IRA Rules

Archive for the ‘IRA Withdrawal Rules’ Category

Question: Determining annual income during retirement with Social Security and IRA?

My Aunt wants to finance a new car but does not know how to determine her annual income. The finance company wants a number. She gets Social Security and has a large IRA that she draws from as needed for her expenses. Her IRA withdrawals vary greatly from year to year. Basically, her “income” is whatever she needs it to be. Her credit score is in the 800’s. The finance company won’t budge until she comes up with a $number. She won’t “just tell them a number” (my advice). How would you handle this?
My Aunt doesn’t want to withdraw the money to pay cash and take the IRS tax hit or be forced to pay income taxes on any portion of her Social Security.

Answer: DON’T FINANCE IT. Pull the whole amount of the new car from the IRA. Why finance a car she can afford?

If she can’t afford to do that. Than she can’t afford it.

EXPLOSIVE: OBAMA ADMIN TO CONFISCATE IRAs, 401Ks, RETIREMENT ACCNTS

Question: Regular 401k, Regular IRA, and my wife’s Roth IRA plus our Investment?

I’m using simple terminology to help others who may benefit from my questions.

Facts: our planned retirement age 62, won’t live in USA, we will have 5 sources of income: my 401k + IRA + military pension, her IRA , & our investments.

Unknowns: Social Security for us, & my employer’s pension; not planning on them.

1. I have a regular 401k. Would like to know what mandatory US government deductions (e.g., taxes) will I owe on each withdrawal? A simple line-item answer is fine.

2. Same question for my traditional IRA, & for my wife’s Roth IRA.

3. Our investments are made with after-tax dollars. Since I already paid taxes on that money before investing it, when I reach 62, will I have to pay taxes on my withdrawals? If so, would that be double-taxation: the money was taxed before I invested it & then the gov’t will tax it again upon withdrawal? Remember: I also paid tax on the dividends and capital gains thru the years.

4. Do RMDs apply to IRAs & 401Ks?

Answer: regular 401ks and traditional 401ks get added together and taxed as ordinary income. If you take lump sum distributions then they may withhold 30% becasue you won’t be residing in USA (that’s a MAY).

Roth IRA is different. Assuming it’s in for the right amount of time it’s a non-taxable event.

After tax dollars that have had dividends and capital gains already paid on would not be taxed at all. Treat that no differently than you are currently doing so.

RMD’s apply to 401ks and traditional IRA’s but not to Roth IRA’s. Roth IRA’s also have better estate planning options than the 401k and Traditional IRA.

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