Originally Posted by First Break

In retirement, that pilot would pay 10% of the first $22,000, 12% of the next $67,450, 22% of the next $101,300, 24% of the next $173,450, and finally 32% of the last $35,800. Add all that together, and the pilot will have paid $85,664 of federal income taxes on $400k of retirement plan withdrawals, or an EFFECTIVE tax rate of 21.4%. This pilot is still “in the 32% tax bracket”, but the treatment of dollars on the way OUT is vastly different than the treatment of the dollars on the way IN.