"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:u_idnWcaoby85zfYnZ2dnUVZ_vyunZ2d[at]comcast.com...
- quote -

This is the situation where SS gets reduced. If the pension is based on
income that wasn't subject to SS taxes, then the amount of the pension will
reduce your SS benefit. If your pension is increased (for inflation or
something), then your SS benefit is reduced additionally. Also, it is
interesting to note that a person who receives such a pension will not be
able to collect SS as a widow/widower based on a deceased spouse's income.
They call this double-dipping. However, and paradoxically, that spouse who
collects SS may be beneficiary on the pension and collect both. Finally,
note that this pension is based on non-SS taxed income. If you worked for a
state of local government and DID pay SS taxes, then nothing happens to your
SS benefit no matter what happens with your pension.

Elizabeth Richardson

John Richards wrote:

- quote -

2 points. Yes, state employees may not get SS, depending. My 80 yr old
client was a teacher in Mass, and did not participate in Social Security
(what her deductions were, while employed, I don't know, I just know she
only collected the teacher retirement, not SS when she retired).
For the original question, no, nothing is reduced.
If you earned money Fed, or State as my teacher did, you don't earn the
SS credits, it's not like she was expecting anything, and then found out
that due to pension, she gets less SS.
If you have too much income at retirement, the SS is taxed, so the net
effect is the same, but the SS check isn't reduced, just taxed more so.
This may very well be nit-picky, but it's an important point.

On a side note, it's possible to work in government, earn the pension,
and quit after 20 years, no SS earnings. Then work a civil job, and get
20 years of SS credits and quit with both SS and the Gov pension.

JOE

"Dave Dodson" <dave_and_darla[at]Juno.com> wrote in message news:1168795641.299872.307630[at]11g2000cwr.googlegroups.com...
- quote -

Unless that pension income is from federal government civil service,
as mine is. Not sure if state and local government pensions fall
into that category.

--
John Richards

RML wrote:
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No. Social Security benefits are reduced from "earned income,"
including what shows up on a W-2 form, but pension income and
distributions from IRA accounts does not affect Social Security
benefits.

And I should have added in my previous post that distributions from
Roth IRAs do not affect the taxability of Social Security benefits.

Dave

What I actually meant to ask was, "Is SS reduced based on pension
income and/or IRA withdrawals"?

Thanks

On Sun, 14 Jan 2007 06:52:22 -0600, "Dave Dodson"
<dave_and_darla[at]Juno.com> wrote:

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"Sam" <neverchecked40[at]hotmail.com> wrote
- quote -

Sam, can you give the interest rates and lengths of all
loans? This will be key here. IMO, if the interest rate is
below about 5.5%, I would forget about paying them off,
unless you really like the psychological boost of being debt
free. A lot of people do prefer the latter.

Also, the general guideline for retirement vehicles is
1) Contribute to 401(k) up to the employer's matching
2) Max out, if possible, the Roth IRA
3) Review 401(k) expenses and investment options, and
consider continuing to contribute to it

About losing your job: Remember that the Roth IRA
contributions (but not earnings on same) may be withdrawn
without penalty at any time. Of course one wants to avoid
drawing on any retirement, tax advantaged account, but this
flexibility is there for folks who have emergencies.

RML wrote:
- quote -

Yes and yes.

Dave

Is pension considered income, in determining if SS is taxed? What
about withdrawals from an IRA, are they "income"?

Thanks

On Sat, 13 Jan 2007 14:54:53 -0600, joetaxpayer
<joetaxpayer[at]nospam.com> wrote:

At retirement,
social security can be taxed baed on other income, so phantom rates of
50% may appear.

Thanks everyone for your responses. Turns out I will not break over
into the 28% tax bracket as I had thought. Before posting I had thought
the breaking point was $74,200 but that was for 2006, 2007 is $77,100.
I dont think I will be making that big of a jump from where I am today.


I guess my original post did not really ask the question correctly.
What I was really getting at was if I am close to going into a higher
tax bracket then would it make sense to increase my 401k contribution
to reduce my taxable income and thus keep me in a lower tax bracket. I
realize now that my original post did not really get down the real
question, which is... if I am on the border of crossing over into a
higher tax bracket would it make sense to increase my 401k contribution
so that I reduce my taxable income and stay in the lower tax bracket
and also invest more at the same time. Seems like a win-win situation.

(this is getting off topic)
joetaxpayer, I do realize that I am sitting pretty good for being 32
and single and I have been trying to put aside as much as possible. I
will be 33 in March and I have ~$102k in retirement accounts, not
exactly setting the financial world on fire but not too bad I think. I
keep telling myself that investing more earlier will allow my
investments more time to grow (you know the whole "delayed consumption"
thing, consume less today so that I can consume more tomorrow). I think
my biggest problem is finding a balance between saving for retirement
and paying down debt. I am currently struggling with a decision to
change my 401k from roth to traditional so that I can take the tax
deduction, bring more cash home and use that additional take home pay
to pay down some debt. I should note that the debt is not credit card,
two homes and a new (used) truck. I have also been fully funding my
roth ira for about 5 or 6 years. Just using rough estimates I am
currently spending ~$800/month just on loan interest and I hate that
but I should also note that one of the houses is a rental unit so a
good portion of that $800/month interest payment is getting paid by the
tenet. I realize there is not a "silver bullet" for this question but
how does a person determine how much debt is acceptable for their given
situation? I am sure that depends on the type of debt, for my personal
situation it is all mortgage and a single auto that I just purchased
last month. Oh and as of last week a student loan, again. Just
yesterday I figured out that I can change me 401k from roth to
traditional, increase my contribution from 10% to 20% and only lose
about $9 from my 2006 take home (partly because of being able to take
the tax deduction and partly because of a pay increase). One side of me
says thats a no brainer and I should do it but at the same time that
still does not help me pay down my debt. So how does a person decide
whether to pay down debt or increase retirement investments? I would
really like to pay down some debt because I have a feeling that my
salary is going to take a pretty big cut one of these days and I may
not be able to handle my current payments.

Sorry for the long post...

Sam

Rich Carreiro wrote:
- quote -

exactly.

- quote -

yup, this is a point that many people misunderstand. If you are $1 over
the 28% bracket, then only that $1 is taxed at 28%.

In addition to Richard's and Joe's suggestions, you might
find the following online calculator to be a helpful guide
in understanding rates at which your income will be taxed:
http://www.dinkytown.net/java/Tax1040.html

I did a partial Traditional IRA conversion (and naturally,
followed by a recharacterization... one day I'll do it
perfectly the first time) and was contemplating taking some
capital gains on stock sales in 2006, and used the
calculator a lot, along with a spreadsheet here at home, to
gage, roughly, the effects of different scenarios re the
conversion and gains. Of course, I have been doing my own
taxes for decades now, so I have a handle on Richard's and
Joe's points already, and this helps when using the
calculator at the link above.

Sam wrote:

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There is a line on the 1040, which shows "taxable income" line 43.
Go to http://www.fairmark.com/refrence/index.htm and you'll see the 2007
tax rate schedule. This is your 'tax bracket' or marginal rate.

In truth, it's more complex than that. Exemptions phase out at a certain
income level, so marginal rates actually are higher. At retirement,
social security can be taxed baed on other income, so phantom rates of
50% may appear. I have yet to fine a good graph or spreadsheet showing
that. At the simplest level,in 2007, you are in the 28% bracket if your
taxable income is above $77,100, single, $128,500 married.

So in either case, 28% bracket land mean you are doing well.
(stepping up on soapbox) I hope you are planning for your future and
your family's if you are married. Killed off credit card debt you
accumulated when you were young and stupid (I was both, perhaps you
weren't)? Putting money in the retirement plan(s) at work? Up to 15% (or
more if you aspire to retire early)?
It's never too soon to start to think on these things, and whether you
go it alone or seek a professional, knowledge is power, time is money,
and I've forgotten the punchline.....

JOE

"Sam" <neverchecked40[at]hotmail.com> writes:

- quote -

Neither. It's determined by their taxable income (AGI less itemized or
standard deduction less personal exemptions).

- quote -

You do realize that only the amount of taxable income extending into
the 28% bracket is taxed at 28%, not all of it?

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

Is a persons tax bracket determined by their AGI or just gross salary?
I just received a pay increase that puts my gross salary just a few
hundred dollars below the cut off for the 28% tax bracket and next year
(2008) I fully expect that my gross salary will be in the 28% tax
bracket but I think taxes are based on AGI so I should still be in the
25% bracket.

Can someone please confirm that a persons tax bracket is based on AGI
or gross salary?

Thanks