Adjusting withholdings via the employer - (retirement year?)

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GiannaLuna
Posts: 113
Joined: Sat Dec 03, 2016 12:33 pm

Adjusting withholdings via the employer - (retirement year?)

Post by GiannaLuna » Sun Nov 17, 2019 5:05 am

As I am planning to retire in the 1st quarter of 2020, so my annual income for 2020 will decrease sharply.

I will be adding as much as I can in those first few months to my 401K and flex spending accounts.

I'd like to have access to more cash, if possible - any reasons for NOT adjusting my withholdings by decreasing the amounts withheld?

Thank you

Silk McCue
Posts: 4160
Joined: Thu Feb 25, 2016 7:11 pm

Re: Adjusting withholdings via the employer - (retirement year?)

Post by Silk McCue » Sun Nov 17, 2019 8:27 am

No reason not to reduce withholding to match your expected taxable income. We have no insight into your total taxable income for the full year, so just make certain you take care of business with the IRS.

Cheers

MathIsMyWayr
Posts: 1480
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: Adjusting withholdings via the employer - (retirement year?)

Post by MathIsMyWayr » Sun Nov 17, 2019 8:36 am

What kind of income sources are subject to withholding and is there any upper limit to the percentage? According to my understandings, they include wages, social security benefits, distribution from retirement savings such as IRA, and pension. Withholding is more convenient than paying estimated taxes.

3feetpete
Posts: 425
Joined: Sun Dec 14, 2014 7:30 pm

Re: Adjusting withholdings via the employer - (retirement year?)

Post by 3feetpete » Sun Nov 17, 2019 9:06 am

Go ahead and change your deductions but remember any withdrawals you make from your 401k or regular IRA are taxable as income. Towards the end of the year, estimate what your total taxes will be and adjust your withholding on your 401K accordingly or make an estimated payment. The

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