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. Do tax brackets include Social Security?

    Find out whether your Social Security benefits are subject to taxation, and learn how they can affect your tax bracket as ... Read Answer >>
  2. 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 >>
  3. How do I calculate my effective tax rate using Excel?

    Find out how to calculate your effective tax rate using Microsoft Excel, what income tax rates to apply to your earned income ... Read Answer >>
Related Articles
  1. Financial Advisor

    Tips for Tax-Efficient Retirement Plan Withdrawals

    Here's how advisors can help increase tax efficiency for clients who are withdrawing assets from retirement accounts.
  2. Taxes

    Why Your Tax Bracket Is Not the Tax Rate You Pay

    Understanding how federal and state tax brackets work is important for tax planning – and for making sense of the political conversation around tax reform.
  3. Taxes

    Breaking Down Taxes For Different Income Brackets

    Here is a useful rundown of how much you will pay in taxes based on your income.
  4. 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.
  5. Taxes

    Comparing Long-Term vs. Short-Term Capital Gain Tax Rates

    Learn about the difference between short- and long-term capital gains and how the duration of your investment can impact your tax liability.
  6. Financial Advisor

    Many Baby Boomers Must Take First RMD by April 1

    Many Baby Boomers must take their first RMDs from retirement accounts this year.
  7. 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.
  8. 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.
  9. Taxes

    Preparing for Potential Tax Policy Changes

    Here is a comprehensive guide to tax planning in an environment where policies could dramatically change under new leadership in Washington.
  10. 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 ...
RELATED TERMS
  1. Tax Bracket

    The rate at which an individual is taxed. Tax brackets are set ...
  2. Future Income Tax

    Income tax that is deferred because of discrepancies between ...
  3. Federal Tax Brackets

    Income tax groupings specified by the Internal Revenue Service ...
  4. Ordinary Income

    Income received that is taxed at the highest rates, or ordinary ...
  5. Marginal Tax Rate

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

    The average rate at which an individual or corporation is taxed. ...
Hot Definitions
  1. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  2. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  3. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
  6. Border Adjustment Tax

    A tax levied on goods based on where they are sold – exported goods are exempt from tax; those imported and sold in the ...
Trading Center