taxes on traditional ira withdrawals
I plan to begin a stystematic monthly distribution from a traditional ira. What are my options regarding my taxes? thank you
I plan to begin a stystematic monthly distribution from a traditional ira. What are my options regarding my taxes? thank you
Permalink Submitted by Alan Spross on Tue, 2011-05-17 22:44
IRA custodians use a default withholding rate of 10% if you do not indicate otherwise. But you can increase that, add state withholding or decline withholding if you would rather pay quarterly estimates or if you have other withholding sources that you think will cover your tax liability. The distributions are fully taxable at your marginal rate unless you have made prior non deductible contributions and filed Form 8606.
Generally, if you are setting up monthly distributions, you should use a date between the 7th and 23rd of the month. That way you will know that you will get 12 annual distributions. Using the first of the month can result in holidays or missed distributions where you end up with 11 distributions in one year and 13 the next.
Permalink Submitted by tomd37 on Tue, 2011-05-17 23:00
Pablooo7,
Are those monthly distributions going to cost you any fees imposed by your custodian/broker? If so, less frequent distributions might save you some money.
Tom D.
Permalink Submitted by paul lolicata on Wed, 2011-05-18 16:34
there are no fees from my custodians(tiaa-cref and vanguard) I will set date between 7-23. thank you so much