Okay, can you calculate, like let's say you have a $26,000 401k or a IRA, and you also get a social security payment every month of $895. dollars. What would be the exact right amount to pull from that 401k or IRA where you end up owing zero federal tax? And we get that there would be state tax, which is fine because it's very low, but we want to tune it to where we pull out just enough of the 401k to be under the federal income tax with those $8.95 payments per month, because I believe that those Social Security payments would be considered income.

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Accepted Answer

Great question. The key here is that Social Security benefits are often partially or fully tax-free at lower income levels. For single filers, if your combined income, which is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits, stays below twenty-five thousand dollars, then zero percent of your Social Security is taxable.

So let's do the math. Your annual Social Security would be ten thousand seven hundred forty dollars, which is eight ninety-five times twelve. Half of that is five thousand three hundred seventy dollars. To keep your combined income under twenty-five thousand, your IRA withdrawal would need to be under nineteen thousand six hundred thirty dollars, since nineteen thousand six hundred thirty plus five thousand three hundred seventy equals twenty-five thousand.

However, here's the good news. The 2026 federal standard deduction for a single filer is around sixteen thousand dollars. So even if you withdrew the full nineteen thousand six hundred thirty from your IRA and none of your Social Security was taxable, you'd only have about three thousand six hundred thirty in taxable income after the standard deduction, which would result in roughly three hundred sixty dollars in federal tax at the ten percent bracket.

To owe absolutely zero federal tax, you'd want your total taxable income after the standard deduction to be zero. That means you could withdraw up to about sixteen thousand dollars from your IRA, keep your Social Security nontaxable by staying under the twenty-five thousand combined income threshold, and you'd owe nothing federally. You'd still have your ten thousand seven hundred forty in Social Security on top of that, giving you roughly twenty-six thousand seven hundred forty total to live on with zero federal tax.