Strategy Intermediate: Avoiding Taxes at Retirement

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1.
If your income is below $32,000, your Social Security benefits will not be taxed.
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False. It depends on your filing status. If your income is above $25,000 (single) and $32,000 (joint), your Social Security benefits can be taxed at 50 to 85 percent.
2.
Your minimum required retirement distribution will be higher if you use the joint life expectancy of you and a younger spousal beneficiary in the calculation.
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False. Using the joint life expectancy of you and a spousal beneficiary who is 10 or more years younger lowers your minimum required retirement distribution.
3.
Retirement plan distributions are added to your overall taxable income.
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True. The IRS treats them as taxable income.
4.
The tax penalty for early withdrawal from your IRA account is 10 percent.
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True. This penalty is meant to discourage you from taking out your money before the allowed time.
5.
Which of the following is not true about a joint annuity?
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It pays any estate taxes on the taxable amount. It is recommended that an insurance policy be used in conjunction with the annuity to cover taxes.