Mandatory
withdraw of IRA/Carlos Pueblo
At age 70 ½,
we must start withdrawing IRA because IRS likes to cash out its
share of our
pension fund and we must pay our income tax accordingly. I
have thought
of it and with a conclusion that we have better converted to
our Roth IRA
account. By this conversion, we have satisfied the federal by
paying the
annual income tax and moved the fund to a shelter of appreciation
as well as
some legal protection for pension funds.
At the same
age 70 ½, we must withdraw our social security benefit, if our
combined annual
income is higher to a certain level, we must treat that income
as taxable
income on our income tax return. I have seen more and more retired
seniors with
higher income after the retirement. Only a earned income is eligible
to
contribute to a regular IRA account and enjoy a tax deductible. There are
several
reasons for
people like me to have an early withdraw of social security benefit, a
discounted
amount due to income need and mortality concerns, while there are
reasons for
seniors postponing the day of withdraw until 70 ½ because of continual
working or
expecting to get more. These are all interesting factors and involving so
much attention
and discussion.
There is an
early withdraw of regular IRA without 10% tax penalty that is called the
average
annual distribution, a sum of digit calculation, we can state it and apply for
the annual
income. The withdraw must be continuously until age 59 ½ and after that
we can stop
at any year until that 70 ½ mandatory. It is good for the tax management.
The more I
think of it, the more I appreciate the U.S. tax law, very comprehensive, fair
, and considerate.
After we
start the withdraw, we can see a better picture of our retirement fund if it is
sufficient
to last until the last day, of course, we need to have another prediction of
our
longevity,
80 years old, 90 years old, or 100 years old which means 10 years, 20 years,
or 30 years
from 70 ½.
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