 Planning IRA withdrawals
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 Dear
Tax Talk,
My husband and I have planned well for retirement. We are both now 63, retired, not yet making withdrawals from our IRAs and in a low tax bracket. When we look ahead to the mandatory withdrawal amounts we will have to take from our IRAs, we will be in a very high tax bracket. Perhaps we should be making withdrawals now (which we reinvest) at our low tax rate, but how much should we withdraw? Would it be better to move money into a Roth, and if so, how much? We would welcome your advice.
-- Colleen and Marv
 Dear
Colleen and Marv,
You're right to be thinking that far ahead. If your required minimum
distributions will throw you into a higher tax bracket than you
are now in, you should think about making some withdrawals now or
even converting to a Roth IRA. If your current tax bracket is, let's
say, 15 percent or less, making a withdrawal or IRA conversion now
is like paying capital gains tax.
In 2006, the 15 percent tax bracket applied to taxable
income of $61,300 or less (in 2007, it's $63,700). It's also beneficial
to do this now, before you start to receive Social Security benefits,
so that they don't become taxable. As far as how much and how to
go about it, I suggest that you get together with a CPA who can
take into account your whole retirement and tax scenario and suggest
the right course of action.
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