Using an IRA to pay electric bills, property tax, etc (federal, state)

[Pip-Squeak]

Is this possible? I've done a ton of research and not able to find it.

My friends elderly neighbor uses cash for her groceries. Neighbor shops 1x a week for her.

Her checking account is getting low which auto pays her housing costs.

Can her Traditional IRA which has a balance of 75K or so, can it be hooked up to pay her ongoing monthly expenses such as electricity, prop tax, etc?

This is less accounting of course. Luckily she's going like gangbusters but Doc says she's got cancer

He predicted she lives a year.

[evening sun]

As long as she meets the age requirements she can do whatever she wants with IRA withdrawals. Maybe a monthly stipend or each quarter. Or once a year. If you mean to direct bill the IRA she would need to call the fund manager, & find out, but it seems it would be simpler to have it go directly to her checking account & then pay the bills.

[mathjak107]

yes , the asset in the ira has to be sold , and moved to checking or savings

[Pip-Squeak]

Thank you both

[mathjak107]

remember though , that is taxable income when it’s taken out

[GWoodle]

Originally Posted by Pip-Squeak

Is this possible? I've done a ton of research and not able to find it.

My friends elderly neighbor uses cash for her groceries. Neighbor shops 1x a week for her.

Her checking account is getting low which auto pays her housing costs.

Can her Traditional IRA which has a balance of 75K or so, can it be hooked up to pay her ongoing monthly expenses such as electricity, prop tax, etc?

This is less accounting of course. Luckily she's going like gangbusters but Doc says she's got cancer

He predicted she lives a year.

Need to do a budget.

How much income from SS & other sources?
How much are monthly bills?

Probably set up monthly distribution from IRA into checking. Maybe do withholding from the distribution.
Check timing when income comes in & bills are due. Maybe she needs to be paid 1st of month or after 25 for next month's bills?

From checking maybe autopay electricity, phone, rent

Maybe use debit card for groceries that may vary per trip.

Probably should set up checking with 1 month bill balance. Have alerts if it goes below that.

[Pip-Squeak]

I'll pass that on, thank you ^^^ I don't know if it's a traditional or Roth IRA

[L00k4ward]

Originally Posted by Pip-Squeak

I'll pass that on, thank you ^^^ I don't know if it's a traditional or Roth IRA

Just be aware that besides owning Federal and State income taxes on withdrawals the IRA trustee may impose distributions fees - some could be substantial.

It isn’t worth the ease of accounting to pay 25$ distribution fee or whatever the trustee charges every month to get a monthly amount from the IRA to pay bills

Actually, it makes accounting more difficult - to keep track of those monthly distributions

She should withdraw an appropriate amount once a year and deposit to her checking account which then will pay her monthly bills automatically

She could be already required to have mandatory distributions - depending on her age or face substantial IRS penalties

[StealthRabbit]

1) Her checking acct is already linked to pay her expenses, so KIS and occasionally fill her checking acct from IRA distributions (taxable if not Roth). I would set up automatic qtrly draws from IRA to checking (Don't forget to withhold, or set aside for taxes due, and pay estimated taxes). Leave the checking acct doing it's thing.

2) Encourage her to have End-of-life stuff completed and signed. (There are inexpensive ways to complete this... funerals.coop or similar)

3) Be sure there is an alternate authorized person for ALL of her accts and financial business (including utilities).

4) Keep engaged to assure stuff doesn't fall through the cracks, in case health decline prempts completion of details.

Thanks for your help in these matters.
Remain an advocate for her care, comfort, completion of life.

[txfriend]

My IRA distribution is set up so that half of it is distributed over 11 months and the remaining half is taken out in December, all going directly into my checking account.