Withdrawing some money from IRA Rollover
I am 60 years old and have approximately $700k in my IRA Rollover. I want to buy a new car and would like to withdraw from my IRA Rollover. I receive a nice pension; have no mortgage, credit card debt, excellent health coverage from my former employer and am in very good health.
Will I be taxed heavier at 60 versus 70 years old? How much should I figure on paying at tax time for the withdrawal?
Terry Says
No, you won’t be taxed “heavier” — because you have passed the early withdrawal penalty period, which ends at age 59-1/2. BUT, you will lose all future tax-deferred growth on the account. And in the future, as inflation whittles away at the value of your pension, I promise you will be sorry you took the money out!
The actuarial tables say you are likely to live another 30 years! Somewhere along the line that car will be in the junk heap. And at only 3 percent inflation the spending power of your fixed pension will be cut in half. And Fidelity says you are likely to spend over $250,000 on healthcare related costs during your retirement.
So consider carefully before dipping into your IRA piggy bank! And if you do, ask your accountant how much tax should be withheld, given your other income and marginal tax rate. The custodian is likely to withhold at least 20 percent, but that may not be enough if you are still working. And you don’t want to be under-withheld at tax time.
