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OT How much IRA to take out?



 
 
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  #1  
Old October 26th 11, 01:37 AM posted to alt.home.repair
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Posts: 1,343
Default OT How much IRA to take out?

Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.

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  #2  
Old October 26th 11, 01:54 AM posted to alt.home.repair
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Posts: 12,886
Default OT How much IRA to take out?

On Tue, 25 Oct 2011 20:37:01 -0400, Metspitzer
wrote:

Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.


Um, consult your Human Resource Office and tax preparation person?

Taking money is a bad idea:

- Penalty for early withdrawal

- Taxed again as income for the year?

- Possible state taxes on income the same year.

I would advice against it. Just my option.

Contact your HR Manager.
  #3  
Old October 26th 11, 01:54 AM posted to alt.home.repair
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Posts: 564
Default OT How much IRA to take out?

On Oct 25, 8:37*pm, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. *How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.


If you are 70 and 1/2 there is a minimum distribution of about 4%.
Since you pay income tax on it, what ever it adds to your total will
be taxed at that maximum. Same for anything you take out but there
are penalties for early withdrawal. Most I know, myself included,
take the minimum distribution.
  #4  
Old October 26th 11, 02:40 AM posted to alt.home.repair
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Posts: 1,343
Default OT How much IRA to take out?

On Tue, 25 Oct 2011 17:54:42 -0700 (PDT), Frank
wrote:

On Oct 25, 8:37*pm, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. *How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.


If you are 70 and 1/2 there is a minimum distribution of about 4%.
Since you pay income tax on it, what ever it adds to your total will
be taxed at that maximum. Same for anything you take out but there
are penalties for early withdrawal. Most I know, myself included,
take the minimum distribution.


I forgot to mention I am 52/disabled so there is no penalty to take it
out. I called it an IRA. It is actually a Vanguard mutual fund.

  #5  
Old October 26th 11, 02:44 AM posted to alt.home.repair
dpb
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Posts: 10,174
Default OT How much IRA to take out?

On 10/25/2011 7:37 PM, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?


Depends on what the definition of "too much" is?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. How do you figure out what percent
tax you will have to pay?


It's pretty simple to estimate if your deductions are also similar to
last year's your marginal rate will begin at the point were in last
year. Question is where you are wrt the breakpoints which are
obtainable from tax tables at the irs site.

If you're subject to AMT or other special circumstances it's more
complex, obviously.

If you can recommend an "active" group where this would be on topic I
would appreciate it.


misc.taxes.moderated

--
  #6  
Old October 26th 11, 02:51 AM posted to alt.home.repair
dpb
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Posts: 10,174
Default OT How much IRA to take out?

On 10/25/2011 8:40 PM, Metspitzer wrote:
....

I forgot to mention I am 52/disabled so there is no penalty to take it
out. I called it an IRA. It is actually a Vanguard mutual fund.


Well, those two aren't exclusive; you could hold mutual fund shares in
an IRA.

If it is a traditional IRA, the income is taxed as ordinary income; if
it were a Roth IRA it would not be taxable, if it is _not_ an IRA at
all, then it would be either short- or long-term capital gains depending
on how long the sold shares have been held.

Anything approximating a real answer will depend on the actual answers.

I would recommend (again) misc.taxes.moderated but figure out and
provide the correct information before posting the question.

--
  #7  
Old October 26th 11, 03:00 AM posted to alt.home.repair
dpb
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Posts: 10,174
Default OT How much IRA to take out?

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.

--
  #8  
Old October 26th 11, 03:30 AM posted to alt.home.repair
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Posts: 185
Default OT How much IRA to take out?

On 10/25/11 8:37 PM, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.


This concept for IRA withdrawals is called "topping up the bracket".
It's basically fairly simple to figure. Look at your 2010 tax return
at the line for TAXABLE INCOME (Line 27 on 1040A). Then look at the
bracket ranges (ie $0-$8375 = 10% for Single filers)

The difference between Line 27, and the $8375 (in this example) is how
much room you have left to stay in the 10% bracket (again this an
example). Your Taxable Income, equivalent Bracket, and File Status may
vary.

This also assumes you are the correct age, etc to not having an "early
withdrawal" penalties, etc. Also IIRC, you must make the withdrawal
before DEC 31 to apply to that years return. So you need to do a rough
"what-if" return before the end of the year to get a good idea of how
much you can "top up the bracket.

in addition to NG misc.taxes.moderated
the forum at http://www.city-data.com/forum/retirement/
has good discussions

I have been doing this since age 59.5, now 67.

BTW, is your Vanguard MF account specifically a Traditional or
Rollover IRA account ?? If it's a Roth IRA, or a non-IRA account, then
none of this applies.


  #9  
Old October 26th 11, 03:48 AM posted to alt.home.repair
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Posts: 1,343
Default OT How much IRA to take out?

On Tue, 25 Oct 2011 20:37:01 -0400, Metspitzer
wrote:

Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.


misc.taxes.moderated
Thanks everyone
  #10  
Old October 26th 11, 12:44 PM posted to alt.home.repair
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Posts: 1,456
Default OT How much IRA to take out?

On 10/25/2011 9:40 PM, Metspitzer wrote:
On Tue, 25 Oct 2011 17:54:42 -0700 (PDT), Frank
wrote:

On Oct 25, 8:37 pm, wrote:
Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year?

My income will be the same this year is it was the last, but I want to
withdraw some of my retirement. How do you figure out what percent
tax you will have to pay?

If you can recommend an "active" group where this would be on topic I
would appreciate it.


If you are 70 and 1/2 there is a minimum distribution of about 4%.
Since you pay income tax on it, what ever it adds to your total will
be taxed at that maximum. Same for anything you take out but there
are penalties for early withdrawal. Most I know, myself included,
take the minimum distribution.


I forgot to mention I am 52/disabled so there is no penalty to take it
out. I called it an IRA. It is actually a Vanguard mutual fund.


Personally, if I did not need the money, I would leave it alone and let
it compound tax free. Don't know how your mutual fund is doing but
think you can rotate it without penalty.

I did not take any withdrawals from IRA's or 401k until it was mandated
and since I still have work income can buy Roth's.
 




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