Withdrawal Strategy Advice

[pb4uski]

Thanks for all the good advice, links, etc. Playing around with a tax program the couple could actually take their SS of $22K and $18K from their traditional IRA and not have any tax liability ! The balance needed for living expenses could be taken from after tax accounts to the tune of about $5K to achieve the annual living expense of $45K.

The rub will be higher taxes due to RMDs down the road, hence the advice to convert the traditional IRA to a Roth ?

Am I on the right track and is my logic sound ?

Assuming the numbers above if money is rollover and there is a tax event does the amount rolled over add to 1040 income and if is does it would change the entire complexion of the return such as making ss taxable, etc.

Hope this all makes sense. Again thanks for the input.

Yes, the reason to reduce the traditional IRA is because beginning at age 70 1/2 there are RMDs which are taxable and you would then also have SS and the combination of the two could cause you to be in a higher tax bracket than you would be with lower RMDs.

Any amounts withdrawn from the tIRA, whether paid to you or rolled into your Roth would be taxable income. So using your example of $18k being included in taxable income and resulting in no tax, you would take the $18k in cash and reduce your draws on your taxable accounts or you could rollover the $18k and draw $23k from your taxable account that year. Either way, $18k will be included in your tax return as taxable income.