Retirement Tax Law

Retirement tax law refers to the rules governing how income from retirement savings, such as 401(k)s and IRAs, is taxed when you withdraw money. Typically, contributions made to these accounts are tax-deferred, meaning you don’t pay taxes on that money until you take it out, usually during retirement. At that point, withdrawals are generally taxed as regular income. Additionally, there are specific regulations about minimum distributions and penalties for early withdrawals. Understanding these laws helps individuals plan for taxes during retirement, ensuring they manage their finances effectively.