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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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Are we crazy to take money out of my IRA to pay off credit

Customer Question

Are we crazy to take money out of my IRA to pay off credit card debt? What's the tax implication of doing that. We want to take out $60-70k. I've been laid off for 3 years. My husband is 64 with Parkinsons and needs to quit working but we don't have the money to do that. If we could get rid of our debt, we might be able to manage.
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!While the money in IRA account are YOURS and may use then as you wish - we need to consider possible tax circumstances.First of all - distribution will be taxable, and if you are below 59 1/2 - there would be additional 10% early distribution penalty.In general - it would be better to spread distribution over several years - to avoid being pushed into higher tax brackets.However - the first step would be to estimate your tax liability and plan your IRA distributions wisely.