No. of Recommendations: 3
3) the withdrawal amount is typically based on the IRA value as of 12/31 of the previous year. The closer to that date you take the withdrawal, the less likely there will be any major swings in market value of the IRA between calculation date and withdrawal date. If the IRA value collapses between the calculation date and the withdrawal date, you’d be forced to take out a larger percentage of the IRA’s value than you otherwise would have, reducing the benefit of deferrals.

Of course, for the large percentage of years where there is a positive total return, you've lost the ability to defer taxes on the growth that would have occurred.

Additionally, if you do a withdrawal near the end of the year, and have enough of it withheld to meet your tax safe harbor, you don't have to send the government any estimated taxes throughout the year, nor do you have to worry about underpayment penalties. If the only withdrawal that's done is at the beginning of the year, you won't be able to do that.

Lots of things to consider - and it all depends on the specific investor's situation and preferences.

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