Roth, Personal, or IRA Funds: Which Should You Spend First? – Episode 188
Once you hit retirement, you’ll probably have money in several types of accounts: a 401(k) from work, some personal money in a brokerage account, your regular checking account at the bank, and maybe some Roth IRAs, to name a few.
Once it’s time to start withdrawing that money, the important question you should ask yourself is this: from which account(s) should my funds be taken out, and in what order? Do I spend my fully-taxable IRA money first, do I defer and use the Roth or personal funds, or some combination of all of them?
Getting it wrong can be costly, and detrimental to your financial health. Find out more about the “Spending Order of Funds” with podcast host Johnny Dean and “Professor” Rick Plum, CFP® on this week’s episode of Managing Your Financial Future!
Important Information:
The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances.
You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal.
401(k) benefits may be subject to change at your employer, the governing pension, or benefit organization’s discretion.
Roth IRA distributions of principal from a Roth IRA are tax-free; however, any earnings will be taxed at ordinary income rates and a 10% penalty tax will apply if withdrawn prior to age 59½ or within five years of the date the Roth IRA was established, whichever is longer.
IRA withdrawals will be taxed at ordinary income rates. Withdrawals prior to age 59½ may also be subject to a 10% penalty tax.
Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.
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