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Are Ghost Taxes Creeping Into Your Knights of Columbus Retirement Plan?

'Many Knights of Columbus employees underestimate how much “ghost taxes” can erode retirement income. Understanding these hidden thresholds today can help you make more thoughtful decisions for tomorrow’s financial well-being,' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Many Knights of Columbus employees are surprised by how quickly hidden taxes like AMT, NIIT, and IRMAA can reduce retirement income, making it important for retirees to stay informed and thoughtfully plan so these costs don’t catch them off guard.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The five “ghost taxes” that may unexpectedly impact retirement income.
How these taxes can affect Knights of Columbus employees and retirees.
Strategies to better understand and prepare for these tax implications.

How Knights of Columbus Employees Can Prepare for the Five “Ghost Taxes” That Could Haunt Retirement

There are several lesser-known surcharges and thresholds that may unexpectedly increase your tax bill in retirement, even if you already understand federal, state, and local tax obligations. These include the Alternative Minimum Tax (AMT), the Net Investment Income Tax (NIIT), the Medicare Income-Related Monthly Adjustment Amount (IRMAA), the Social Security “tax torpedo,” and the new senior deduction. Because many of these thresholds are not adjusted for inflation, they increasingly impact retirees, including those from Knights of Columbus.

1. AMT: Alternative Minimum Tax

The AMT is a parallel tax system designed to make sure higher-income individuals pay at least a minimum amount of taxes. It has its own tax brackets, forms, and rules, with a top rate of 28%. ¹ Some deductions available under the traditional tax system are limited under AMT rules.

For 2025, the AMT exemptions are:

- $88,100 for single filers (phasing out at $626,350)
- $137,000 for married couples filing jointly (phasing out at $1,252,700)

High income, exercising incentive stock options, large capital gains, or numerous itemized deductions may trigger AMT. Even though long-term capital gains receive preferential tax treatment, they can still reduce your AMT exemption. If AMT is paid in one year, a tax credit may be available in future years when AMT is not owed.

2. NIIT: Net Investment Income Tax

The NIIT applies a 3.8% tax on net investment income when modified adjusted gross income (MAGI) exceeds:

- $200,000 for single filers
- $250,000 for married couples filing jointly ²

This tax applies to dividends, interest, rental income, gains from home sales, and capital gains beyond exclusion limits. Withdrawals from 401(k)s and traditional IRAs are not directly taxed by NIIT, but they may increase MAGI and cause other investment income to be taxed.

Strategies to limit exposure include contributing to traditional retirement accounts, using health savings accounts (HSAs), and tax-loss harvesting. For instance, tax-loss harvesting allows you to use up to $3,000 in capital losses annually to offset ordinary income. ³

For individuals age 70½ or older looking to reduce MAGI, qualified charitable distributions (QCDs) may help. QCDs allow you to donate to qualified charities on a tax-free basis directly from your IRA, satisfying required minimum distribution (RMD) rules without bringing distributions into income. In 2025, up to $108,000 may be donated tax-free. ⁴

3. IRMAA: Income-Related Monthly Adjustment Amount

IRMAA adds a surcharge to Medicare Parts B and D premiums for higher-income retirees and is based on MAGI from two years prior.

For 2025, IRMAA applies when MAGI exceeds:

- $106,000 for single filers
- $212,000 for married couples filing jointly

Even a small increase above these limits can place retirees in a higher premium bracket. Tax-exempt interest from municipal bonds is included in MAGI for IRMAA purposes. Premiums and IRMAA can be deducted from Social Security payments or paid directly. Social Security allows individuals experiencing major life changes, such as retirement or death of a spouse, to request revised IRMAA calculations.

4. The Social Security “Tax Torpedo”

Social Security benefits may be taxable depending on “provisional income,” which includes:

- Adjusted gross income
- Non-taxable interest
- One-half of Social Security benefits

If provisional income exceeds:

- $34,000 for single filers
- $44,000 for married couples filing jointly

...then up to 85% of Social Security benefits may be taxable. ⁵

Delaying Social Security up to age 70 increases benefits by 8% per year beyond full retirement age.

5. The 2025–2028 New Senior Deduction

From 2025 to 2028, individuals age 65 and older may qualify for a new senior deduction:

- $6,000 for single filers
- $12,000 for married couples filing jointly

This deduction phases out at:

- $75,000 MAGI for single filers
- $150,000 MAGI for joint filers

This is separate from the standard senior deduction, which currently adds $2,000 for individuals or $3,200 for married couples age 65 or older.

Need Help Navigating These Taxes?

Understanding how AMT, NIIT, IRMAA, Social Security rules, and senior deductions affect retirement income can be complex, especially for Knights of Columbus retirees managing pensions, 401(k)s, and other investments. The Retirement Group can help you better understand how these tax considerations relate to your retirement planning. Call (800) 900-5867 for guidance.

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Articles you may find interesting:

Sources:

1. Tax Foundation. “ 2026 Tax Brackets .” 9 Oct. 2025.

2. Gravelle, Jane G., and Don J. Marples. The 3.8% Net Investment Income Tax: Overview, Data, and Policy Options . Congressional Research Service, 30 June 2023, crsreports.congress.gov/product/pdf/R/R41413.

3. IRS. ' Topic no. 409, Capital gains and losses .' 12 Sep. 2025.

4. Wealth Enhancement. ' 7 Tax Moves to Consider Before The End of The Year ,' by Mary Taliaferro, CFP. Nov. 5, 2025.

5. Investopedia. ' Provisional Taxes: What They Are and How They Work ,' by Julia Kagan. 4 Sep. 2025.

What are the factors that determine an employee's retirement benefits under the Christian Brothers Employee Retirement Plan, and how are these factors influenced by an employee's length of service and compensation? Understanding the nuances of these factors can help employees plan for their retirement more effectively. Additionally, how does the recent shift in tenure and wages in the industry affect the calculation of these retirement benefits for employees of the Christian Brothers organization?

Factors Determining Retirement Benefits: Under the Christian Brothers Employee Retirement Plan (CBERP), retirement benefits are determined by a combination of years of continuous service, credited past and future service, and compensation. The benefit formulas consider W-2 earnings and past service contributions if applicable. The length of service increases the number of credited years, leading to higher benefits, while higher compensation during service periods also boosts the overall calculation(Christian_Brothers_Empl…).

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Vesting: Vesting refers to an employee's right to receive retirement benefits, and under CBERP, employees become vested after 4 years and 9 months of continuous service. Employees can always receive the return of their contributions plus interest, but to maximize vesting, they should maintain continuous employment for the full vesting period(Christian_Brothers_Empl…).

Can you elaborate on the "Golden Rule of 90" regarding early retirement and the criteria that must be met for employees of Christian Brothers to qualify for this benefit? How does meeting this qualification potentially affect an employee's retirement income stream and financial planning going forward?

Golden Rule of 90: The "Golden Rule of 90" allows employees to retire early without a reduction in benefits if their age and years of service sum to 90, provided they are at least 55 years old. Meeting this qualification offers employees a full retirement benefit without the reduction typically associated with early retirement(Christian_Brothers_Empl…).

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Temporary Disability and Retirement Benefits: Employees who become temporarily disabled may initiate retirement benefits if they meet Social Security’s disability requirements. If qualified before July 1, 2018, employees continue to accrue benefits until normal retirement without employer contributions. Starting benefits early due to disability results in a cessation of future accruals(Christian_Brothers_Empl…).

In the context of re-employment after retirement, what specific conditions must Christian Brothers employees be aware of under the retirement plan regarding their eligibility for benefits? Furthermore, how can returning to work impact their benefits and what should they consider when making this decision?

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What methods does the Christian Brothers Employee Retirement Plan outline for employees to designate beneficiaries for their retirement benefits, and how do those designations change upon events like marriage or divorce? Understanding these provisions is crucial for employees to ensure their final wishes regarding benefits are honored.

Beneficiary Designations: CBERP allows employees to designate beneficiaries for their retirement benefits. These designations can be updated after major life events such as marriage or divorce. Employees should ensure that their designations reflect current relationships to ensure that their wishes are honored(Christian_Brothers_Empl…).

How can employees of Christian Brothers effectively contact the benefits department for further clarification on their retirement benefits? What information should they prepare to facilitate a productive conversation regarding the specifics of their retirement plan?

Contacting the Benefits Department: Christian Brothers employees can contact the Benefits Department at 800-807-0700 or via email at rpscustomerservice@cbservices.org. Employees should prepare personal and employment details, along with specific questions about their plan, to facilitate a productive conversation(Christian_Brothers_Empl…).

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How does the Christian Brothers Employee Retirement Plan address potential changes to the plan and the rights of employees in such instances? Understanding the procedures in place for plan amendments is vital for employees to stay informed about their benefits and rights.

Plan Amendments: CBERP includes provisions for amending the plan. Employees' rights to accrued benefits are protected, meaning that any modifications will not affect benefits that have already been earned. Understanding these protections can help employees stay informed about changes(Christian_Brothers_Empl…).

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