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Retirement Income Tax Analysis Template

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Retirement plans are usually offered by almost all companies to accommodate their employees during their retirement. Different companies offer some types of tax advantage over retirement plans or retirement income. Some retirement plans are known as tax-deferred accounts so that the retirement income of the employee can be considered exempt from tax for a specific period under some terms and conditions. It will be good to analyze your retirement income in advance to get the following benefits:

  • Either you have sufficient income to meet your goals.
  • Plan necessary adjustments to meet your goals.
  • Projected estimation of your retirement income.
  • Social Security projection estimate.
  • Retirement distribution and cash-flow analysis.
  • Retirement income tax analysis will help you to anticipate your future liability regarding income tax.

Retirement income tax analysis is a good tool to get the prospect approximately after ten or more years of retirement. It will prove beneficial to plan your goals after evaluating your future financial position.

Here is a preview of this free Retirement Income Tax Analysis Template created using MS Excel,

Retirement-Income-Tax-Analysis-Template 1

Here is the download link for the above-mentioned Retirement Income Tax Analysis Template,


Federal Income Taxes

If you have tax-deferred pension plans then while taking out money, you have to include the amount that you have received as taxable income while filing federal income taxes. Federal tax return mentions taxable benefits on the 12a and 12b lines in the case of the 1040A form. If you are using the 1040 form then you have to read the 16a and 16b lines.

If you have a Roth pension plan like a 401 (k) plan or Roth 403 (b) plan then you can enjoy tax-free withdrawals. In this case, the pension income will be reported on line 12a of form 1040A or 16a of form 1040 only so do not consider 12b of form 1040A or 16b of form 1040.

State Income Taxes

Some states charge income taxes on pension income so if you are living in such a state then you have to pay income tax on retirement income. Tax rates may vary from state to state and are usually based on your total taxable income for the state.

Some states consider different types of pensions while applying tax on them. For instance, some states like Alabama, Illinois, Mississippi, New York Pennsylvania, etc. do not tax any government, federal state, or local government-level pensions. On the other hand, California, Connecticut, Rhode Island, and Vermont do not have any plan to exempt pension income from tax.

Tax Penalties

There are some rules for the withdrawal of pensions like if you will withdraw your pension payments before the determined duration then you have to pay tax on the amount of withdrawal as a penalty. The tax penalty is just one fee amounting to 10 percent of the unqualified distribution. This penalty is considered important and urgent that you have to pay on the early withdrawal. To calculate the amount of tax penalty and its documentation, it is necessary to fill out a 5329 form and attach it to your Form 1040 tax return.

Note: Form numbers and lines of tax details can be varied according to your state.

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