Traditional IRA withdrawal

[Al in Ohio]

What age was the earliest you made a TIRA withdrawal? At age 60 with my younger spouse still %orking and with family medical coverage, I’m thinking of taking my first tIRA withdrawal to conserve non taxable funds for when she retires in a few years and we need to reduce income for ACA subsidies. Make sense?

 

[RunningBum]

59.5. It might make sense. It depends on how the numbers work out for you with taxes now vs. taxes later, how much the subsidy might be, etc.

 

[Al in Ohio]

59.5. It might make sense. It depends on how the numbers work out for you with taxes now vs. taxes later, how much the subsidy might be, etc.

I figure I can safely withdraw between $10-15k under the 10% tax bracket for 2021. This is after already doing a $14k Roth conversion.

 

[Al in Ohio]

I think the subsidy is at least $1,000/ month.

 

[Splash]

We started making tIRA withdrawals this year when DH turned 59.5.

75% of our retirement funds are tax deferred so we are trying to reduce those prior to RMDs. The first 4 years of retirement we lived off our taxed investments and did Roth conversions up to the ACA subsidy cliff.

 

[RetireeRobert]

Age 70-1/2. Gave me an extra decade plus of tax deferred growth. That makes up for a lot of taxes.

 

[yakers]

DW started RMDs 2 years ago at 70, I will start RMDs next year at 72, fortunately our withdrawals are QCDs.

 

[RobbieB]

I started pulling 3 years ago. That would be 62.

 

[RunningBum]

Oops, I read the question as "What's the earliest you can make a tIRA withdrawal?", not when did "you" personally. I'm not 59.5 quite yet so I haven't withdrawn, and I expect to convert most or all of my tIRA to a Roth, and probably QCD the rest.

I'm not really sure why it matters when anyone else made a withdrawal, since everyone's case is different.

 

[unclemick]

70 1/2 . 50 to 70. Sold and spent rentals (duplex, trailer) some land , did about 1 yr temp work, dividend stocks ,sold some taxable stock, lived 'cheap'. Early reduced pension at 55 and SS at 62.

Let tax deferred ride .

Heh heh heh - did do some some small hits for remodeling and down payment on a house post Katrina.

 

[VanWinkle]

I think the subsidy is at least $1,000/ month.

Thinking ahead to control MAGI for the ACA is a good use of your time.
Congrats on working to minimize the cost of your healthcare in retirement.

VW

 

[Fermion]

You can sort of pull out earlier than 59.5 without any penalty and without doing a set plan using the Roth pipeline trick.

Any money you convert from a T-IRA to a Roth is just a taxable event, same as pulling the money out at age 59.5+. After five years, you can yank that same money from the Roth tax free (but not the earnings it made, those have to stay).

So it requires some future planning but eventually you can be converting and yanking every year until you hit 59.5.

 

[EastWest Gal]

Agree that thinking ahead for MAGI is a great idea. Depending on your income, you could also consider doing Roth conversions with some of the withdrawal Then you can't touch that money for 5 years, but it grows tax free.

Everyone's situation is different. It also depends on how much younger your wife is than you, and how long you both are pre-Medicare and using the ACA. We decided to make sell equities and make Roth conversions and say to heck with the cliff every other year, then we were given a gift with the COVID relief legislation; a gift of about $20K. Of course we await a SCOTUS decision this year about the entire ACA.

Looks like you need a crystal ball. But it is smart to plan as best you can.

 

[Fermion]

We decided to make sell equities and make Roth conversions and say to heck with the cliff every other year, then we were given a gift with the COVID relief legislation; a gift of about $20K. Of course we await a SCOTUS decision this year about the entire ACA.

Looks like you need a crystal ball. But it is smart to plan as best you can.

Same situation as you with the ACA gift, but having a hard time figuring out how to file without including the payback. Have you filed 2020 yet?

 

[aaronc879]

If you can stay in the 10% bracket or even the 12% bracket then it could be a good idea.

 

[jollystomper]

What age was the earliest you made a TIRA withdrawal?

61, for the purposes of starting Roth conversions. We were not eligible for Roth IRAs until I retired.

 

[Dtail]

59.5
I pull a portion each year to effectively lock in my MAGI for ACA income management purposes.

 

[Al in Ohio]

59.5
I pull a portion each year to effectively lock in my MAGI for ACA income management purposes.

That’s what I figured out and am starting to do. That will preserve both cash and Roth positions for keeping MaGI below the ACA cliff until we are both 65. I am only pulling tIRA income and doing ROTH conversions in combination to keep most of the taxes incurred at the 10-12% level.