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Once you start receiving your pension, the IRS regards it as income and you'll pay taxes on it accordingly, on the federal level. If a portion of your paycheck goes to your pension fund pretax (before paying income tax on it), this lowers your adjusted gross income and lowers your federal tax bill each year that you're working. Some retirees opt to make quarterly estimated tax payments or have federal taxes withheld so there aren't any surprises come tax time. Sure, there are lighter ways to ma...
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