Manditory IRA withdrawals, Best way to invest manditory withdrawals

Question:
Soon to be 70 1/2 and required to start manditory IRA withdrawls. Presently I have a IRA Annuity and collect "ordinary income" interest monthly and the principal IRA investiment remains. I do not yet know the required withdrawl percentage, however I understand it can be significant, upward to 25% per year. I am not sure, so is the amount withdrawn annually also taxable?Are there any "financial investments" to consider to reduce the taxable portion applicable? Is is best to simply take the annual withdrawl and put it in savings? (I no longer wish to be involved in stocks, mutuals, etc.) Any advice will be welcomed.

My response:
For an individual aged 70 (in the year in which your age is 70 1/2), the IRS' table indicates the factor to be used is 27.4. In other words, the RMD for this particular year is equal to 1/27.4 (~3.6%) times your IRA balance(s). The number changes each year, so you'll update the percentage of withdrawal required every year. The table can be found in Pub 590 at www.IRS.gov.

Keep in mind that you must make the calculation for all of your IRA's and take a distribution equal to or greater than the RMD for each year. Consult your tax preparer or financial planner if you're unsure about how to do this.

Another response:
Look like we're talking about somewhere around 4% required distribution? If so, it looks like it IS possible then to protect the investment and still only live on the interest depending on annual return and lifestyle, even when RMD's are in force. I mean, is it feasible to assume 4-5% annual return, while in retirement and being in more of an assest preservation mode of investment risk, or atleast at the beginning years of the RMD's?

Thanks for the info!

My response:
That figure (~4%) works fine for a while, but the mortality table causes this figure to increase each year... just a quick look at the table shows that by age 80, you're up to 5%+ (divisor is 18.7), and the numbers just keep going up from there.

There is no requirement to spend the money, you can always reinvest it once you take it out, but you are required to take the distribution.