What do you use your Roth IRA withdrawals for?

[googily]

With no direct heirs, I don't feel like I need to "protect" my Roth, so I'll use it alongside my taxable account to massage my income while on the ACA for the next few years.

 

[RunningBum]

I'll pull from my HSA first (up to the amount of saved receipts) and then Roth before I sell highly appreciated holdings in my taxable account, since the taxable holdings will get stepped up basis for my heirs. I will need to do so in the next couple of years for every day expenses if I defer SS to age 70, and also for big ticket purchases and repairs.

Why HSA first? Because my heirs would have to liquidate it within a year and it will be fully taxed as regular income.

I have no issue with taking money from my Roth. It's money I saved for retirement, so when it makes the most sense to draw from, I'll do it.

Someday fairly soon I'll have to go through the analysis of whether it's better to take from my Roth or start SS earlier. If I do start earlier I may still need to draw some from the Roth to make up for the smaller SS benefit.

 

[Dtail]

No withdrawals from the Roth yet. No real plans to do so, but am open conceptually if the right reason comes along.

 

[Koolau]

Why would you want a MYGA in a Roth? Seems like a waste of space in the Roth for an aggressive investment. I like MYGAs, but never thought of putting one in my Roth.

First of all, I was answering OP's question - not suggesting that anyone actually "Roth" a MYGA.

Having said that, I HAVE "Rothed" a MYGA - in anticipation of converting it to something else shortly before it matured. It was a timing thing.

 

[SunGuy]

I have had to w/d from it a few times for family emergencies over the years. But really don't want to have to do that going forward.

Currently down a big chunk from a stock blowing up [MOD EDIT] in March and still being down over $25k in it, hopefully it recovers.
But up overall for the year between all my accounts.
My minimum gains per years with investment and contributions and matches and profit sharing is about $35k iirc.
And I am up great in other funds and even from other stocks in my Roth too.

 

[Sunset]

I hopefully won't be withdrawing from it - or at least very late in life as it is set aside to self-insure for LTC.

I would rather use IRA for LTC as the medical deductions will be huge, effectively reducing the tax paid on IRA withdrawals.
Rather than pay taxes on Roth Conversions and then waste the medical deductions.

So I'll l leave at least $200K in IRA

 

[Koolau]

I would rather use IRA for LTC as the medical deductions will be huge, effectively reducing the tax paid on IRA withdrawals.
Rather than pay taxes on Roth Conversions and then waste the medical deductions.

So I'll l leave at least $200K in IRA

Seems like a reasonable approach - especially if you only need a little over a year in LTC (for one of you).

My 401(k) keeps growing faster than I can take from it - maybe I'll think of it as my LTC back-up!

Thanks for the idea.

 

[sengsational]

I could see using Roth money to support an opportunity that was after tax cash flow constrained. For instance, if the after tax balance wasn't big enough for the opportunity and a tIRA/t401k withdrawal would drive you into higher brackets/lower subsidies, then tapping the Roth would be a reasonable plan. Like maybe to fund the RV while keeping below 4xFPL.

 

[surprising]

I thought the general strategy was to convert as much as possible, if not all, from traditional to roth, so I'm surprised with most of the responses in this thread. I plan to do as much roth conversion as possible, and then draw down what's left of trad, and then live rest of my life on roth, and then whatever is left goes to the kids. Is it a bad idea?

 

[reneeh63]

I would rather use IRA for LTC as the medical deductions will be huge, effectively reducing the tax paid on IRA withdrawals.
Rather than pay taxes on Roth Conversions and then waste the medical deductions.

So I'll l leave at least $200K in IRA

That's a very good point...I was only considering the amounts/proportion in my IRA vs. Roth but I'll need to reconsider that in my spend-down plan - thanks!

 

[sengsational]

I thought the general strategy was to convert as much as possible, if not all, from traditional to roth, so I'm surprised with most of the responses in this thread. I plan to do as much roth conversion as possible, and then draw down what's left of trad, and then live rest of my life on roth, and then whatever is left goes to the kids. Is it a bad idea?

The idea, I think, is to level the taxable withdrawals/conversions such that they're all hit with about the same tax rate. If you convert all Roth early, paying in a higher bracket, and are in the zero tax bracket at the end, that's not as tax efficient as being in the same bracket through to the end.

 

[Koolau]

I thought the general strategy was to convert as much as possible, if not all, from traditional to roth, so I'm surprised with most of the responses in this thread. I plan to do as much roth conversion as possible, and then draw down what's left of trad, and then live rest of my life on roth, and then whatever is left goes to the kids. Is it a bad idea?

I think the idea is to "smooth" the tax rate during conversions and "save" your converted Roths a long as possible to grow the money tax free. Also, then, spend Roth money to smooth taxes as needed.

So far, after 20 years of retirement, we've found no reason to spend Roths but that's just us.

 

[ShokWaveRider]

I use ours for federal income tax at the end of the year instead of quarterly payments. Just estimate your taxes get within $1k of last year. One and done.

 

[mountainsoft]

All of our retirement savings (other than cash) are in Roth accounts. No traditional, and no taxable brokerage. We converted to Roth before we retired. Combined we only have about 260K in our Roth accounts, as of yesterday (it was 204K when we retired).

We retired about 2-1/2 years ago and so far I only withdrew about 11K to buy a newer car. I "might" take out another 10K or so this next year for living expenses, but we'll see how things work out. That was always the plan until my wife starts social security, though we've actually done better than our original plan. Her pension and our combined SS should cover all of our routine expenses from there, leaving the remaining Roth to grow.

Other than living expenses, most of our Roth will be there to cover unknown emergencies (medical, etc.), or to help fund long term care later in life. If anything is left after we're gone, it will pass down to our daughter.

 

[Humbooster]

Just curious what you use Roth IRA withdrawals for. I’m early retired and have been doing Roth IRA conversions for 7 years, but haven’t done any withdrawals yet. I can understand a withdrawal to buy a new car every 10 years, or a major home renovation. Does anyone do annual withdrawals to fund their vacations. Can you buy a MYGA inside a Roth IRA to do yearly withdrawals?

I just made a large withdrawal to help one of my children buy a house, not sure what the tax implications will be but will soon find out I suppose....

 

[NomDeER]

I thought the general strategy was to convert as much as possible, if not all, from traditional to roth, so I'm surprised with most of the responses in this thread. I plan to do as much roth conversion as possible, and then draw down what's left of trad, and then live rest of my life on roth, and then whatever is left goes to the kids. Is it a bad idea?

It think it's very dependent on your particular situation. For example, for some people currently in a high tax bracket with a lot in their tIRA, they might be paying a lot in taxes today to convert all of it, and it may not pay off because of the lost opportunity costs resulting from paying a lot of taxes today. For some people, converting everything now would mean that they couldn't completely take advantage of the lower tax brackets down the line. For others, converting now can screw with their ACA costs. Or, as someone pointed out, the lost ability to use the tax advantages of tIRA for long-term care. Also, some people definitely use Roth IRAs as part of their estate planning and that is going to differ from one person to another.

 

[junkanoo]

I would rather use IRA for LTC as the medical deductions will be huge, effectively reducing the tax paid on IRA withdrawals.
Rather than pay taxes on Roth Conversions and then waste the medical deductions.

So I'll l leave at least $200K in IRA

Great point.

It appears that our kids will likely be in a low tax category when we're gone, so doing Roth Conversions at a higher tax rate would not be advisable for us. Best just to let them inherit what T-IRA assets remain. And using T-IRA assets for LTC makes great sense. Sure, when only my wife remains, as a single, her RMDs won't be fun but my best estimate is she will stay in the 24% bracket (if that still exists) so nothing tragic.

All we can do is plan as best we can and adjust when possible.

 

[Murdock75]

Just curious what you use Roth IRA withdrawals for. I’m early retired and have been doing Roth IRA conversions for 7 years, but haven’t done any withdrawals yet. I can understand a withdrawal to buy a new car every 10 years, or a major home renovation. Does anyone do annual withdrawals to fund their vacations. Can you buy a MYGA inside a Roth IRA to do yearly withdrawals?

Only have done one so far which was a down payment for buying a townhouse, but next year for a new vehicle.