So Im a firefighter and about to retire next year. I have a deferred comp 457 account that will supplement my monthly retirement check.
What are the tax implications in drawing money from my 457? Obviously I will owe federal tax but what I was specifically wondering was whether or not there was any difference in the funds Im invested in and what the tax implications are. For example I have my money invested over a range of funds, from stock funds to tax-free municipal bonds. When I start pulling money will it make any difference what funds I'm in? Will I have to specify which fund to pull money from or does it all just come off the top, so to speak?
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It depends upon the state, of course. Since Texas has no state tax, no worries for you. In Colorado where I live the first $20K of a pension gets an exception from state tax for folks over age 55. New Mexico, to where I will retire, only has exemptions from state tax for people that earn less than $55K (joint filing), so that rules me out from that one.
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