Helping a 67 yo single relative with fiances and wanted to get some input about direction and how to best use this tax year and the next few since they will have no earned income. Other income will be about $10,000 from dividends and an additional $10,000 from interest, and a pension (already collecting) of $8,000.
Assets include $280,000 in Roth account
$1,000.000 in Traditional IRA
$440,000 in Brokerage account
Right now they are taking money from their brokerage account for expenses (around $40,000) per year. They were laid off last year and there is likely to be no earned income this year or unemployment compensation this year. They are waiting till age 70 to collect social security and that should be about $38,000 per year. Their RMD at age 73 calculates to around $53,000 assuming some growth in the IRA account. So at age 73 with social security, their RMD, small pension, interests and dividends they will be collecting close to or above $100,000 yearly in taxable income.
Since they are in a lower tax bracket this year and for the next few years, would it make more sense to take money for expenses out of the traditional IRA or continue to take from the brokerage account and consider doing a Roth conversion, or does it not matter much? For a single person, I see a big jump in taxable income once social security and RMD kick in and thought it might more sense to start taking money from the IRA for expenses and pay taxes now in a lower tax bracket rather than from the brokerage accounts. Or are Roth conversions a better option, pay taxes, and continue to take out from the brokerage account. Thanks for any thoughts
Assets include $280,000 in Roth account
$1,000.000 in Traditional IRA
$440,000 in Brokerage account
Right now they are taking money from their brokerage account for expenses (around $40,000) per year. They were laid off last year and there is likely to be no earned income this year or unemployment compensation this year. They are waiting till age 70 to collect social security and that should be about $38,000 per year. Their RMD at age 73 calculates to around $53,000 assuming some growth in the IRA account. So at age 73 with social security, their RMD, small pension, interests and dividends they will be collecting close to or above $100,000 yearly in taxable income.
Since they are in a lower tax bracket this year and for the next few years, would it make more sense to take money for expenses out of the traditional IRA or continue to take from the brokerage account and consider doing a Roth conversion, or does it not matter much? For a single person, I see a big jump in taxable income once social security and RMD kick in and thought it might more sense to start taking money from the IRA for expenses and pay taxes now in a lower tax bracket rather than from the brokerage accounts. Or are Roth conversions a better option, pay taxes, and continue to take out from the brokerage account. Thanks for any thoughts
Statistics: Posted by drzzzzz — Sun Jun 16, 2024 6:02 pm — Replies 6 — Views 290