I'm not a tax advisor or financial consultant. I eat crayons
That said
1- With a traditional IRA, withdrawals are taxed as regular income (not
capital gains) based on your
tax bracket in the year of the withdrawal
2- What I'm doing is pulling as much as I can out of my 401K (same difference) each year and doing it as a rollover to a Roth IRA we established 10 years ago (we each have one). So a rollover but spread out over likely 7 years.
Same as you we are trying to stay in the
12% bracket.
So you have income consisting of: SS, Dividends and Interest, and now this 401K/IRA money, that all adds up to your gross income
We know that married filing jointly we need AGI to come in less than
$96,950 this year (ALL income minus 31,500 std ded, 1600 for being over 65, and the new $6000 deduction-
so $39,100 Deductions)
The Roth is the best way to do this IMHO as you have ALL investment choices and
ALL gains are tax free forever, and no RMD's
The tax I pay on that rollover portion is just part of my total 2025 AGI and I'm taking just enough to stay under the $96,950 after deductions
I'd ask about a Roth Rollover (you dont take possession of the $ it is made out to your Roth broker, otherwise its treated as a simple withdrawl as you indicate)
You should be able to roll the entire IRA into a New Roth (still gotta pay tax on the rollover that year), but from there on out you control it and no taxes on any gains
*Only caveat is the Roth must exist for 5 years before withdrawing earnings/gains
If you can't do a Roth then taking it out is simply a question of your tax liability tolerance for the year you withdraw it as it all counts as income for that year
From Investopedia
A
Roth IRA switches the situation. It doesn't offer an upfront tax deduction like a traditional IRA, but qualified withdrawals from a Roth IRA are tax-free in retirement. 2
If you inherit a Roth IRA, withdrawals of contributions are tax-free at any time. And You can withdraw
earnings free from tax and penalty if at least five years have passed since the beginning of the tax year when the original account owner made the first contribution, even if the new owner is 59½ or older.