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Greetings, Arlie, and welcome. You wrote:

<<I am 57 yrs old. I have a pre-tax account in the mid 6 figures, and it is paying a guaranteed 8.5%, tax free until withdrawal. At age 70 1/2 the fed will determine how long I will live(strange how they can do that), and I will have to have a strategy in place at that time that will deplete that account at the age they say I will die. (in this case 85)

I am thinking that when I retire next year, that instead of waiting until I am 70 1/2, I will begin immediately taking about $2000 per mo. out of it, paying the tax, and reinvest in something like an index fund.

My thinking is that if the fed says that I am going to die at 85, if I wait until I am 70 1/2, I will only have 14.5 years to spread out the disbursment, whereas, if I begin next year, I can extend the period over a longer period, and the disbursment will keep me in a relatively lower tax bracket.

In addition, I think that the index fund will at least keep up with what would have been in the account gaining at 8.5% even after I pay the taxes. If not, in about 10 years, I can reevaluate, since I will only have drawn the original fund down by approximately half.

I can also take advantage of dollar cost averaging, and take advantage of the time element (what there is left at my age) by taking the disbursment now.

What do you think, draw out the money and pay the tax or leave it where it is gaining at 8.5% tax free until 70 1/2?

In a related question, if my strategy is viable, in consideration of the brokerage fees, should I take a once a year disbursment and invest or disbursement monthly and invest monthly?

The $2000 per mo disbursment along with my regular pension will place me in the $120,000. per year pre tax dollars.>>

Your approach is valid. Some folks will definitely benefit by drawing down an IRA prior to reaching age 70 1/2. If you have run the numbers, then you will have determined whether it makes sense in your situation. And as to how to take the money if you elect to do so, I personally would prefer the annual as opposed to monthly approach to keep broker's fees down.

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