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JG:

If they have low taxable income, it might be a good strategy to convert some of the IRA to a Roth each year until age 70 1/2. Withdrawals from a Roth are not taxable after 59 1/2. This reduces the IRA balance and the amount of the Required Minimum DIstributions.

There is a five year waiting period, I think, for gains after transfer, but this shouldn't be a problem for them. Read IRS 590 for Roth rules.


To "expand" a little on JG's reply. Your contributions can be taken out AT ANY TIME without paying taxes or penalties. The earnings in the ROTH on the contributed amounts can be taken out tax-free after age 59 1/2 as long as the first contribution was made at least 5 years ago. Any converted amounts can be taken out tax-free as long as they've been in the account for at least 5 years (if you're under 59 1/2) or at any time if you're over 59 1/2.

Easy, huh? Gotta love the IRS!
3MM
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