IRA & 401K money
My Heloc is 75k, my IRA and 401K can pay this, will i pay penalty is taking out the money? I am getting in 5 1/4 interest & my loan is 1/4 below prime now 7.99%. I am retired & have no Mortgage.
Terry Says
Gosh, what are the terms of your HELOC? Does it have a balloon payment at the end? When is that point?
I hate to see you take money out of your retirement funds to pay this off. You’ll pay ordinary income taxes on all the withdrawals, and lose future growth of the money. (although it sounds like you have it invested in CDs)
The real question is can you do some part-time work now to get extra money to pay down the Heloc? Is there anything you could sell — stuff you don’t really want — to pay down that loan? If those aren’t alternatives, then maybe pay down HALF of the HELOC loan with a withdrawal– And don’t forget to have them withhold income taxes. AND, consider whether this withdrawal puts you not only in a higher tax bracket, but a higher Medicare Part B premium bracket. Ask your accountant to dothe calculations based on the amount withdrawn.
