Know what's taxable and what's not
Distributions from some accounts will be taxed, and some won't be--so make sure you account for that in your planning. You may want to reach out to a financial professional or tax accountant for help.
- Traditional 401(k) savings and earnings are taxed upon distribution.
- Qualified Roth 401(k) and qualified Roth IRA withdrawals are not taxed upon distribution.1
1 Qualified distribution from a Roth account (including the 5-year rule)—A qualified distribution from a designated Roth account in the plan is a payment made after the participant attains age 59½ (or after death or disability) and after the designated Roth account in the plan has been established for at least 5 years. In general, in applying the 5-year rule, count from January 1 of the year the first contribution was made to the designated Roth account. Participants should contact their plan consultant or financial or tax advisor for specific details on the 5-year rule and whether any special rule may apply.