[Jeff]

I retired 5 years ago and gave been living on my non-tax advantaged accounts. In August I will be 59 1/2 and have penalty free access to my IRA.

I’ve been thinking about putting my non-tax advantaged accounts back into dividend reinvestment and start taking distributions from my IRA.

I’ve been trying to find anything online that talks about spending down IRAs when you have very little income which means low taxation on the distributions vs continuing to fund my retirement using the non-tax advantaged accounts.

Not only will the taxes be lower on the distributions but by spending the IRA down the RMDs starting when I turn 73 will be lower which will have less of an impact when it comes to taxing SSI benefits.

Am I thinking this through correctly or am I completely off base?

[Rick]

How would you feel about living off brokerage and doing Roth conversions from then traditional ira?

[Christopher]

The tax situation has a lot of variables, so your specific situation could fall under anything from “all ira all day” to “don’t bother, let it ride”.

You can also potentially convert some of the pre-tax ira dollars to Roth, lowering future RMD liability without losing the benefits of tax sheltering; this too depends on your situation.

[Bill]

FYI – If you are 59 years old now, your RMDs will begin at age 75, not 73.

[Shirley]

I’m in a similar situation. I’m still learning and mapped out this rough strategy. Any comments welcome.
Age 54 to 59.5

Jan 2025 to March 2030 = 5 low tax years
Withdraw from cash or brokerage
Roth conversion up to tax bracket

– up to 12% tax / $48k income when relying on ACA (premium savings about $6k)

– possible up to 24% tax / $197k income if market is down (need to pay high ACA premiums or maybe ACA is gone)
Age 59.5 to 67

April 2030 to Aug 2035 = 7 low tax years
– Withdraw from Traditional IRA taxable income if market is okay

– if market is down, use cash or brokerage for living expenses + Roth conversions up to 22% or 24% tax bracket
Age 67-70
Moderate tax years

Withdraw from Traditional IRA
Social security FRA at 67 or delay social security until 70 if more time needed for Roth conversions

Age 75 and over
High tax years
RMD (at Age 75 for birth years after 1960)+ social security

[Author]

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