My wife and I plan to begin IRA withdrawls soon. We couldface a 51.8% marginal rate due to the perverse way in whichthe taxable amount of Social Security benefits iscalculated. I noticed that after we get to a certain levelof non-Social Security income, our marginal rate could goback down from 51.8% to 28.0%.The new tax law decreased the rate slightly, to 50.9% and 27.5% for 2001 (50% and 27% for 2002), but your thinking is correct.Should we consider a large IRA withdrawl in one year inorder to get past the rate hump?You'd need to look at a multiple year projection to see if this makes sense. Remember to focus on the total dollars paid in taxes rather than the marginal (or effective marginal) rate. It will depend a lot on your other sources of income, how much you need (or want) to live on and other such items. A large withdrawl is certainly one possible strategy - but whether it will work for you will require running some numbers.Should we consider converting our IRAs to Roth IRAs?That's another good possibility. It's very similar to taking a large IRA withdrawl, but then the earnings on the funds you don't need this year can escape tax altogether.Is there another strategy we should consider?Where can we find relevant strategy information? Have you tried the Retirement Investing board here at the Fool? They may have batted around a few ideas that might help.--Peter
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