Johanna is a 63 years old, retired and is considering what to do with her $200,000 traditional IRA She must start taking distributions from her traditional IRA at age 70 1 2 At that point, a combination of pension income and Social Security will put her into the 25 federal tax bracket She has no pr...

a The advantage is that she would have the money to ...

Johanna is a 63 years old, retired and is considering what to do with her $200,000 traditional

Question:

Johanna is a 63 years old, retired and is considering what to do with her $200,000 traditional IRA. She must start taking distributions from her traditional IRA at age 70¹/_2.At that point, a combination of pension income and Social Security will put her into the 25% federal tax bracket. She has no pressing financial needs.

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

b. What are the advantages of waiting until she is 70 ½ and taking the minimum mandatory withdrawals? Consider the tax implication in both cases.