Can ira distributions cause SS Income to be taxed
Can Distributions form a traditional ira or even a roth ira that has not met the 5 year requirement potentially cause a persons full social security benefit to be taxed if the taxable portion of the withdrawls is over a certain dollar amount?
I know that only income from wages andf not retirment accounts or pensions can effect the benefit amount of Regualr Social security beneifts. But I have yet to find clarity on the taxation piece of it?
Permalink Submitted by Michael Peterson on Thu, 2011-05-19 12:32
Any taxable withdrawals from a traditional IRA can cause you to pay more tax on your social security benefits. This is because those withdrawals will become part of your Modified Adjusted Gross Income (MAGI), whis is used to determine taxation of Social Security benefits.
Permalink Submitted by Alan Spross on Thu, 2011-05-19 17:35
Mike is correct, and that also applies to the taxable portion of any Roth IRA distribution (non qualified earnings).
Of course, once 85% of your SS benefit is included in AGI, the phase in cost is over. But not for the possible surcharge tiers on Medicare premiums which occur in the second tax year following the year that MAGI exceeds the basic tier amount.