Tax rate on IRA withdrawal too high – Borrow until 2015 ?
Last year I took a lump sum distribution from my company retirement plan and rolled it into an existing IRA. So far, I’m doing okay. (I am planning on hold off on SS until 70, then it will be a gravy train !)
This year, expenses were well above “average” (helping the kids with a down payment, college funds for the grand children, etc, etc) so I am now in a “high” tax bracket (30%+ I’m guessing). I am going to need some more spending money before the end of the year and I really don’t want to give more than 1/3 to Uncle Sam and my state ! (Thank goodness I can make my 4th quarter tax payment after Jan 1 !)
Should I
1) pay minimum on credit card balance until 2015 ? (Never done this in 40+ years !)
2) borrow from my credit union on a home equity loan (house is free and clear) ?
3) take it out of my “rainy day” money market (which will put the balance below the threshold for a “premium” rate of over 1%)
4) ????
Permalink Submitted by Clyde Wolf on Thu, 2014-09-11 18:01
I think it is raining. Paying the minimum on the CC, you will be charged the rate the CC uses on the unpaid balance. Not the best idea. Taking a HELOC, unless you have the HELOC in place, you would likely have origination fees. And I would guess the interest rate is more than your Rainy Day fund is earning. Use your rainy day fund. You will be surrendering some interest, but that will be less than you would pay for options 1) and 2). 4) Do you have any family that could loan you some amount interest free?