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Q&A With Scott Burns: How Are Social Security Benefits Counted?
FYI: Q. Can you explain how Social Security benefits are calculated? I know they're based on an average of the last 35 years of wages before beginning to draw benefits, but is there a cap to the amount a person gets "credit" for in a particular year when calculating the average? Regards, Ted https://assetbuilder.com/knowledge-center/articles/how-are-social-security-benefits-counted
Sigh. Burns is crossing over from polemics to just plan wrong facts - wrong to the point of being dangerous.
In his answer to the second question, he says that you can split RMD among all your plans, be they employer plans (e.g. TSP, 401(k)), be they IRAs, or both. That's completely wrong.
RMDs must be calculated and taken separately from each employer plan. In contrast, while you also calculate the RMD for each of your IRAs separately, the RMD amounts may be combined and taken from any combination of the IRAs, but only from the IRAs and not from the employer plan. So you can't avoid IRA RMDs by taking distributions from your TSP or 401(k), as Burns suggests.
His polemic in the first answer: he says that SS benefits you get from contributions once you earn over $5157/month have effectively no value. This is supposedly due to those benefits being taxed. (Yet another column ranting about the evils of subjecting SS benefits to progressive taxation.)
Do you feel that any of your income is worthless because it is taxed? I didn't think so - 3/4 of something is still a good chunk of something.
The only way you get nothing after tax is if you start with nothing. Billy Preston said it more concisely.
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In his answer to the second question, he says that you can split RMD among all your plans, be they employer plans (e.g. TSP, 401(k)), be they IRAs, or both. That's completely wrong.
RMDs must be calculated and taken separately from each employer plan. In contrast, while you also calculate the RMD for each of your IRAs separately, the RMD amounts may be combined and taken from any combination of the IRAs, but only from the IRAs and not from the employer plan. So you can't avoid IRA RMDs by taking distributions from your TSP or 401(k), as Burns suggests.
From IRS: RMD Comparison Chart: IRAs vs. Defined Contribution Plans (see multiple accounts line)
His polemic in the first answer: he says that SS benefits you get from contributions once you earn over $5157/month have effectively no value. This is supposedly due to those benefits being taxed. (Yet another column ranting about the evils of subjecting SS benefits to progressive taxation.)
Do you feel that any of your income is worthless because it is taxed? I didn't think so - 3/4 of something is still a good chunk of something.
The only way you get nothing after tax is if you start with nothing. Billy Preston said it more concisely.