Q: I want to start withdrawing from my IRA. I have held it for many years and bought and sold numerous stocks and mutual funds. My problem is, I haven't kept good records through the years, and I'm at a loss when it comes to knowing how to report my income from the withdrawals.

A: Good news - you don't need any of your trading records for your IRA transactions. What matters with IRA withdrawals is whether you've ever made so-called nondeductible contributions into the account. If not, then all of your withdrawals are taxed as income.

If you ever have made nondeductible contributions into your IRA, then a portion of your future IRA withdrawals will not be taxed (since you already paid taxes on the nondeductible contributions). For example, suppose that through the years you made non-deductible IRA contributions totaling $10,000 and that your account is now worth $100,000. If you made a withdrawal, then about 10 percent of that withdrawal would not be taxed.

Q: We would like to buy a second home. We have two annuities and two IRAs worth about $300,000. In mutual funds, we have $100,000. We would like to spend about $80,000 for a second home. What source should we take the money from?

A: Tax considerations are clearly important in your situation. With the stocks and mutual funds, can you sell some of those without incurring a significant tax hit? If some are at a loss, perhaps those can be sold and offset by selling some at a profit.

If the stocks and funds would all generate a capital gains tax bill upon sale, compare that tax with the income tax generated by withdrawing money from your IRA or annuity accounts.

Last, but not least, I'll ask you the same question I ask others about to buy a second home - are you sure you want to do this? Owning a second home that often is not used ends up generally being a costly proposition. Have you considered the alternative of periodically renting? Can you really afford the cash-flow drain that comes with a second home?

Be sure to review your current monthly spending and make some estimates as to how your monthly budget will change with the addition of a second home. Remember to include the maintenance and repair expenses (figure about 1 percent of the home's value annually) you're going to have on a second home.