A:



Any taxable amount of the distribution will represent ordinary income for the year that the distribution occurs and will be subject to income tax at your regular/ordinary income tax rate.



If the amount is significant, it could put your income in a higher tax bracket.



Visit the IRS website for 2007 Federal Tax Rate Schedules.



For more on required minimum distributions (RMDs), see Avoiding RMD Pitfalls and Strategic Ways To Distribute Your RMD.



This question was answered by Denise Appleby
(Contact Denise)



RELATED FAQS
  1. How can I find out which income tax bracket I am in?

    Find out how to determine your federal income tax bracket and calculate how much you will owe in federal taxes with online ... Read Answer >>
  2. Can moving to a higher tax bracket cause me to have a lower net income?

    Many people think that when their income increases by enough to push them into a higher tax bracket, their overall take-home ... Read Answer >>
  3. What is the income breakdown for the effective tax rate?

    Read about the effective tax rate, how the marginal income tax brackets affect it and how the denominator in its formula ... Read Answer >>
  4. I'm an 80 year old making increasing required minimum distribution (RMD) tax payments. ...

    First, some background information: the tax treatment of a Roth IRA distribution depends on whether or not the distribution ... Read Answer >>
Related Articles
  1. Financial Advisor

    The Basics of Income Tax on Mutual Funds

    Learn about the basics of income tax on mutual funds, including what types of income may be subject to the capital gains tax rate.
  2. Taxes

    Federal Tax Brackets

    Why do we have income tax brackets? What do they do for us? Read this to understand the basics and where to find your own bracket.
  3. Taxes

    How Getting A Raise Affects Your Taxes

    Many people think they may actually make less overall because they are paying more taxes.
  4. Financial Advisor

    Tax Tips for RMDs on Big 401(k) Balances

    Have a large 401(k) balance? Here are some ways to reduce taxes on required minimum distributions.
  5. Taxes

    What's a Marginal Tax Rate?

    The marginal tax rate is based on a progressive tax system, where tax rates for an individual will increase as income rises. This method of taxation aims to fairly tax individuals based upon ...
  6. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  7. Financial Advisor

    Why Age 70 is Pivotal for Retirement Planning

    Age 70 marks the time that you will have to start thinking about RMDs for real, but it's better to start planning for them much sooner.
  8. Financial Advisor

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
  9. Retirement

    Should Required Minimum Distributions Be in Cash?

    What is the most tax-efficient way to take required minimum distributions from your retirement plan? Several financial advisors weigh in.
RELATED TERMS
  1. Tax Bracket

    The rate at which an individual is taxed. Tax brackets are set ...
  2. Federal Tax Brackets

    Income tax groupings specified by the Internal Revenue Service ...
  3. Marginal Tax Rate

    The amount of tax paid on an additional dollar of income. The ...
  4. Effective Tax Rate

    The average rate at which an individual or corporation is taxed. ...
  5. Income Shifting

    A strategy of moving a person's income from a high income bracket ...
  6. Dual Rate Income Tax

    An income tax rate structure in which two different tax rates ...
Hot Definitions
  1. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that decreased and eventually eliminated tariffs to encourage economic activity ...
  2. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  3. Derivative

    A security with a price that is dependent upon or derived from one or more underlying assets.
  4. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  5. Sharpe Ratio

    The Sharpe Ratio is a measure for calculating risk-adjusted return, and this ratio has become the industry standard for such ...
  6. Death Taxes

    Taxes imposed by the federal and/or state government on someone's estate upon their death. These taxes are levied on the ...
Trading Center