Vanguard withdrawal question

[Murf2]

Hi all, I will be needing to withdraw money from either my Roth IRA or my Rollover IRA this year for living expenses.

I will be 59.5 this month. I have never withdrawn money before.
Do I have to do anything to make sure no penalty is witheld?
Thanks
Murf

 

[iloveyoga]

The Vanguard system should do this for you correctly. Be sure to wait until you are exactly 59.5 or a day over.

 

[Sunset]

The Vanguard system should do this for you correctly. Be sure to wait until you are exactly 59.5 or a day over.

I waited until the next month started after I turned 59.5 just to be sure, as some of the IRS rules are stupid and complex. The IRS has some other thing where the rule is really the month after you turn x.

 

[Sunset]

Generally you have the choice of having the Broker withhold tax money or take it out without withholding.
If you do without withholding, then you may need to do estimated tax payments 4x per yr.

 

[Fedup]

Call Vanguard and ask how. I know with Fidelity, they send my sister a check book so she can write how much she needs per month. She doesn't have to withdraw the whole amount.

 

[sengsational]

Since you said "Roth IRA or Rollover IRA", I'm thinking you haven't decided or don't know which you will be using.

So, just a suggestion, create a new tax return in your tax software and enter rough figures for the 2017 tax year. Then try various things to get the money you need to live on. If you don't have much other income, you might find it advantageous to pull from your rollover IRA (which will consume the zero percent tax bracket). But if you pull "too much" from the rollover, it might start taking away credits or pushing you into a higher tax bracket. At that point, you might consider pulling Roth funds to get up to the amount you need to spend. For one idea of how to pull from tax advantaged accounts, you might try i-orp.com (when you have a few hours to invest in it).

 

[Murf2]

Thanks all! Especially sengsational. I'm new to all of this, as you can tell.
It seems quite complicated to me. I have to control my MAGI for ACA and still withdraw enough to live on.

I may have to invest in some tax software for future use. Any recommendations on one suitable for a ludite?
Thanks again
Murf

 

[Sunset]

Taxcut is good, simple to use (all are pretty simple), and taxcut is cheap. You should be able to find it for $10 -> $20.
I personally like the download versions, so I know I always have it, of course I do my taxes with it too so I don't have to pay anyone.

 

[Murf2]

Thanks Sunset, I'll check it out.

Do most tax software update for free or do you have to buy updates every new tax season?

Thanks again
Murf

 

[eastnortheast]

Most (all?) tax softwares do not update for free. There is a new version every year that incorporates any changes to the tax code. I am not sure if it is worth it to try and use "old" software to file a new return. If a person is going to use tax software, I think it is worth it to pay the $20 bucks or so a year.