Let’s Talk About Retirement

Nan J asked:


This is a retirement pension but I do not qualify for social security for another year. This income was taxed. Why is it treated differently than social security?

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fred asked:


curious how much a government employee on a pension makes every month?
american government, or state?
Just a ballpark figure.

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ironhorseman46 asked:


This came from the QA on IRS.ORG..
Q. Are pension and annuity amounts provided by state, federal or private sector employers considered qualifying income in determining eligibility for the economic stimulus payment by those who are not otherwise required to file?

A. No, these payments are not included in the legal definition of qualifying income. [Updated 5/12/08]

If this true then why do you pay federal withholding taxes on your pension?

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sng2350 asked:


Where does pension appears in the W-2 form. Which Box within W-2 form will it appear? Does the pension has to be deducted for social security and medicare tax? Is pension a part of 401(k) and other retirement plans?

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David asked:


I got a pension payment for $2,500 it was federally taxed $500.
When i do my taxes next year will my retail pension lump sum fall under regular income with the rest of my regular pay?
I am 30 yrs old so i know i will already get taxed 10% extra.

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John M asked:


I’m currently employed by the state of Massachusetts but have just been offered a job in the private sector.

I have been contributing to the state pension fund for eight years but will not be vested (that requires 10 years in the system) so my contributions will be returned to me.

I’m told that you can either roll that money into a 401k or take a cash payout but that if you take the cash you pay a substantial penalty in addition to applicable taxes.

Does anyone know how much of a penalty you have to pay? Or for that matter, at what rate it gets taxed? I would ask HR but don’t want to tip them off to the fact that I might be leaving.

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kydadoflouisville asked:


I recently got divorced. I have to sign over 1/2 of my 401k to her. I am thinking of asking her to buy her out less any taxes she would have been charged. What percentage is taken out of a 401k when removed. I am trying to think of an offer to give her. The 401k is not alot. (24,000) She gets 12k. Any Ideas?

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wizeman asked:


In tax year 2006, Since I am over 50 years old, I contributed $5,000 to a traditional IRA because I wanted to reduce my taxable income. My 401k contributions brought my income just a little over $50,000 so I was able to reduce my income by most of $5,000. Is there a limiy as to how much I can have my employer deposit into my 401k account? My income will increase a little and want to be able to contribute more so that my 2007 taxes can be reduced by a $5,000 traditional IRA contribution.

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zaxxon asked:


What if, in the hypothetical case, I cashed my 401K, paid nothing to the IRS and ran away to a foreign country to never come back to the US?

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skybelle24 asked:


I have to have a $25,000 surgery not covered by insurance. I’m thinking of cashing out my 401K and someone told me that you can do it tax free for medical bills. Is this true?
I’m only 25 so it’s not like I can’t build back up my 401K…

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