Taxation of Government Plans

Will I save taxes later? Is there a future benefit?
Here are a few factors to consider:

1. How much TOTAL income will I be receiving from ALL sources when I retire? (The total of all income, including government plan income, determines your tax rate.)
   ..
2. Will I have any significant tax deductions left? For most, there will be none, increasing the likelihood of being in a higher tax bracket during retirement.
   ..
3. Will government plan income cause my Social Security income to be taxed?
   ..
4. Can I be assured that before retirement I will NEVER need or want to use my money and be subjected to the MAXIMUM tax bracket plus penalties by making a withdrawal?
   ..
5. Can I be assured that after retirement I will NEVER need or want a lump sum withdrawal (all or part of my money) and be subjected to the MAXIMUM tax bracket? (Consider health factors and unexpected needs or wants.)
   ..
6. Will I live long enough to “draw down” my account enough (taking an income level that maintains a low bracket), so that my beneficiaries are not subject to the MAXIMUM tax?
   ..
7. Will the remaining balance after my death be consumed by the combination of MAXIMUM income and estate taxes? (While it varies case by case, it has been estimated that the combined impact of estate and income taxes can exceed 60% of the total proceeds in a government plan upon the death of the plan owner.)
   .
   
8. Will inflation increase my cost of living and force me to withdraw an amount of money that will increase my taxes?

Back

Next