Do 401k withdrawals after age 59 1/2 require paying Social Security and Medicare taxes? (Weird tax question)

You don't need to worry about Social Security and Medicare taxes (FICA taxes) on your 401k withdrawals after age 59 1/2. Those taxes only apply to earned income - like wages from a job or self-employment income. When you take distributions from your 401k in retirement, they're only subject to regular income tax, not FICA taxes. To clarify how it works: When you contributed to your 401k while working, you still paid your share of FICA taxes on that money before it went into the account. That's because FICA taxes are calculated based on your gross wages before any deductions, including 401k contributions. So you've already paid the Social Security and Medicare portion on those funds. Your brother-in-law might be mixing up different tax concepts. Retirement account withdrawals are treated as ordinary income for income tax purposes, but they're not considered earned income that would trigger additional FICA taxes.

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There's a lot of confusion on this topic! To summarize what others have said: - 401k withdrawals after 59 1/2 are NOT subject to Social Security or Medicare taxes - They ARE subject to federal income tax (and possibly state income tax) - FICA taxes (Social Security and Medicare) only apply to earned income - You already paid FICA on this money when you earned it originally Remember that the government can always change tax laws, so double-check before you make any big decisions!

wait but what about the taxable portion of social security benefits?? my dad gets social security AND takes 401k money and says his social security gets taxed more cuz of the 401k withdrawls... is that different?

This is such a common source of confusion! I went through the exact same worry when I was approaching retirement. The key thing to remember is that FICA taxes (Social Security and Medicare) are only on "earned income" - basically wages and self-employment income. Your 401k withdrawals are considered "unearned income" or investment income, so they're completely exempt from FICA taxes. What helped me understand it better was thinking about it this way: when you were working and contributing to your 401k, you were still paying FICA taxes on your full gross salary before any 401k deductions. So you've already "paid your dues" to Social Security and Medicare on that money. Now when you withdraw it in retirement, the government just wants their income tax cut, not another round of FICA taxes. The only thing to watch out for is if you're still working part-time in retirement - those work wages will still have FICA taxes, but your 401k withdrawals won't. Hope this helps ease your mind about retirement planning!