Are Traditional 401(k) distributions get a Social Security tax?

Hi! Please correct me if anything of this is incorrect. But I'm trying to get a feel for how much of my income I should put into my Roth IRA vs. my employers pre tax 401(k). One question that came up is that my Roth contributions get a Social security tax since it factors into my taxable income now while my pre-tax doesn't. When I retire and I'm receiving social security, will I have to pay a social security tax on my pre tax distributions, or is that extra savings I get for contributing to my pre+tax 401(k)?

6 Answers

  • 10 months ago
    Favourite answer

    You pay SS and Medicare taxes in the year you earn...the "pre-tax" 401k only applies to income tax. So no, you don't pay SS tax on the 401k distributions because you already did.

    Here is the fun of a ROTH. When you start taking the money out, odds are your income is higher than when you were putting money in. If tax rates are consistent, then you'd pay a lower tax rate when young and a higher tax rate when old. So, using post tax money for your ROTH is awesome since it wont get taxed again at the presumably higher rate.

  • 10 months ago

    Distributions from retirement accounts are not subject to Social Security tax.

  • 10 months ago

    I agree with the people encouraging Roth contributions, whether to an IRA, or a Roth 401k if your company offers it. At least, I'm certainly glad that I went all Roth as soon as it was offered.

    Since you are not retired yet, I'd say who knows what will happen in the future. Maybe Social Security payments will be means-tested, and you'll get less if you pull money from a Traditional IRA, or even a non-taxed distribution from a Roth. That's effectively a tax, because you get less based on your income. Or maybe they will start deducting SS, Medicare, etc, from all income, no matter where it comes from. Sounds silly, taking SS out of SS, but honestly, I'm seeing a lot of things recently that I thought could never happen.

    As for what would happen if laws remain unchanged, others have answered well.

  • P
    Lv 7
    10 months ago

    You shouldn't go too crazy with the Roth as your taxable income (tax bracket) will be much lower when you retire since SS income is not taxed and many states with income tax don't tax 401K withdrawals either.   You won't pay SS tax on retirement income. 

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  • 10 months ago

    No ss tax on retirement income, only federal income tax. In your case of course, Roth is not subject.

    Source(s): Retired tax preparer
  • Anonymous
    10 months ago

    You've already paid social security/medicare tax on all contributions to your Roth IRA and 401k. There will not be any more social security/medicare tax on either when you make withdrawals.

    Withdrawals from a pre-tax 401k are subject to income tax. Withdrawals from Roth IRAs are not.

    Pre-tax retirement accounts are subject to RMDs (required minimum distributions) and Roth accounts are not.

    Medicare premiums are affected by one's taxable income. Income from Roth IRAs is not taxable and therefore does not inflate your medicare premiums.

    Roth IRAs also have some nice advantages when it comes to estate planning/inheritance.

    Baby Boomers who have retired with a sizeable nest egg are realizing just how screwed they are by having their assets in pre-tax accounts.

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