The taxman keeps working even after you stop. Be prepared. By Sandra Block, Senior Editor January 15, 2015 You’ve saved for years so you can enjoy a comfortable retirement. Now prepare to give some of that money back to Uncle Sam. Taxes could take a big bite out of your savings, leaving you with less money for living expenses. Here’s a look at how some common sources of retirement income are taxed.See Also: 10 Least Tax-Friendly States for Retirees Withdrawals from traditional IRAs and 401(k) plans are taxed as ordinary income, which means at your top tax bracket. Withdrawals of earnings from your Roth IRA, on the other hand, are tax-free as long as the Roth has been open for at least five years and you’re 59 1/2 or older. You can withdraw contributions to your Roth IRA tax-free at any time, since you made the original contributions with after-tax money. When it comes to your taxable accounts, the tax hit will depend on the types of investments you own and how long you’ve owned them. Interest on savings accounts and CDs is taxed as ordinary income. If you’re in the 10% or 15% tax bracket, you’ll pay 0% on capital gains from the sale of stocks, mutual funds and other investments you’ve owned for more than a year. Most others pay 15% on long-term capital gains. Will you receive a private or government pension when you retire? That’s a nice benefit, but it’s also taxable, usually at your ordinary income rate. Some retirees are surprised to discover that a portion of their Social Security benefits may also be taxable. Depending on your other sources of income, up to 85% of your benefits could be taxed. Advertisement Finally, don’t ignore the impact of state and local taxes on your retirement income. Moving across state lines—or across the country—could have a big impact on your tax bill. Seven states have no income tax, but that doesn’t always mean that moving to one of them will save you money. Some states with no income taxes make up the difference with high property or sales taxes. And many states that impose income taxes offer generous tax breaks for retirees that could wipe out your tax bill. For a rundown on how each state taxes its retirees, take a look at our State-by-State Guide to Taxes on Retirees.