How much of my IRAs can I withdraw without add'l tax?

Question

My husband and I are both disabled -- he for several years and me more recently. I have several small (under $30K) IRAs and retirement funds. The economy looks awful, and I hate to continue watching it dwindle away! Is there a formula or a way I can find out how much $ I can withdraw before I have to pay tax on our SSDI? There are no penalties, and I know tax will be withheld up front on the $ I withdraw, but I'd like to avoid having to pay tax on our SS income as well if possible. Our home is paid for, children grown, medical bills covered, so I really have no deductions at tax time. Can some financial wiz offer help or advise? Thanks!

PS: I can provide personal $ details by email if necessary.

Answer 1

If your intention is to just not watch your IRAs dwindle, why don't you just shift your investments out of the stock market and stock funds into bond related things or even money market instead of wiping out your IRAs.  You don't have to blow a beautiful tax dodge (the IRA) just to get out of a falling stock market.

Answer 2

You could take out $17,900 and not pay tax on the withdrawal, or even a little more than that if one or both of you is over age 65. Whether that would trigger tax on any of the SSDI would depend on how much the SSDI is - if your other income plus half of your ss is under $32,000 on a joint return, the ss isn't taxable.   If you take out more than that, you'd pay some tax at least on the withdrawal, and possibly on the SSDI also.

So if you split the withdrawal over two years, you wouldn't owe tax.  You could roll the amount you don't take out this year into something like a CD if you don't want to risk any more downside - they don't pay much interest these days, but the principal wouldn't decrease.

Good luck.