Roth withdrawal after age 60 and over 5 yr period

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susa
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Roth withdrawal after age 60 and over 5 yr period

Post by susa »

How does this work in practice ?

MFJ both over 60, both retired, no income, not planning to file SS until after 66, still have years to go.

Roth accounts all at Vanguard and oldest Roth's opened over 10 years ago. Newest ones opened each year until we got rid of all traditional IRA accounts (tIRA's are also with Vanguard but all have Zero balances). Question is not about IRS "account age" as our accounts qualify in every way for "spending". We don't have any tax liability as our income is too low, we're too old and our accounts are well over 5 year rule.

Say we want to start splurging some of the Roth funds.

Do we just manually move some funds from VG over to our regular bank "as needed" and pay bills ?
Is there a simpler way to open a linked credit card or setup autopay ?
Do we need to keep track of something - if yes, what ?
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RickBoglehead
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Re: Roth withdrawal after age 60 and over 5 yr period

Post by RickBoglehead »

You can withdraw the funds, as you need them, with zero tax liability (income is irrelevant). You can also combine all of them together (per individual). Simply setup checkwriting on your ROTH account at Vanguard (checks have to be for $250 or more). https://personal.vanguard.com/us/whatwe ... eckwriting Of course you're going to want to use your taxable funds first before doing this, letting the ROTH funds grow tax free as long as possible.
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susa
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Re: Roth withdrawal after age 60 and over 5 yr period

Post by susa »

We haven't written checks for two decades. Any checks.

All funds or payments have been handled via bank transfers, in/out or via credit cards, paypal etc.

I see this note on the link and assume that means we don't really have to "write checks" ?
Connect your bank
The easiest way to move money between your bank account and your Vanguard account quickly and safely at any time is via our electronic bank transfer service. You'll never have to worry about the mail.
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RickBoglehead
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Re: Roth withdrawal after age 60 and over 5 yr period

Post by RickBoglehead »

First, you have to sell the investment. A Vanguard fund will have funds available tomorrow. A stock or bond will take longer.

Then, the funds are in your settlement account. You can write a check to pay the bill and mail it. Or, you can ACH the funds from Vanguard to your bank, which will take one business day. Once at your bank, they can be used how you see fit.

You cannot pay a bill electronically directly from your Vanguard ROTH IRA though.

Vanguard does have a Vanguard Advantage account that includes bill paying, everything I've read about it says it's not state of the art. And that complicates things by having multiple bill paying sources.

If it were me (and it will be in a few years), I would sell at the end of the month to fund the following month, then ACH the funds to my bank's savings account, then transfer them during the month in batches to pay bills.
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Alan S.
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Re: Roth withdrawal after age 60 and over 5 yr period

Post by Alan S. »

You don't have any pre tax retirement accounts or taxable savings? If you can take out several thousand dollars from an old 401k for example before you create taxable income, you should at least not tap the Roth until you otherwise withdrew amounts from the pre tax accounts up to where your 10% or 12% bracket starts. Roth IRAs are normally treated as the LAST accounts to tap for retirement expenses because Roths will otherwise continue to generate tax free earnings for life. If you do not have pre tax retirement accounts of any kind, it would still be preferable to spend other savings before tapping your Roths because the other savings produce taxable interest or dividends and Roths do not.

But to answer your question, since both Roths are qualified, you will not need Form 8606 to report distributions. The 1099R total goes only on line 15a of Form 1040, nothing on 15b.
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