IRA and Annuity

richiefortrucking

I'm 61 years old in New York State. I had a k4 retirement account from a company when I left the company I rolled it over to an IRA which I just closed out because it wasn’t earning much interest, I also drew money out of an annuity. Let's say the 2 numbers and some other interest are 20K and I take a standard deduction, approximately how much I owe?

AlexO

Hello, richieffortrucking!

That is a great question! I'm assuming you meant a 401(k) retirement account. Correct?

If so, the rollover of a pre-tax 401(k) to a traditional IRA won't be taxable. However, if you withdraw the funds by closing the IRA, the withdrawal will be taxable. Because you're over the age of 59 1/2, the withdrawal is not considered early, and you won't be charged a penalty on the withdrawal.

Are you a single filer? If so, your standard deduction would be $13,850. After the standard deduction of $13,850 is applied, $20,000 of total income would result in about $6,150 of taxable income. 10% of this, which would be the marginal tax rate at this taxable income level, is $615.

If you have not already taken the withdrawal, you may want to consider having tax withheld to cover the $615 owed. If you have too much withheld, you can receive it back via a tax refund.

You can find the 2023 standard deduction amounts at the IRS link below:

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023