While the difference between 900 and 3,000 seems large, most of it is strictly due to timing. At 61,he is going to start collecting SS benefits in the next few years. If the 2016 income holds when he starts SS, 85% of it will be taxable. Assuming benefits of 20K, 17K will be taxable. Adding on the 31.5 ordinary income items and he will already be in 25% marginal bracket, so any disbursements from IRA will be at 25%. Still lower than the 30%, but not as much difference as it first seems. With good returns, the 10K should be worth 20K in 10 years, and taking it out then, the tax would be 5K (20K x 25%).
It may be a good time to explore with him his plans for the rental property and tax projections for different options of keeping or selling.
It may be a good time to explore with him his plans for the rental property and tax projections for different options of keeping or selling.
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