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Author: CindyC72 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Another IRA withdrawal question Date: 1/9/2000 1:41 PM
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Hi all

This is just assuming that I start taking money out of my IRA's after age 59 1/2 and have met all requirements for holding for any Roth IRA accounts, and assuming I won't have to worry about the age 70 1/2 rules.

As long as I am 59 1/2, I can take out whatever amount I want, right? Even if I could take out $15,000 for example (based on returns/life expectancy, etc.) but I only need $5,000 and that is all I take out, I am not going to run into problems, am I?

Thanks

Cindy
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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17580 of 75340
Subject: Re: Another IRA withdrawal question Date: 1/9/2000 1:44 PM
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You have it right. Essentially from 59 1/2 to 70 1/2 is the free period; take as little or as much as you want.

TheBadger


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Author: mattpam Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17582 of 75340
Subject: Re: Another IRA withdrawal question Date: 1/9/2000 2:08 PM
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Badger is right, there are no restrictions on what you
take out before 70 1/2 trigger date; but remember any
withdrawals are taxable at ordinary income rates in the year of withdrawal! If you can, you may wish to spread the withdrawals over several years to minimise the tax impact. Remember however, the whole concept of the IRA
is to leave assets to accumulate tax-free for as long
as possible. Plan foolishly, spend wisely! - - Matthew

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Author: Chipsboss Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17587 of 75340
Subject: Re: Another IRA withdrawal question Date: 1/9/2000 3:50 PM
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I planned to leave my IRA untouched throughout my 60's and take only minimal required withdrawals starting at age 70. This was based on the idea of leaving the tax-sheltered account to work for me as long as possible. To my surprise, however, in running the numbers it turns out to be to my advantage to take out a little each year in my 60's. The amount is around 2% a year in the first five years, and around 1% a year in the second five years when social security comes in. This is not a huge effect; it comes to an extra 2.5% left in the account at the end of a 35-year planning period. Apparently, it's all an income-tax maneuver, where it's worth my while to pay a little extra income tax in my 60's to cut down on some vastly greater income tax bills when the mandatory IRA withdrawals set in.

You need to run the numbers for your own particular situation, of course, to see if my results apply in any way to you. (If you have to have the IRA withdrawals, with no attractive alternative source of funds, my analysis is irrelevant.) The only convenient way I know of to do this is to write a spread sheet that has your important financial information and assumptions, and then to use the spread sheet optimization routine find the ten best withdrawals from your IRA for your 60's. This ten-dimensional optimization problem is easily solved by, for example, Solver in Excel. You shouldn't have to guess these ten numbers, although, of course, as your actual investment results come in over the years, you will want to revise the remaining withdrawal plans.

Regards,

Chips

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