So, I’m now at the point where SSA, some pensions and savings are more than adequate to cover my expenses. Last year, with the big beautiful bill, I find myself in a situation where I can pull 20k out of my IRA tax free. I would not spend this money, but over the next couple of years, the senior bonus exemption will expire. It seems to me that it would be prudent to pull as much money out of your traditional IRA if it’s tax free.
Thoughts and opinions?
I see where there’s a $6K deduction for seniors, but I can’t seem to find where 20K can be taken from an IRA tax free. Can you provide your source and/or more details. Thank you.
Sure. If I take my normal SS, pension and wife’s SSA, then then we have about 60k annually. Taking the standard deduction of 34k, plus the senior deduction and the BBB senior boost, I’m quite negative in taxable income. This only happens because of the senior boost. I ran the numbers on the AARP tax estimator, FreeTaxUSA and reviewed last year’s return.
The withdrawal is taxable as ordinary income, but the deductions are overwhelming the income.
Asked google gemini too 
Ok, I see what you are doing now. I had a similar question as @sefortenberry .
My opinion is that anytime you can convert pre-tax money to post-tax money without incurring a tax hit or penalty then you should definitely do it. My only question now is if you want to withdraw it or convert it to a Roth? If you don’t need it then I vote for Roth conversion to get tax-free growth and income.
That’s what I was thinking as well, I just wondered if I was missing something.
Thanks for the clarification. Best to you!
I would indeed pull out whatever you can “tax free” while you have the opportunity. Think of it as getting a 10%+ bonus on your money. The only argument against it would be paying taxes immediately on future earnings on that money, but that is likely to be a very small amount compared to the bonus of not paying the taxes on what you pull out. If some how you invest that money such that taxes on its earnings exceed what you saved in taxes, you will have made so much money on it you are unlikely to care!
Do you have state income tax? If so include that in your math.
excellent point. I’ll have to check that tomorrow.
Apparently, I am still new to “retirement.” I live in Georgia where retirement income - pensions or IRA distributions are not taxed. So, still 0 tax. Still, something to watch for.
I hope you take into account the tax hit you will take. It will also raise your agi so your medical deductions will have to meet a higher threshold. Taking too much may affect your irma. Also, the bbb phases down in amount as your income passes a certain level. In my case here in ca, they underwittheld for state taxes and I got hit with a huge state tax bill. Next time, I will make an advanced payment to the irs as I will also have an added penalty if it happens again. But absolutely take some money as the senior discount will sunset in a couple years.
Valid points all. I’m not even close to the limits when IRMA triggers. Because of the BBB, I have this opportunity to move the funds tax free. I’m well under the income that would trigger federal taxes, and my state does not tax retirement income.
Your point about IRMA is important. But again, I’m well below the income that would trigger a review. I’m not arguing with you - I wanted to comment with specifics when someone else comes along to read this.
Whole heartedly agree whatever you can get out of “pre-tax” account, doit. As mentioned above pay careful attention to IRMAA and make sure your so-called “income” (MAGI) is safely below.
You didn’t mention your age, but I will note that once RMD kicks in and at the right age number, you can un-tax some of the IRA money with Qualified Charitable Donation(s) or QCD. This is an excellent way to get out up to $111k this year. Neither you nor your charity will pay tax! We had opportunity a couple of years ago to put money INTO wife’s IRA, and did so just so she can give it away.
This is the same math I have been running here in Georgia. If your deductions already cover the withdrawal, pulling pre-tax money out now beats letting it grow and facing bigger required distributions later at higher rates. I would just keep an eye on the IRMAA thresholds like others said, since a big pull in one year can raise Medicare premiums two years down the road. Doing it in yearly chunks while the window is open seems like the sweet spot.
You don’t have to be an expert - this is a basic spreadsheet issue. It sounds like to me that you have much higher income than I do. 2025 was the first year the BBB features for seniors kicked in. With all of the senior deductions, I had zero tax in 2025 as I expected.
It’s the same for this year except I have even less income.
This: “…do not owe tax on that would be if you are withholding more than you need to…”
This is not the case. Zero withholding on my SS benefits, pensions and withdrawals. What you are referring to is if I have prepaid my taxes which is what withholding is. In this case, I simply have no taxes.
That is wonderful charlie. Some of us wish we were in your boat. Would love to owe none and not have to confess “income” and play the whole 1040 game. Having yuge deductions so your confession shows you owe zero is second best. But don’t expect BBB deductions to remain, particularly if the socialists take over.
The reality is that if you have an IRA (Traditional IRA, not Roth), the money therein is un-taxed and becomes taxable when you take it out. If you can pull from IRA and stay under top of 12% bracket ($100,800 for 2026) it would seem advantageous. Drop in your Roth where I heard Clark say, “It will never be taxed again!”
I completely agree with your assessment. The BBB is only good for 3 years, and we are in year 2. As far as my boat, I’m an abnormal American. I had a large family, We learned to cook in bulk, etc. I worked my tail off. My wife worked harder than I did. Do, I have millions in an IRA? Not hardly.
One rule based on your comments: what the government giveth, government can taketh away. The BBB is gone after Trump (hence my question). The IRAs and Roth’s? The socialists will try and come for them. That’s another topic. In fairness, it’s not just the socialists.
Way too much government in our lives.
I live in GA and my pension is taxed. What pension do you have that isn’t?
If you are 65 then GA has a generous retirement income exclusion ($70k in 2027) and if you are 62-64 then its 1/2 that amount:
Huh, I’ll have to go back and check the form again. It might be as Butler points out that the income exclusion simply wipes out the taxes. I’ll verify and then clarify.