Once you’re retired, you will likely need to draw on several sources of income for your living expenses. But do you know how this money is taxed?

For starters, consider Social Security. Whether your benefits will be taxed depends on how much other taxable income you receive from various sources, such as self-employment, stock dividends, and interest payments.

Next, think about your retirement accounts. If you have a traditional IRA and 401(k), your withdrawals will be taxed as ordinary income. But if you chose the Roth option for these accounts, if available, withdrawals are free of federal income taxes, provided you meet certain conditions.

Finally, some people supplement their retirement incomes with annuities. When you start taking money from a qualified annuity, your contributions and earnings are taxable at your individual tax rate. With a non-qualified, or after-tax, annuity, you won’t be taxed on the amounts you contributed, but earnings will be taxable.

Knowing these general rules governing different income sources can be helpful, but you should contact your tax professional about your specific situation.  The more you know about retirement income taxes, the better you can plan your financial strategies.

This content was provided by Edward Jones for use by Matthew Kenady, your Edward Jones financial advisor in Chillicothe. Matthew Kenady can be reached at 309-274-3929.

Edward Jones, its financial advisors and associates cannot provide tax or legal advice. Member SIPC.