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.
