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Question for the Money Doctors

Question submitted on May 19, 2011.

Question

What is the best way to withdraw money from my 401k. I am retired and want to avoid as much tax as possible.

Answer

This will depend upon many factors such as your current age, your cashflow needs, your current income from other sources such as Social Security, pensions, investment income, and itemized deductions such as your mortgage interest and property taxes.

Taking money out of retirement accounts need careful planning because taking too much may put you in a higher tax bracket or will affect the amount of Social Security that will be taxable.

I suggest sitting down with your CPA to review the consequences of withdrawing money from your 401(k). This is not an easy questions to answer without a more complete set of facts.


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