Have a Tax Question? Ask a Tax Expert
Hi. My name is ***** ***** I will be happy to help you.
The income averaging was eliminated in 1986 for most taxpayers. Unless you are farmer or fisherman or born before 1936, you cannot use income averaging. And it only applies to distributions from 401ks, not IRAs.
If you are at least 59 1/2 you will avoid the early distribution penalty but the distribution will be added to your taxable income and most likely increase your tax bracket.
If your really want to use your IRA to pay off your mortgage divide the distribution between few years to minimize tax burden.
The funds in you IRA are pre-tax so there's no way you can get it out tax free. The only way to reduce tax liability is to avoid large lump sum distributions.
I see you read my respond. Do you have any questions? Is there anything else I can help you with today?
I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.