contributing some (or all) of their 401K contributions with pretax dollars. They have been available for employers to offer since 2006 and then you have choices for strategic tax lowering when you retire.
This is where I’m confused…My husband will most likely work until he is 70 (41 now) just based on our bills and etc. So if he waits till Full retirement age (67 for him) then that means he can “make as much as he wants” right. It’s only if you take it early that your limited…is that correct
Is 401K withdrawal taxable after 59?
My question is why even have a 401k.