Retirement Income Sources

401(k) • Profit-Sharing Plans • 403(b) • SEPs • Defined Benefit Plans • Traditional IRAs

The distribution of pre-tax contributions are currently taxed as ordinary income.

Post-tax contributions are currently distributed tax-free.

All earnings grow tax-deferred, and the distribution of earning is currently taxed as ordinary income.

Distributions prior to age 59 1/2 may be subject to 10% penalty.

Roth IRAs • Roth 401(k)

Qualified withdrawals are tax-free (Federal income tax)*.

Distributions prior to age 59 1/2 may be subject to 10% penalty.

Permanent Life Insurance Cash Values

Tax-free withdrawals**.

Brokerage Accounts (stocks, bonds, UITs, mutual funds, etc.)

0-20% Federal long-term capital gains (1+ years) and dividends***,

Marginal tax bracket on gains held under one year and interest.

State taxes may apply to both.

Tax-Deferred Annuities • Non-Deductible IRAs

Marginal tax bracket on all withdrawals to the extent of gains plus 10% penalty if before age 59 ¹⁄₂. Annuitization can spread out the taxable portion.

* For Roth IRAs, most states will follow federal taxation regulations.  However, you should check on whether your state of residence treats a Roth as tax-free.

** For life policies, distributions (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (your cost basis).  If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10% tax penalty.  Access to cash values through borrowing or partial surrenders can reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.

*** Federal long-term tax rate depends on tax payer's marginal bracket..

The information provided here is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties.  Individuals are encouraged to seek advice from their own tax or legal counsel.

CRN202302-277933