Article in the Wall Street Journal on 3/12/13

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Article in the Wall Street Journal on 3/12/13

Postby Almost there » Sun Mar 24, 2013 8:57 pm

I have typed up an excerpt of the article from WSJ:
5 tax tips for those thinking about or getting ready for retirement.
I have typed up an excerpt of the article from WSJ:
5 tax tips for those thinking about or getting ready for retirement.
1. Don’t forget about taxes when you look at the size of that retirement nest egg.
2. Diversify your retirement asset by adding Roth IRA, even if you are close to retirement.
3. Remember, you must pay estimated taxes in retirement.
4. Even if you wait until 66, it may not pay to take Social Security the first year of eligibility.
If you worked for part of the year, those earning may push you over the limits and result in taxes on your Social Security, says Ted Sarenski, CEO of Blue Ocean Strategic Capital in Syracuse NY.
“My birthday is Sept. 5,” he says. “In the year I turn 66, I already have nine months of income. If I have earned $50,000, I am $10,00 over the $40,000 limit.
I have to give back $1 for every $3 over that. It may not pay for me to take Social Security (in the first year).”
5. Don’t put retirement planning on autopilot.

I have the following 2 questions:

To #3: Does VG withhold taxes from retirement plan withdrawals?

To #4: Why does Ted Sarenski have to “give back $1 for every $3 earned over $40,000”?

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Re: Article in the Wall Street Journal on 3/12/13

Postby ddunca1944 » Sun Mar 24, 2013 9:36 pm

#3 VG will withhold taxes if you tell them to. If youmchoose to have taxes withheld, you also tell them what % to withhold.
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Re: Article in the Wall Street Journal on 3/12/13

Postby bottomfisher » Sun Mar 24, 2013 9:40 pm

#3 Vanguard does not withhold taxes unless told to do so

#4 The rules regarding the year you go into retirement and start/anticipate collecting social security are tricky. Everyone's situation is different. Although Bogleheads provides solid advice, I recommend you sit down with a representative from the Social Security department to discuss your specific sitution if you are retiring soon. My mother and a recently retired employee did so last year. Both were grateful that they took the time to do so.
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Re: Article in the Wall Street Journal on 3/12/13

Postby Sunflower » Sun Mar 24, 2013 9:50 pm

Regarding #4: (deleted - properly detailed by Oblivious Investor.)
Last edited by Sunflower on Sun Mar 24, 2013 10:37 pm, edited 1 time in total.
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Re: Article in the Wall Street Journal on 3/12/13

Postby ObliviousInvestor » Sun Mar 24, 2013 9:56 pm

I believe #4 is regarding the Social Security earnings test rather than Social Security taxation. In the year in which you reach full retirement age, the earnings test threshold is $40,080 (in 2013).

See here: http://www.ssa.gov/oact/cola/rtea.html
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Re: Article in the Wall Street Journal on 3/12/13

Postby Almost there » Mon Mar 25, 2013 6:39 pm

Thank you everyone for your input which was a lot more than I had anticipated.

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