The Surprising Reason Large 401(k) Withdrawals May Get More Expensive Starting at Age 63
If you take a large distribution from your 401(k) starting at age 63, you may get hit with a surprise extra cost you aren't prepared for.
The Surprising Reason Large 401(k) Withdrawals May Get More Expensive Starting at Age 63
Overview
When it comes to your 401(k), you want to maintain a safe withdrawal rate. In some cases, though, taking a large lump-sum distribution may be part of your retirement planning process.
When you take a large amount out of your 401(k), you have to pay taxes on the withdrawal at your ordinary income tax rate, and the distribution counts as income. Since your taxable income increases, you could end up pushing yourself into a higher tax bracket. This happens at any age.
But if you take a withdrawal starting at age 63, that big distribution could actually end up costing you much more than if you'd acted sooner. Here's why that could happen.
Details
Source
Originally published at www.fool.com.
