Understanding taxes and your retirement savings

Did you know that retirement accounts have different rules on how your savings and withdrawals are taxed? Some accounts are taxable when you put the money in, some are taxable when you take the money out—and some are taxed along the way. Get to know the differences so your retirement saving strategy can help you pay taxes when you think it’s best for you.

Man looking beyond computer screen

Tax treatment of withdrawals when retired

401(k)

You pay taxes on your withdrawal (contributions and earnings) at your current tax rate.

Roth 401(k)

You can withdraw your Roth 401(k) contributions at any time and owe no taxes. When you turn age 59½ and your Roth 401(k) account is at least five years old, your entire withdrawal (contributions and earnings) is tax free.

IRA

You pay taxes on your withdrawal (contributions and earnings) at your current tax rate. In a nondeductible IRA, only the earnings are subject to taxes.

Roth IRA

You can withdraw your Roth IRA contributions at any time and owe no taxes. When you turn age 59½ and your Roth IRA account is at least five years old, your entire withdrawal (contributions and earnings) is tax free.