I have a general question for retirement spending and tax planning.
Assume someone retires around age 50-55, with assets in a mix of
taxable accounts, Roth accounts and tax deferred accounts.
If person has to pay health care premiums, my understanding is these
would be considered "pre-tax" items- the premiums lower taxable
income. I am curious how this works on three levels.
1) Assume a 72(t) is used to fund the early retirement including
health care premiums, and some taxes are paid from the 72t. Is the
entire 72t withdraw for the year taxable? Then at income tax time
some of this is "returned" to tax payer because the health care
premium lowered taxable income?
2) can the health care premiums get paid from a rollover IRA, prior to
age 50, without tax or penalty (because the payments are for
healthcare).
3) Is it better, worse, or indifferent to use monies in a taxable
account to pay the health care premiums. There is a part of my mind
suggesting the rollover IRA has never been taxed, and the health care
premiums are not taxed, so that is best use of money. But if the tax
return is where the tax savings is actually seen, might be a moot
point where the premiums for health care are paid out of.
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