IRS,RMD,SWR strategies

Research on Safe Withdrawal Rates

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unclemick
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Location: LA till Katrina, now MO

IRS,RMD,SWR strategies

Post by unclemick »

Scott Burns touches on this every once in a while. I'm 85% trad IRA, age 61, single (9yrs to 70 1/2) have been dinking along without touching IRA (pension plus dividend stocks). Roughly 60/40 in balanced index with 10% REIT Index. When RMD makes me an offer I can't refuse - do I change my asset mix? Since I want flexibility to spend principle/or not - should I be taking money out now?

The IRS doesn't give spit about SWR - they want their tax money. So what are some strategy conserations. Hmmm - should I have considered this back at age 49.
JWR1945
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Post by JWR1945 »

You might choose to withdraw from your IRA if you ever find that you must sell something. If your money from dividend stocks is includes sales that you would prefer not to make, tapping the IRA makes sense.

Of course, anything that you take out of your IRA in the form of profits is taxed as regular income, not as capital gains. You may want to consider tax rates, now and in the future (to the extent that you can predict future tax rates). If today's tax situation is favorable, you might want to take something out of your IRA and pay regular income taxes now to make attractive purchases for the future. That way, any gains that you make between now and when you sell your investments will become capital gains.

You might want to convert your traditional IRA into a Roth IRA. You pay taxes now on whatever you take out, but [after five years] you never pay any taxes on your holdings inside of the Roth IRA and you never have to take any distributions from your Roth IRA. Just find an attractive (low tax rate) time for making the conversion. It does not have to be all at once.

Disclaimer: all of this is from memory and I may have made errors. After Christmas (or possibly before if sufficiently motivated) visit the IRS website to get the facts.

Have fun.

John R.
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