So is dipping into your retirement account for credit card debt EVER a good idea or is it all bad? First comes the tax penalty. If your money is in a k or a traditional IRA, then you will incur a 10 percent penalty on any money withdrawn.
The only account not affected by the early withdrawal penalty is a Roth IRA. Next, you will have to pay income taxes on the money you withdraw — essentially because it counts as income that you brought in for the year.
This applies no matter what type of retirement account you have. Finally, you have the risk that the money you take out which counts as income for the year can knock you into a higher tax bracket where your taxes may be higher.
Q: I am trying to...
The older you are and the more money you take out, the greater this risk is. With all of that being said and as with almost all things in life there is still a tiny margin of space left where withdrawing from a retirement account can be a good idea. But the numbers and your situation have to align perfectly to make it happen. But you have to weigh the financial risks.
You feel like you're drowning...
You also have to factor in the growth of money in your retirement account to understand how long it will take to replace what you took AND what it would have grown to had it been left alone. If not, talk to a tax professional first. You may also want to contact a credit counselorsince options like debt consolidation can lower your payments and solve your
Liquidating ira to pay off debt card problems without ever touching your retirement money. Article last modified on November 14, Mobile users may also access the AMP Version: You should receive a call within the next few minutes so you can get connected.
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Except in one rare instance, tapping retirement accounts for high interest rate credit card debt only delays your retirement goals.
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Credit Card Debt Calculator Plug in your payment information so you can find the best way to pay off your debts. Facebook Icon linking to Debt. If you work for a small business, chances are you may have a SIMPLE IRA -- Savings Incentive Match Plan for Employees Individual Retirement Account. This account can be used as a tax-free source of funds to help you pay off debt, but it is a short-term solution and requires some.
If you're thinking of using your retirement to pay off debt, here's the one time it's In most cases, it's a bad idea
Liquidating ira to pay off debt drain your (k), IRA or other.
6 days ago You have debt to eliminate and time before you retire, so is it a good idea to use early withdrawals from a (k) or IRA to pay off credit card.
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