Hi Dan,
For most folks, it makes more sense to delay tapping into an IRA (or 401b or 403k) for as long as possible. This is because the monies inside the IRA continue to accrue on a tax-deferred basis until you reach the maximum age where you must start drawing down on the plan. As long as you have earned income, you can also continue to fund the IRA as well. So, presuming that you don't need the extra income right now, the best plan may be to just let it sit and grow, and continue to fund it if you can.
Another lesser known benefit pertains to your heirs or specifically to the beneficiary of the IRA. If that person is IRA-eligible, then the beneficiary may have the option to roll those funds into his (or her) own IRA, thusly shielding the funds from taxes until s/he is of retirement age and desires the additional income. Otherwise, taxes (income) will be due immediately upon receipt of the IRA monies when your estate is settled. Depending upon the size of your estate, these monies may be taxed twice, once as ordinary income (because the source of the money was tax-deferred, both on deposits and any interest/capital appreciation) and then (whatever remains) again under estate tax laws or inheritance taxes.
It's probably best to have a talk with your IRA provider to see what information they may have for you on this topic. And, it's probably also in your best interests to consult your financial advisor (if any) and your accountant (if any) for their input. You can never have too much information when making these type of decisions...
EK!!! |
