On 10/25/2011 7:54 PM, Oren wrote:
....

Taking money is a bad idea:

- Penalty for early withdrawal

Agree there, but there are circumstances in which can avoid the early
withdrawal penalty even if under 59=1/2 (which OP later indicates is but
meets one of them).

- Taxed again as income for the year?

If traditional IRA, yes; Roth, no.

- Possible state taxes on income the same year.

I would advice against it. Just my option.
....

Would note that depending on circumstances (size of the IRA being a
significant one), it's possible that if wait the size of a required RMD
might drive the taxpayer into even higher marginal tax bracket than
would be if were to maximize the margin between existing bracket and the
next higher one (assuming under the maximum, obviously). In that case
it makes sense to take out at least that amount after 59-1/2 but yet
before 70-1/2.

Also, it depends on what one's expected income is going to be going
forward outside of the IRA withdrawals and what one uses as estimates
(guesses) of future marginal tax rates. One can make at least
reasonable presumptions that there's a good likelihood those may be
going up. Does one want to gamble on that not happening or not is the
question--the devil you know vs the one in the future you don't.

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