Financial Issues with Dan Celia
Financial Issues with Dan Celia
Dan Celia
Dan Celia
Financial Issues

July/August 2014 – Q: When I retire, should I withdraw my IRA or 401K money?

A: Because a 401K or IRA may have accumulated a large amount of money over the years, we sometimes are tempted to hang on to it in order to avoid paying taxes. However, in my opinion, that’s a mistake. Yes, you have to pay tax on it, but remember that the taxes on an IRA and 401K are unavoidable. Anyway, retirement is the reason for which you saved it. 

From a tax standpoint, one of the worst things that can happen is this money passes to your children. In that case, taxes will be even higher. 

You have never paid taxes on this money, so the IRS wants its share. As it gets passed on and is used, it will continue to be taxed. But if you pay tax on it this year, you may be paying taxes on the money at the lowest tax rate you will ever see. 

Tax laws concerning IRAs continue to change, and I believe rates will only get higher.

____________________
Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).

Financial Issues website
Email: [email protected]
AFA Foundation: 800-326-4543, ext 345