Deferred Comp Withdrawal Tax Question

by Jim
(Louisville, KY)

Deferred Comp Withdrawal Tax Question

Deferred Comp Withdrawal Tax Question

Should I withdraw from 457 deferred comp acct. which is in mutual funds. to pay off house mortgage.

Household (wife and me) income is $103,000 pension and $27,000 from part time work---total yearly income $130,000---net is $104,000. Mortgage payment is $1500 per mo., (P&I).

8 yrs. left on mortgage at 4.24 APR fixed. I have $150,000 in 457 accounts. I owe $120,000 on mortgage. Should I take out the $150000 and pay off the $120000.

20% would be withheld and I would clear $120000 for mortgage payoff. I have no other bills. I could save the $1500 per mo. that I am now paying on mortgage.

Since fed taxes are going to be lower the next 2 yrs. would it bebefit me to withdraw the money during this time period.

Would drawing out the $150000 in one year cost me more due to a higher tax bracket or would it be better to draw out have 2011 and half out in 2012 and apply to mortgage balance.

I am 67 yrs. old wife is 57.

Comments for Deferred Comp Withdrawal Tax Question

Average Rating starstarstarstarstar

Click here to add your own comments

Jan 20, 2024
Rating
starstarstarstarstar 		Paying Off Mortgage vs. 457 Withdrawal
by: BB

Before making a decision, consider the following factors:

Tax Implications: Withdrawing a large sum can push you into a higher tax bracket. Consult a tax professional to assess the impact on your overall tax liability.
Future Income Needs: Assess your future income needs and ensure that the withdrawal won't affect your financial stability.
Investment Strategy: Consider the potential growth of your investments in the 457 deferred comp account compared to the mortgage interest rate.
Penalties: Be aware of any penalties or fees associated with early withdrawals from your 457 accounts.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

Deferring Farm income

I received 2 crop payments in 2022 and was hoping to defer some of this income to 2023. Is this possible to do legally?

Comments for Deferring Farm income

Average Rating starstarstarstarstar

Click here to add your own comments

Jan 20, 2024
Rating
starstarstarstarstar 		Understanding Legal Income deferral
by: BB

In general, the timing of recognizing income is subject to tax regulations. While specific rules can vary, agricultural income, including crop payments, may be eligible for income averaging or other deferral strategies in certain situations. It's crucial to consult with a tax professional who can provide advice tailored to your specific circumstances and local regulations.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

Deffered Income Interest

How do I defer Income Interest to next year?

Comments for Deffered Income Interest

Average Rating starstarstarstarstar

Click here to add your own comments

Jan 20, 2024
Rating
starstarstarstarstar 		Deferring Interest Income for Next Year
by: BB

Deferring interest income to the next year may depend on the type of interest and applicable tax regulations. One common strategy is to invest in tax-deferred accounts or municipal bonds. However, it's crucial to consult with a tax professional to explore suitable options based on your financial situation.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.


Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you every month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.

Like Bookkeeping-Basics.net?