As a 62-year-old on Social Security, how much can I take out of my 401(k) before I have to file and pay taxes on it?

by Thomas N. Alvaré, CPA | Dec 27, 2018
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I'm 62 and on Social Security. How much can I take out of my 401(k) before I have to file income tax and pay tax on it? I don't make enough to file now.

Assuming you file as single, you get a standard deduction of $12,000 and the first $9,525 of income is taxed at a zero rate in 2018. Adding them together, that means the first $21,525 of income is not taxed. Social Security benefits are not taxed at all until total income exceeds $25,000.  

So, to answer the question precisely, assuming Social Security income exceeds $3,475 for the year and taxable 401(k) withdrawals are the only other source of income, you can take out of the 401(k) the difference between $25,000 and the actual 2018 Social Security income before triggering federal tax. State taxes may apply to the 401(k) withdrawal, depending on the state. Pennsylvania does not tax retirement income or retirement account withdrawals.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Thomas N. Alvaré, CPA, is managing principal with JFS Wealth Advisors in Doylestown, Pa.

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