9 Valuable Tax Breaks Retirees Should Know About

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Withholding

If you get regular payments from a company pension or a 401(k) plan, the payers will withhold tax (unless you specifically tell them not to), and the same happens with traditional IRA withdrawals.

With traditional IRA, 401(k)s, and pensions withdrawals, taxes will be withheld unless you file a Form W-4P. In general, if you benefit from traditional IRA distributions, withholding is calculated at a flat 10 percent rate, but this can change if you request a different rate.

Now you may wonder what will happen to your Social Security benefits… Well, luckily, there will be virtually no withholding, but that’s up to you.  You can actually opt for withholding by filing a Form W-4V. The rates are 7%, 10%, 12% and 22%.

All in all, withholding is not really a bad thing, as most would assume. Considering the fact that it stretches your tax bill over an entire year, it could be a pretty good choice for those on a fixed income.

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