My mother is 87 and her health has been declining recently. I had her withdraw more than the required distribution from her IRA the last couple of years even though she does not need the income at this time. The money is transferred to a taxable account. The amount of the distribution is calculated so that her Social Security will not be taxed either. Do you think this is a sound strategy?
Terry Says: NO! I think this is a HORRIBLE strategy. If she dies, and you are the named beneficiary of her IRA, you can stretch out the tax-deferred growth of all the money remaining in the IRA over your lifetime. What a windfall. Why give it away to the government now if it is not needed?
When you SHOULD be doing is getting her “affairs in order” — making sure she has a will or revocable living trust, and that YOU have power of attorney for both business and healthcare. And you should ask her about creating a”living will” — end of life instructions. If you have power of attorney for business then, if necessary, you could withdraw extra money from the IRA for her care if necessary.