Why are pensions taxable at 20% whenever a withdrawal is made by an owner under 70 years of age?
Current account managers of pension owners funds assess a 20% withdrawal fee stated as IRS required taxes, yet the funds deposited into most accounts have already been taxed, so why the "double taxation law" being allowed? Can anyone explain the logic of this taxation rule?
Taxation best answer:
Answer by Wayne Z
1) Most of these funds are mostly pretax money so the money has not "already been taxed".
2) The 20% is not a tax or a "fee". It is withholding. You get credit for it when you file your return.
Taxation
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