I.R.A. ACCOUNT need more infromation?

My friend need to know about her roleover money in her ira account?

• my friend have about 100,000/- in her traditional ira acct.in stable kind of savings investment plan, since she was laid off in 2006. she have no resources beside her $724/month social security income.she is almost 69 years old.the ira account gives her about $176 to 200/month income that she automatically asked to reinvest in her acct. now she has enroll in a medicare health plan that is universal med gap where she got the freedom of going to any dr or surgeon of her choice so whatever medicare, do not pay that insurance cover the expenses that is costing her $147/month this beside the medicare deduction from her monthly pension of like $96/month. so from her monthly income $724-$147+96=$451. just because of her ira savings she will never be able to get any help from the government. now her question for the finance geek people is if she take out from her monthly ira re investment money about $150/month to compensate the med gap money to run her daily expenses and the bills, can she do that? just leave the Principal amount of $100,000/- and only take from the monthly interest income,so how much uncle same will deduct from that $150/interest income fund? or how much she have to pay the taxes? she wants her distribution from the age of 71.5 age. as i told you her yearly income is right now is total= 9288/yearly + 150/month will make it $11088/- yearly. she is still way below poverty level. since the cd rates are down so it is not wise to take out all the amount from ira and invest in a place where she can have better return,and as she will take out a big chunk like $25,000/- or 50,000/- they will deduct a lot of income tax on it.so what is the best financial solution for her? her investment are in T-roweprice. please give the right solution or advice for her to help her live poor but with dignity without any aid, or gov Charity. only professionals please who understand the situation and give the advice to benefit her financially. thanks

• Answer:

  The whole point of having an IRA is to use that money to supplement your income during retirement. That's why it has Retirement in the name. After age 59 1/2, you can withdraw money from an IRA without paying any penalties. If it's a traditional IRA, part of the money withdrawn will be taxable. How much depends on how much you contributed and did not take a tax deduction for. With traditional IRAs, you can contribute money and take a tax deduction at the time you contribute, but if there is any money that you contributed but did not take a tax deduction for, you do not have to pay tax on that again. The most recent form 8606 filed with your yearly tax return would show what amount that is. If you contributed $10,000 without taking a tax deduction for it and the total amount is $100,000, then 10% of the money you withdraw is not included in taxable income ($10,000 / $100,000) but the rest is. You would have to calculate taxes to figure out how much tax that will cost, but my guess is that with an income that low it would probably be possible to withdraw several thousand a year without owing any tax on it. You can use last year's forms and recalculate using various numbers of extra income to determine about how much can be taken out without owing tax. (That won't be exactly right since there will be some small changes in the numbers on this year's forms, but it should be close.) If the money is in a Roth IRA, there will be no tax on it when you withdraw it. Roth IRA's do not allow you to take a tax deduction when you contribute, but all earnings in them are tax-free so there is no tax on withdrawal.