No. of Recommendations: 4
“My financial advisor told me recently that once you hit 60yo, you may want to start taking small distributions out of IRA each year because the value has grown to a significant size that if you wait to withdraw at 75yo, when we trigger RMDs, the amount you’d be taking out every year would be very large and place one in a higher tax bracket with many non-optimal consequences.I confess we went through this "anxiety" also. It's a decent anxiety to have, relative to other problems. In hindsight, we got here by not paying attention to the cautions issued on the old Fool, when TIRAs became a thing and some folks suggested you would do better just by investing in stocks buy and hold style in taxable accounts than doing tax deferred IRAs. Because of the old ways TIRAs could be inherited, we were not concerned about eventual taxes, figuring our boys would just inherit and take RMDs, and we maxed out our IRAs and 401Ks annually. The new inherited IRA rules gave us problems with that, particularly as our 30 year old makes more now than DH did at the end of his career, and being single, is taxed much higher than we are.
We have done Roth conversions for several years, having transferred enough money to the Roth for the boys to inherit tax free. It's a nice nest egg, but because our investments have done well the TIRA/401K balances have grown even larger than before the conversions, and we have incurred higher costs for things like health insurance, both in terms of DH's Medicare and my not being eligible for ACA subsidies. Again, there are worse problems to have.
We stopped doing Roth conversions in 2025, not really wanting to give the current gov't more mad money. Should our RMDs get too large, we will do QCDs and donate up to the allowed amount to charity, which is $115K/pp max in 2026. Currently, part of that can also go towards a charitable annuity that you can benefit from, but it is a small and may be a one time thing. Here's Schwab's blurb on QCDs:
https://www.schwab.com/learn/story/reducing-rmds-w.... We will probably also make the beneficiaries of the TIRAs charities. Our offspring only need so much. Frankly it surprised me a bit how well we have done through simple LBYM and investing the extra. We never expected to be able to provide more of an inheritance for the kids than their college education, and have always fully funded their Roths while they take care of their 401Ks. It's a pretty small annual thing to do that started out as a way to get them interested in investing, by having actual seed money in a Roth to grow, but no longer so small a legacy that may help them also retire early some day.
Unless you need cash to support you in retirement, I fail to see how taking funds out of the TIRA is better than simply doing a Roth conversion with those funds. Am always happy to be educated though. In hindsight, I clearly could have invested for retirement more efficiently.
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