I will be 59 1/2 in 6 months. My mortgage rate is 5%. I will have around 5K left in my ira after I pay off my mortgage and pay any income taxes. I have not personally contributed to the ira.
2007-12-16 16:35:09 · 6 answers · asked by Lady 1 in Business & Finance ➔ Investing
...You don't say how many years you have left on your Mortgage... 5% is a pretty GOOD rate... -& you're going to take a BATH in taxes on that IRA if you cash out on it... ... I'd advise, that unless you fully intend to remain fully employed for the REST OF YOUR LIFE- then DON'T cash it in. I KNOW the market is in a Slump just now (EVERYBODY'S watching their IRA's take a hit...), but it should bottom out by Spring, & then a pretty nice Rally should set in after next years Election. Social Security ALONE -is probably NOT going to pay all your bills...-so that little IRA you have could come in VERY HANDY when you turn 65 & if you want to get out of the Working World... Be VERY CAREFULL about deciding to cash that IRA in... -you could be making the "mistake"- of the REST of your Life! [One thing you COULD DO- is call the Company that Holds your IRA- & ask THEIR advice... Sure they want your $$$- but it's of NO benefit to them if you go broke- either! Call them & see what they say...] Good luck with your Decision- & happy Holidays! :)
2007-12-16 17:02:19 · answer #1 · answered by Joseph, II 7 · 1⤊ 1⤋
Sounds like a terrible idea. Your mortgage is a tax deduction and allows you to leverage your asset. You should have the biggest, longest mortgage possible to maximize your deduction, liquidity, and the leverage you have. You're using someone else's money, and it's a hedge against inflation, since the cost of your borrowing is decreased annually by the real rate of inflation.
Your IRA grows tax-deferred. Put the IRA to work in a good investment. Better yet, convert it to a ROTH so it grows tax-free rather than tax-deferred. With a self-directed IRA, you could buy rental property, invest in local opportunities, buy a business, etc.
2007-12-17 01:44:19 · answer #2 · answered by Anonymous · 2⤊ 1⤋
Without even thinking, pay off your mortgage. At 5% interest you will be saving the present value of the pay off over the next 20 years. 5% equils 100% every 20 years. Simple interest is being applied here. Best example is paying 5% "per year" for insurance on a thousand dollar diamond ring. In twenty years you will have paid another thousand dollars for the same ring and still only have a thousand dollar policy. Money talks louder than credit in this day and age. Pay off the your debts when ever you have the cash. Our fiat paper money is loosing ground every day. TAA
2007-12-17 00:51:16 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Are you losing money due to declining value of your investments or because there are excessive fees being charged by the management? If the management of the accont is unacceptable, then rollover your investments to something with more reasonable fees and performance.
5% mortgage sounds pretty reasonable.
Definitely check with financial and tax professionals as to what will be the tax status as you remove money from this account.
2007-12-17 01:14:10 · answer #4 · answered by witz1960 5 · 3⤊ 1⤋
Check with a company like H&R block to make sure that you won't have any penalties, because my dad transford his to another account, and it ended up costing him on his taxes. Good Luck!
2007-12-17 00:39:12 · answer #5 · answered by hello 3 · 0⤊ 1⤋
How about transferring it into a safer IRA?
2007-12-17 00:37:24 · answer #6 · answered by Anonymous · 1⤊ 1⤋