Michigan has changed how it taxes retirement income, and those changes could affect your retirement plan.
In Episode 21 of Kitchen Table Finance, Nick Nauta sits down with returning guest Matt Cooper of Matthew Accounting. They discuss how Michigan currently treats different sources of retirement income and where retirees may still run into state taxes.
Matt explains that Michigan’s retirement income deduction is now fully phased in. However, that does not mean every dollar of retirement income is automatically tax-free. The type of income, your age, the account involved, and how you take distributions can all matter.
Nick and Matt discuss qualified retirement distributions, pensions, IRAs, 401(k)s, Roth accounts, Roth conversions, Social Security, annuities, and taxable investment accounts. They also explain why retirement tax planning should consider both Michigan and federal taxes.
You’ll learn about:
- How Michigan’s retirement income deduction works
- Why not all retirement income receives the same tax treatment
- How qualified retirement distributions may be treated
- Why Roth distributions and Roth conversions are different
- Tax considerations for people retiring before traditional retirement age
- How certain annuity distributions may be treated
- How Michigan generally treats Social Security income
- Why taxable investment accounts and capital gains require separate planning
- When it may make sense to review Michigan tax withholding
- Why tax planning should be coordinated with your larger retirement plan
Tax rules can change, and your personal situation matters. Before changing distributions, conversions, or withholding, consider how those decisions fit with your complete financial plan and tax situation.
Contact Us Today
Contact SRB today at 517-321-4832 or email us at info@srbadvisors.com. Don’t forget to subscribe to our channel for more bite-sized financial and retirement tips. https://www.youtube.com/@shotwellrutterbaer
Guest: Matt Cooper, Matthew Accounting
Matthew Accounting specializes in individual income taxes, tax planning, small business taxes, and business accounting.
Resources
Specialized financial planning for State of Michigan employees who want to make the most of their benefits and retire with confidence.
https://srbadvisors.com/state-of-michigan-employees/
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