IRA Distributions?

[investor]

Hello retirement and where's my money?...trying to decide what is best way to take interest & cap gains only, from IRA distributions. Just quarterly, or maybe monthly,with all distributions from other IRA's going thru, say, a bond fund. Worried about tax problems among other things....Thoughts?
Thanks

 

[Martha]

I am not sure that I understand your question so I might be off point here. First of all, unless it is a Roth IRA all your distributions are taxable as ordinary income. It doesn't matter if the money came from capital gains or interest. But the money isn't taxed until it is removed from the IRA. If you want part of your IRA in a bond fund so it is more liquid, you could have a bond fund as part of your IRAs, putting the interest and capital gains in the fund but leaving the fund as part of the IRA. Only remove money from the IRA as you need it, unless you are you at the point of having to take required minimum distributions.

 

[mickeyd]

best way to take interest & cap gains only, from IRA distributions.

The way that I view this is that by taking only interest and CGs you are probably not withdrawing the proper amount for your situation. My plan is to eventually withdraw a percentage of my total IRA (say, 4% annually) as that will be close to what my needs will be. The dividends and CGs will just continue to be reinvested. I will have my withdrawal money distributed quarterly to my taxable Prime MMF so that I can access it when I need to. If you withdraw only the divs and CGs you could use the same process.

 

[rs0460a]

The way that I view this is that by taking only interest and CGs you are probably not withdrawing the proper amount for your situation. My plan is to eventually withdraw a percentage of my total IRA (say, 4% annually) as that will be close to what my needs will be. The dividends and CGs will just continue to be reinvested. I will have my withdrawal money distributed quarterly to my taxable Prime MMF so that I can access it when I need to. If you withdraw only the divs and CGs you could use the same process.

That's exactly what I do now. At age 60, my income comes from three sources; SPIA, small VA disability, and IRA withdrawls (albit only on "up years"). I keep 3-4 years in MM funds to get over the "rough spots" as we are in, now . I don't look specifically for a %, but rather than keep the 3-4 year MM level as it is. In down years, I do no withdrawls. In up years (for instance, last year's 7% for me, return) I "restock" that short-term MM position.

Kind of like "buckets" without all the "thinking" ...

I'm not planning on SS till age 70 (but that's another discussion!)

- Ron

 

[investor]

Re IRA Distirbutions

Thanks to all who responded to my question concerning IRA distriutions. Every bit of info is helpful and I realize that everyones situation is different. I am 64, so I have a little time before I have to worry about RMD's, I think. By putting all cpgns & dividns in a MM or a bond fund( I do not have any bond funds or MM set up in my IRA's yet.), I thought that would provide a more level (monthly income) than quarterly, simi, & annually. If as Martha commented, and I believe it to be correct, all distributions would be taxed equally then there would be no problems. My eventual plan is to draw 3 to 4 % when the RMD timeline hits. I do appreciate all the replies.........Thanks