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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19380  
Subject: Re: Asking your advice Date: 3/15/2000 9:45 AM
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Greetings, Edira41, and welcome. You asked:

<<My husband retired 7 yrs ago at age 52 and we had to roll over his IRA into stock. We invested approx. $247,000 in American Funds and annuities. We take out approx. $1,500 a month and now have around $395,000. First question do you think this has done alright?>>

If you have taken $1,500 monthly for that entire period, then the investment has earned an average yearly return of about 12.1% per year. That's reasonably good for that length of time.

<<Second problem - Husband will turn 59 next week and we want to withdraw $140,000 when he is 59-1/2 to pay off the house and all bills so we can have more liquid assets. I know we will have a huge tax bill but will it be regular tax or capital gains or what? We have decided to take $70,000 this year and $70,000 next year will we have to fill estimated taxes? Thanks (this is my first time posting and as you can see I have lots of questions) >>

All money in the account that has never before been taxed will be taxed on withdrawal at ordinary income tax rates. Capital gains rates do not apply to retirement plan or IRA money. Drawing such a significant amount in a single year will almost assuredly throw you into a higher income tax bracket. And yes, you should file and pay estimated income taxes due on such withdrawals in the quarter they occur. If you don't, you could face a penalty for failure to pay those estimated income taxes in the quarter due when you file your return for that year. I suggest you talk to your tax advisor about this issue so you can plan the withdrawal(s) appropriately and with the least income tax impact on you.

Regards..Pixy
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