twistersfan
New Member
Cash: $ 1.30
Posts: 6
Joined: 25 Jan 2005
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| Borrowing from an IRA |
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Hello!
Since my divorce, I've been just barely making it week to week. I do pay all of my bills on time and have an awesome credit rating but I just can't seem to get ahead. I've not been able to invest in my IRA and can't even save anything extra.
I am thinking of borrowing from my IRA, knowing the tax issues related to it. It will take my balance down to about $2,000 (going to borrow $5,000).
Once I do that, I will be able to pay off a credit card and have more breathing room to live and invest back into it.
Question..is it dangerous or is it a common thing to do to get started again? I am 35.
Thank you,
Brian
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Mon May 16, 2005 5:02 pm |
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efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
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I thought you could only borrow from a 401K for limited specific reasons.
Just be aware that if you should ever lose your job or change employment, the 401K loan balance will become due in full. If you cannot pay it all back at that time, you would be hit with 10% penalty and income tax.
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Tue May 17, 2005 1:02 am |
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twistersfan
New Member
Cash: $ 1.30
Posts: 6
Joined: 25 Jan 2005
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That sounds painful..sounds easier to pick up a temp job at night to get caught up!
Brian
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Thu May 19, 2005 5:55 pm |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
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In addition to Sarah's advice:
With a Roth IRA, you can withdraw the contributions tax-free and penalty free at any time for any reason...
Jim Blankenship, CFP®, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Sun May 22, 2005 9:38 pm |
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networking101
Member
Cash: $ 1.02
Posts: 12
Joined: 02 Jun 2005
Location: US
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Brian,
I was in the same situation as you about 1 year ago. I did borrow from my Roth to pay off some credit cards and other things. Some things you want to keep in mind is the money your funds have made already, and the outlook for them in the future. What kind of growth does your funds have? Long Term or Short Term investments?. Also another question before withdrawling is how long you plan to invest. 15, 20 years or up to 59 1/2? You mentioned that your 35. If you plan to continue to invest till 59 1/2 a withdrawl at this point would be minimal. However, if you are doing a 15 or 20 year plan I would highly recommend not withdrawling. Either way you go I wish ya the best of luck. Now that I look back on it I wish I did not withdrawl from my Roth. Don't do it unless you absolutely have to.
Mike
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Fri Jun 03, 2005 1:21 am |
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