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| alicia gist |
 Posted: Sun Mar 13, 2005 5:13 am Post subject: Cash out IRA to pay off debt |
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Investing Sr. Associate
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| Would anyone recommend cashing out an IRA to pay off debt? I'm sick of credit cards and see this as a possible way out. |
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| noksagt |
| Posted: Sun Mar 13, 2005 12:39 pm Post subject: |
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Member of the Month! March
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Traditional or ROTH. Cashing out your retirement accounts isn't usually a good idea & depending on the account, you might face taxes, penalties, and fees that could be worse than your interest. ROTH IRAs allow you to take the contribution (not gains) out with no penalties, so that could be an inexpensive option if you do have a ROTH. Note that the fees may still be substantial, depending on your broker & investments.
I would balance transfer to a low or 0% card if possible. Solicit the best rates from your current card companies and, if your score isn't shot, apply for new 0/low APR BT cards. |
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| trixiezzz |
| Posted: Tue Mar 15, 2005 4:10 am Post subject: |
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Investing Manager
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| Taking your money out of your qualified retirement plan or IRA before reaching age 59-1/2 is not a good idea. In addition to paying regular income tax on that money (it's taxed along with the rest of your income), you have to pay a penalty for your early distribution.The penalty is 10 percent of the amount of money you took out early. If you roll over part of the distribution to another IRA, you have to pay the penalty and the tax only on the part that you didn't roll over. |
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| noksagt |
| Posted: Wed Mar 16, 2005 5:45 am Post subject: |
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Member of the Month! March
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| trixiezzz wrote: | | In addition to paying regular income tax on that money (it's taxed along with the rest of your income), you have to pay a penalty for your early distribution.The penalty is 10 percent of the amount of money you took out early. | This assumes the IRA is traditional & not a ROTH. |
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| alicia gist |
| Posted: Fri Mar 18, 2005 4:11 pm Post subject: |
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Investing Sr. Associate
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| Thanks. It is traditional. Everyone is giving me the same advice. I just wanted to hear it from you. |
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