IRA Information

Retirement Income
Here are a few things to keep in mind when exiting the workforce.

Social Security
If you were born after 1937, you may be eligible for full Social Security. For example, those born from 1943 through 1954, the age at which you can draw full Social Security is 66. Also, keep in mind people who collect at an earlier age get a smaller amount than those who collect later in life.

Managing Your Retirement Distribution
When you get a distribution from your retirement plan, you have 3 options:

• Roll it over into an IRA. This option has 2 advantages: You don’t pay tax on the distribution until you begin to take money from the IRA, and the money in the IRA continues to earn tax-deferred income until it’s withdrawn.
• If you were 59 1/2 or older at the time you received the distribution and you meet certain requirements, you can compute your tax using the 10-year averaging method. This method can result in significant tax savings. The 10-year method is available only to individuals born before 1936.
• If you don’t roll the distribution over into an IRA and you’re not eligible (or do not elect) to use the 10-year averaging method, your distribution will be taxed in the same manner as your other income.

Working could work against you.
You’ll have to repay some of your Social Security benefits if you’re younger than 65 and you earn more than $12,480. There is no earnings limit for taxpayers age 65 or older. In addition, the money you earn may cause your Social Security benefits to become taxable or increase the amount of your benefits that are taxable.

Know the tax laws that can affect the management of your retirement funds. Consult your tax professional and/or financial planner if you have questions.