How Are 401k Withdrawals Taxed in Retirement?

401 (k) are the best plans when it comes to retirement savings. Though when it comes to withdrawal when you retire you will have to pay the taxes on your distributions. The 401 (k) plans are tax-deferred plans which means that you have not paid taxes on the amount vested in the 401 (k) plans until you are willing to withdraw the money from your 401 (k) account. Thus when you contribute to your 401 (k) account it will reduce the margin of your taxable income but it is not possible to avoid tax in any way. You should plan to withdraw your 401 (k) very wisely. It is not a wise decision to withdraw 401(k) early as it may lead to various penalties and you will also have to pay different taxes on your withdrawal.

How Much Tax Do I Pay on 401k Withdrawal on Retirement?

Now let’s go to the case when you will withdraw the money when you will retire from your job as we know the retirement age for 401 (k) plans is 59 and half years. Let’s see the tax deduction when you retire from your job in the following given points:

  • When you retire at the age of 59 and half years you will not have to pay a penalty on your withdrawal. For 401 (k) regular accounts you will have to pay taxes on your withdrawal as the 401 (k) plans are tax deferred and you haven’t paid any tax while depositing the money in your 401 (k) account.
  • For the users having Roth 401(k) plans for their retirement, you will not have to pay any tax on your retirement account as you have already paid the tax when you deposited the money in your plan.
  • At the age of 72 you will have to take the required minimum distributions otherwise a 50% penalty will be held on the distributions amount.

What is the Tax Rate on 401 k after 59 ½?

The withdrawals are taxed based on the various factors. The main factors which will decide your tax bracket will be the distribution amount you will get after claiming your 401 (k). It also depends on whether you are filing for your 401(k) claim individually or jointly with your spouse or you are a widow or widower. The tax bracket will also depend on whether you are the head of a household and thus the tax bracket will change accordingly with the amount of distributions with the factors mentioned. Let’s view out the tax deduction rates on the retirement in the table below:

401 k withdrawal Taxes in Retirement

Withdrawal Tax Rate  People filing alone Married filing 401 k with partner or widow/widower Married filing separately from the partner Head of the House
10% Up to $9,325 Up to: $18,650 Up to $9,325 Up to $13,350
15% $9,326 to $37,950 $18,651 to $75,900 $9,326 to $37,950 $13,351 to $50,800
25% $37,951 to $91,900 $75,901 to $153,100 $37,951 to $76,550 $50,801 to $131,200
28% $91,901 to $191,650 $153,101 to $233,350 $76,551 to $116,675 $131,201 to $212,500
33% $191,651 to $416,700 $233,351 to $416,700 $116,676 to $208,350 $212,501 to $416,700
35% $416,701 to $418,400 $416,701 to $470,000 $208,351 to $235,350 $416,701 to $444,550
39.6% $418,401 or more $470,001 or more $235,351 or more $444,551 or more


So in the end we can say that the best time to withdraw the money from your 401(k) after you retire. So plan wisely and save a lot of money to enjoy your life after retirement. Try to avoid early withdrawals and save enough to lead your life comfortably after living with pride for so many years without depending on your children.

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