McCain's retirement-account liquidation idea

I think a similar formula also applies to those who elect to start withdrawals before 59 1/2, which may affect a larger audience. People may elect to hunker down and live off of Social Security or other investment accounts during this time. It's useful, but not a barn-burner.

@Curmudgeon: I was just reading IRS Publication 590 (big fun!), and as best I can tell there are no required withdrawals before 70 1/2, even if you start before 59 1/2.

First of all, the only people the suspension would help are those who don't need the money right now

what makes you think that is true? I'm not sure of the timing provisions, but isn't it likely that mandatory withdraws have to be done by the end of the calendar year -- and that those who had planned on liquidating some of their stock and (especially) bond holdings will be forced to sell when the market is at a low point. Now all retirees saving are in accounts that require them to reduce the principal each year --- and depending upon where their money is, it might make more sense for them to cash in non-IRA assets at this point.

@lp1: Good point.

I can't believe that no one on McCain's staff knows that you do NOT have to take IRA distributions in cash. You can transfer stocks or mutual funds in kind to a taxable account and depending on the situation could actually benefit from doing so. Do they not know this? I can understand individuals not knowing this but I find it inconceivable that no one on his staff does.

Remember that the distribution is based on the value of the account on 12/31/2007. If the account has gone down a lot in value, you could be forced to take a rather high percentage of the account value and move it to where later capital gains would be taxed. I'd like not to have to do that.

I really don't see how this solves our liquidity crisis, however.