I am a retired E7 (2012) at 40%. That leaves about $16,000 taxable, which is very little withheld. Since I have a job (GS9/11) the retirement on top of my salary and wife's pay really hurts at tax time. The way I see it, I have two choices to avoid another large tax bill; Increase my amount withheld of the taxable amount (which I am doing) or waive the benefit and make my entire retirement check taxable. Of course I want to maintain my 40% status for employment purposes.

Interested in hearing what others do.