2. Johnna is 63 years old, retired, and considering what to do with her $200,000 traditional IRA. She must start taking distributions from her traditional IRA in the year she turns 70½. At that point, the combination of her interest and dividend income and her Social Security benefits will move her into the 25%

federal tax bracket. She has no pressing financial needs. (LO 9-1–LO 9-4)

a. What are the advantages and disadvantages of starting to make withdrawals from her IRA now?

b. What are the advantages of waiting until the year she turns age 70½ and taking the minimum mandatory withdrawals? Consider the tax implications in both

(a) and (b).