Dennis and Sharon, ages 67 and 65, respectively, are going to retire at the end of the year. They will be collecting Social Security benefits (SSBs) of \($22,000\).
They feel they need more than \($22,000\) to live on and would like to withdraw money from Dennis’s 401(k). Their concern is the amount of tax they will have to pay on the distribution and the SSBs. Write a memo to Dennis and Sharon and a memo to their tax file explaining how much money they can withdraw from their 401(k) without their SSBs being subject to tax.