I have 3 IRA accounts one of which is a Roth. I now need income from this account, I have heard about taking a life expectancy draw by dividing the total IRA amount by my life expectancy age. I have approx. 1,000,000. in the combined accounts. If I start to take money from only one acct. can I include the value of all accounts? Will the fact that I'm more than 5 years away from 59 1/2 have any effect on what I can withdraw without penality? This money is invested in the stock market so needless to say the amount does fluctuate, is there a certain date that is used to value these accounts?

You have a certain amount of flexibility, but the area is fraught with danger. If you use one account, you can only include that account in the computation and you can only take the money from that account. But you can move money prior to your starting.

Once you start, you must continue taking the distributions until the LATER of age 59½ or five years from the start. If you take either more or less, you destroy that program, in effect, and all distributions previously taken become subject to the 10% early withdrawal tax. See a COMPETENT pro to help you set this up.

As an aside, if the money you need is a one shot need, it may pay to just pay the 10% tax and let the rest of the IRA alone.



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Barry Picker, CPA/PFS, CFP
New York, NY

You might want to look at two alternatives to early pull down from the retirement accounts. First, if you have substantial home equity you can arrange for a home equity loan, or even a credit line based upon your home equity which might allow you to take funds only if you need them. Second option is fairly similiar, a reverse mortgage that would give you an income stream.

It sounds like you are just looking for a bridge strategy until you reach 59 1/2 or perhaps even social security kick in date.

There are probably other options that might work for you. Your considerable retirement assets will qualify you for these kinds of programs. However, I very much agree with BPicker in that you should find a competent advisor/accoutant. What is best for you clearly will depend upon your circumstances. If you are only looking for $10k each year, the penalty of $1000 (10%) may be the simplest approach.

You need to exercise some caution because the rules are complex and you could have 4+ decades of retirement. Do not count on your custodian understand the details.

One further note, go talk to a good attorney about estate planning if you have not yet done so.

See my article on this subject in the January 2000 issue of Estate Planning. The lawyer who handles your estate planning should subscribe to this publication

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Bruce Steiner, attorney
(212) 986-6000 (NY office)
(201) 862-1080 (NJ office)
also admitted in FL