You have saved money in your 401K throughout your life and now you get to go relax at Del Boca Vista with Morty & Helen Seinfeld and Ellen & Frank Costanza (top 5 Seinfeld episode of all time in our non-scientific poll). You would think that taking income from those retirement assets would be easy but unfortunately you would be wrong. Depending on where you are drawing income from, it can create additional expenses.
Roth contributions you have already paid income taxes on so those do not increase your MAGI (modified adjusted gross income). Pre-tax money (pre-tax deferrals, employer matching, profit sharing) that you distribute from your IRA you have not paid income taxes on. Due to this, it will be counted towards your MAGI. This has two main effects.
The first is if you are in retirement you are presumably receiving social security income. This social security income will be included in income if you are making over 34K as an individual or 44K if filing jointly. Those distributions easily could push you above these amounts thus increasing the taxable social security amount.
The second item relates to medicare. The increase in MAGI that comes from those pre-tax distributions can also increase the amount you pay for your Medicare part B. This also can happen if you are doing a conversion of your pre-tax IRA to a Roth as it can increase income during the year of the conversion. Because of all of this, it can be helpful to start mapping out a strategy years in advance of your actual retirement.