Q.: Would you please explain what happens when one reaches the age of 70 1/2? I participated in 401(k) investments when I was employed, but no one prepared me for what would happen when I reached 70 1/2. I was led to believe that I would be in a different income tax bracket when I retired, so I would pay less in taxes. They never mentioned that Social Security benefits might be affected. We are paying taxes on 85 percent of our Social Security benefits. Knowing what I know now, I'm not so sure that I would have taken the same route. After the Required Minimum Distribution is added, we are in another tax bracket. ? Read more
The situation is similar to that with the alternative minimum tax: every year that this part of the tax code is not indexed to inflation, more and more individuals are impacted by it.