Why this matters
The IRS uses a formula called “provisional income” to determine how much of your Social Security is taxable. IRA withdrawals, RMDs, pensions, and even CD interest all feed into this formula.
When you cross certain thresholds, each additional dollar of IRA withdrawal can cause $0.50 to $0.85 of Social Security to become newly taxable — creating an effective tax rate far above your bracket.
This is called the “Tax Torpedo.” A licensed insurance agent can explain whether certain strategies — like annuities — may help. Your CPA can confirm what applies.
This tool provides general educational information only and does not constitute tax, legal, or financial advice. Results are illustrative estimates. Please consult a qualified CPA or tax advisor. Licensed insurance agents are not tax advisors.