Regular IRA

[mh82784836]

Hello all,

I just turned 63, and with pensions and social security, I net about $92,000 per year. Not bad. I have a Roth IRA which I don't touch, but I also have a smaller "regular IRA" that has about $27,000 in it. It does not realize too much gain. I already pay a boatload of taxes every year, so was wondering what you all think about when I should start taking money out of this account??? I have ten years before the required minimum distributions. Should I wait until 73??? TIA 

[Tonster521]

@mh82784836 Since distributions from a Traditional IRA are taxed as ordinary income, you should withdraw money when you are in a lower tax bracket. It is not clear if your $92 K is AGI or Taxable Income. Also, you do not indicate if single or married filing jointly. If you are single, you are already in the 22% tax bracket. So, it does not matter when you withdraw. However, if MFJ, you are in the 12% tax bracket. The 12% bracket ends at $96,950 for 2025. So, you may be able to withdraw approx. $4,950 and pay only 12% tax on that amount. You need to review your taxable income amounts for 2025 to ensure you remain in the 12% tax bracket. If you exceed $96,950, just the amount above $96,950 is taxed at 22%. The other approach is to continue to delay distribution until attaining the age when RMDs are required. I would invest this money more aggressively with the expectation of earning substantial appreciation which will, in effect, pay your taxes. Using equities, you should be able to double the $27 K in 10 years. Good Luck.

[GailL1]

@mh82784836 

I was going to suggest that you do an IRA to ROTH CONVERSION because the tax consequences wouldn’t be all that much.  BUT because of IRMAA which you would have to pay when you turn 65 for Medicare - you might have an objection of paying this surcharge for your Medicare Part B and Part D.  It is based on your tax return of 2-years prior to you turning 65 years old.  So just based on the numbers you gave and the current IRMAA rates which rise usually every year if there is a COLA - you would be paying about an extra $ 100 each month for at least that 1st year you are on Medicare for this premium surcharge for higher income folks.

IRMAA stands for income-related monthly adjustment amount - here is the details from SSA.

SSA.gov - Medicare Premiums 

So an IRA to ROTH Conversion may not be the best thing if you mind this extra cost to get all your retirement money under the ROTH classification. 

Otherwise, it is such a small amount - that even if you just got RMD from it when you are forced to start taking them from the IRA isn’t gonna make that much of a difference in your taxable income if done as a RMD or perhaps a bit more of your choosing.

But why don’t you move the IRA to some place where it is at least earning more money - you have 10-years to up the value of it.

Just depends on how much you are required to pay in taxes - or to some other government entity.