Distributions from a traditional IRA or Roth

Submitted by Bruce Eckman on Mon, 2019-11-11 20:42

If I rolled over money from a closed IRA account about 40K how much could I withdraw annually and what would the frequency be limited to if there is a withdrawal limitation? For example using the 40K could I withdraw a set amount of money per month?
Finally, what are the tax implications?



Submitted by Alan - IRA critic on Mon, 2019-11-11 22:22

  • It sounds like you want to close an IRA and roll over the funds to another IRA account. This is best done by a trustee to trustee transfer rather than a 60 day rollover, as you only can do one 60 day rollover over a 12 month period. This direct transfer is not reportable on your return. The new IRA should in invested in something liquid, usually not CDs but perhaps a bond fund. You can then withdraw any amount you need from the bond fund in your IRA. You could request the distributions when you want or could set up automatic monthly distributions for example.
  • If you are under 59.5, you would owe tax and 10% penalty on the total amount withdrawn. You will get a 1099R in January showing the total withdrawn for the prior year. You can have an amount withheld for taxes if you want, but you can also decline any withholding. If you do not indicate, then 10% will be withheld. If you are over 59.5, you could owe ordinary income tax, but no 10% penalty.
  • If this does not answer your question, please advise.

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