Tax consequences of liquidating an ira

So by the time you actually enter retirement, you may have both taxable and tax-deferred resources.

To make the most of your money, does it matter which assets you sell first to create retirement income?

The answer depends on your circumstances and wishes.

Consider the problem from two angles: income tax and estate tax.

Note that higher-asset households with high tax-deferred account balances may want to seek professional advice regarding tax-efficient withdrawals due to high RMDs.The withdrawals themselves from these accounts typically are taxed as ordinary income.By waiting to withdraw money from these accounts, you receive more tax-deferred growth.Retirement accounts like IRAs and annuities don’t receive any special estate tax treatment, so estate tax treatment is not much of a concern there.For married couples, when one spouse passes away the surviving spouse can inherit any amount of taxable or retirement accounts without creating an estate tax event.

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