Are retirement distributions taxable? The answer is YES, But… there are some exceptions.

Typically, I write my newsletter on Mondays to send out on Thursdays. However, sometimes I get writer’s block and move on to another task on my “To Do” list and return to it later. And that, dear reader, is precisely what happened to me this week.

I moved on to the next project. Coincidently, this was also a writing task, a blog. Truth be known, I enjoy writing blogs. This week’s blog, “Tips for the Tax Procrastinator,” can be read here, https://thetaxreliefco.com/tips-for-the-tax-procrastinator/.

Job completed! 👏🏻 👏🏻

I went back to the computer, 💻 opened a blank page, and glared at it until the blindingly white empty page, spoke to me and said, “Give up for today, and I did.” Pages do talk, you know.

I discovered that I had no time to write the newsletter on Tuesday as my calendar had other tasks blocked off for the balance of the day. 😓 Yes, I use time blocking on my calendar.

It was then Wednesday, and my feeble brain was still blank. Fortunately, I received an email from Jeff with the information from HR 2617, which we thought would be good information to share. Great, I have the teaching portion of the newsletter. But what about my introduction? Still drawing a blank… 🤔

Now it’s Thursday, and my letter still needs to be written. So, I opened the page containing only the Tax Humor. But another project called my name. And I answered it by closing the page and vowing to return to the article after lunch.

The letter was not going to write itself, so I decided the teaching part would reference the blog I had written earlier in the week. It was a start. So, I began the introduction but could not tie in a real-life experience, so I gave up. Again!

Now it’s Friday, and I know I must send an email out. So, why not be honest and tell my loyal readers I was uninspired and could not find something to draw upon? So there you have it. A frustrating week in the life of Ali Shneider!

Now that I think about it, I should have had AI write the article.

In conclusion, I’m sorry for sending the newsletter a day late.

How do I tie my introduction to the teaching portion without being redundant?

Easy peasy. As Jeff was working from home today, I yelled (actually, it was more of a disgruntled bellow if the truth be known) upstairs to Jeff.

I need help!! Please, come down.

He is far more knowledgeable in discussing retirement distributions, so I asked him to share some words of wisdom. So there you go, tied up, nice, friendly, and understandable.

Are retirement distributions taxable? And are they subject to the 10% early withdrawal penalty?

Generally, you would include some or all of the amount into income when you want to take a distribution from a retirement account (pension, IRA, 401k, etc.). However, unless you meet one of the exceptions (called “The 72t exceptions”), you would be subject to the 10% early withdrawal penalty.

Three of the most common exceptions are:

1)  If you were 59 ½ years at the time of the distribution.

2)  The first $10,000 is not subject to a penalty if you are a first-time home buyer.

3)  If separated from your job after reaching age 55.

Under a new law passed by both Houses of Congress, effective January 1^st, 2023, if you worked for the same employer for 25 years OR reached the age of 50, you would be exempt from the penalty if you wish to take monies from the company’s pension plan.

Sounds great? Yes, it does, but it only pertains to public safety officers.

Another provision of the new law affects government corrections officers to the list of certain other emergency medical services.

Don’t trust just anyone with your taxes. Instead, let a highly skilled professional Enrolled Agent like Jeffrey Schneider, EA, CTRS, ACT-E, show you how to manage your situation to get the best results. He knows all the ins and outs of the IRS playbook and the current tax laws to help you take all the possible deductions available to you.

Even the most conscientious taxpayer can get behind the 8-ball with the IRS. If you or someone you know has a tax problem, please contact us today at https://thetaxreliefco.com/contact/ and see how we can help you.

Or you can call our office at 772-337-1040 for an appointment.

Previous weekly newsletters can be found here if you want to catch up with your reading  https://thetaxreliefco.com/newsletters/

Remember to have your tax returns prepared by an EA and e-filed by the mandatory April 18^th deadline.

Ali “had writer’s block this week” Schneider
Director of Business Development

Phone: 772-337-1040
Email: ali@thetaxreliefco.com

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P.S.S. Call or book your appointment online when you are ready to meet with us.

Click here to watch the video, https://taxcollectionnotice.com

Tax Humor

I got a job as an accountant for a large coffee company.
So, I guess you could say I’m a bean counter.