Q & A

How Do IRA Withdrawals Affect My Social Security?

Full question: I am brand new to reading your column. I am interested in the effect that withdrawing money from my IRA (taxable income) will have on my Social Security benefits. Is it best to withdraw money from the IRA until age 70 and then claim maximum Social security benefits, or will the IRA income adversely affect the benefits schedule? Is there an advantage to postponing withdrawal from the IRA until after I start receiving Social Security benefits?

Answer: Yes, timing your taxable withdrawals from your tax-deferred retirement accounts (regular IRAs, 401(k)s, 403(b)s, Keogh accounts, SRAs, etc.), your non-taxable withdrawals from non tax-deferred retirement accounts (Roth IRAs, Roth 401(k)s, Roth 403(b)s, …) and your partly taxable withdrawals from your non-deductible IRAs can and will affect all your future tax payments. So, too, will doing Roth conversions and deciding whether to contribute, at the margin, to Roth or non-Roth accounts. In general, you want to time your taxable withdrawals to periods when your tax rates are low. Read more…

Source: Laurence Kotlikoff, via www.forbes.com, 8/18/2015

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