Combined Roth and Regular IRA Withdrawal Strategy

[RetireAge50]

We need funds from our IRA’s to bridge the gap from age 50 to 59 1/2 starting in 2018.

By the end of 2017 my wife and I will have put $156,000 into Roth IRAs. We also have a separate rollover IRA from an old 401k with about the same amount.

Our plan is to withdraw $15,600 per year (for 10 years) from the Roth accounts. This will be tax free since it is a return of our investment.
At the same time we will convert $15,600 per year from the rollover IRA into the Roth. We will pay the taxes on this rollover.

This method allows us to get our money out of the regular IRA without paying a penalty and at the same time have zero net effect on our Roth account.

Anybody see any flaws or have better idea.

[pb4uski]

Makes sense to me as long as you use other taxable funds to pay the taxes.

Also, my understanding is that withdrawals from IRAs to pay for health insurance if you are unemployed and unreimbursed medical expenses may also penalty free so there may be an angle there to exploit.

[Animorph]

Sounds reasonable, effectively withdrawing early from the tIRA without the penalty. As long as Roth withdrawals are of contributions only, no investment gains.

[BBQ-Nut]

Isn't there a 5 year moratorium on Roth IRA withdrawals from date of deposit to avoid a penalty?

[REWahoo]

You pay a tax penalty on any gains you withdraw from a Roth for the first five years. Since the deposits you put into a Roth have already been taxed they can be withdrawn at any time without penalty.

[BBQ-Nut]

I'd rather tighten the belt and pay for expenses based on something other than pulling out of the Roth, seems counterproductive, but you gotta do what you gotta do to make ends meet.

[pb4uski]

Net end of day, OP is pulling out of tax-deferred rather than Roths.

[RetireAge50]

Thanks for comments! Here is a bit more to clarify.

Withdrawals will only be from contributions not gains. Also will be beyond 5 years from the date of contribution (although I'm pretty sure contributions can be taken out at anytime without penalty).

I did not want to deplete Roth either so will reimburse from tax deferred. All of our money is in tax deferred, Roth, or pensions so are trying to get funds in the most tax efficient method possible.

This method allows us to get money from tax deferred without penalty and save the Roth accounts for later.