Semi Retired - Taking dividends

[dave-dimperio]

From a tax perspective: Is it better to take dividends from a Traditional IRA account (fully taxable) or use a Systematic Withdrawal Plan taking income from Brokerage account first then Traditional IRA? Thank you, Dave

[MichaelL1 · Accepted solution]

The qualified dividends from the broke age account do get more favorable tax treatment, where the IRA is all taxed as ordinary income. Qualified dividends are taxed like capital gains are. 

Your decision may impact the future, as your IRA will not get a stepped up basis on your death and the stocks in the brokerage account will based on present tax law).  So if you are concerned about the tax situation to the heirs then take from the IRA.  

When you turn 70 1/2 you have to make sure you make withdrawals due to Required Minimum Distribution (RMD). 

We don't really give tax advice here, however these 3 items are things that should go into your decision making process.