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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1249
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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Should my wife and I, aged 67 and 63, withdraw some money from

Customer Question

Should my wife and I, aged 67 and 63, withdraw some money from our IRAs now, this year, while tax rates are "low" instead of waiting for 70 1/2 and required minimal distributions? Out current income from other sources is 125K and tax is 18K. So we could add 20, 30, 40, or 50K and still not be in a very high tax bracket. Plus all tax brackets will be higher after Jan. 1, 2011.
Submitted: 6 years ago.
Category: Tax
Expert:  Mark D replied 6 years ago.
Straddling IRA distributions over several years utilizing detailed tax planning is generally the best strategy. However, you are correct that it is expected tax rates will increase next year (estimated to be a 5% increase). With that in mind, you may consider withdrawing or converting more to a ROTH this year than you usually would. If you would prefer to have you investments grow, the ROTH conversion may make more sense. You can convert now (NO restrictions this year on who can convert) and pay the taxes now and not worry about taxes or RMDs later. In addition, in 2010 (and 2010 only) has a special election that can be made to defer taxes on a ROTH conversion to 2011 and 2012. A mixed strategy is usually best, XXXXX XXXXX you could convert some of your spouse's IRA and elect to defer, and then convert some of your own and make no election and pay the taxes now while the rates are lower. I would suggest you take these ideas and your details to a local tax professional to get detailed planning customized for your situation. Please let me know if you have further questions.


Mark D

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