Has anybody looked into the tax consequences of postponing IRA withdrawals and the effect on your taxes? The longer you wait, the bigger your withdrawals are and the bigger your income. The net effect is your taxes are higher, and the taxes can actually offset your social security checks. Little byline in the WSJ the other day said record number of people on SSN being taxed. Any thoughts/spreadsheets?
what you are asking about is called an 'IRA stretchout'. It basically works by dividing your IRA into as many accounts as can; with each account having a different beneficiary. Thus if you have joint life expectancies with beneficiaries who are over 10 years younger than you, you use a life expectancy of 26.2 years to calculate the distribution (based on the joint life expectancy of a 70 year old and a 60 year old). When you die the beneficiary uses their much lower age and calulates a new, much longer, life expectancy. So the distributions can be extended for very long periods and the rest is accumulating tax deferred. I hope this gives you a pointer to your question.
I think lamons' question was more elementary than that. Customary apologies in advance if I am wrong. If you delay taking IRA distributions past age 59 1/2, your required distribution will be larger. Therefore, your income may grow to where a portion of your Social Security is taxable. That is all, I think.The relevant calculations are provided in the worksheet on Page 25 of the Form 1040 Instructions for 1998.I have not read the WSJ article, but it implies that the retired are growing ever richer, and therefore richer compared to the median family, who are still stagnating.
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