IRA in withdrawal phase - should I stay or should I go?

August 6, 2014 8:12 PM

I'm about to reach age 59 1/2 and poised to begin making monthly withdrawals from my IRA. What questions do I need to ask the broker about the fee structure for doing this? If the fees seem unreasonable, now do I shop around for a new home? Would anyone like to recommend a plan they have experience with in this phase of an IRA?
posted by ackptui to Work & Money (4 answers total)

If they charge you a fee to make a withdrawal (called a distribution by the IRS), you should switch brokers ASAP. That is not something for which most brokers would charge you. You should be thoughtful about the tax consequences of taking distributions. My standard answer to what broker has the best terms and fees is vanguard, although there are a number of good alternatives. I know people who use Schwab and are very happy with them. A lot depends on what kind of investor you are and what kind of fees you usually incur.
posted by Lame_username at 8:22 PM on August 6, 2014 [3 favorites]

Yeah if they charge for distributions, at least for electronic ones (paper check fees are irritating but increasingly the norm; avoid them by doing EFTs into a checking/savings account), you should DTMFBrokerage.

There can be tax consequences as a result of distributions such that it can be a good idea to set aside some of the distributions in order to pay the eventual tax bill at the end of the year. Any decent tax preparer can help you estimate what you're going to owe and help advise you how to structure the distributions properly (need to hit all the right minimums but also not take it out so fast that you're paying unnecessary taxes).
posted by Kadin2048 at 9:32 PM on August 6, 2014 [3 favorites]

Agree. And be on the alert for the need to ensure that any transfer is done as a "trustee to trustee transfer." A distribution of all principal to you, and reinvestment within the 60-day period provided, is possible but can result in glitches that can be devastating. TTTT is much preferred.
posted by yclipse at 3:47 AM on August 7, 2014

They won't charge for distributions.
posted by jpe at 8:05 PM on August 7, 2014