I Will Be Retiring Soon and Pay Off Mortgage With IRA Money. What Taxes Will I Owe? – Robert

This question was submitted to me through the GetOutOfDebt.org site. You can ask a question online here.

Because of the volume of submitted questions, I am behind in personally answering every single one. I need your help. I am publishing the question below for you to answer. Please help this person by adding your response and advice in the comments section of the original question. Click here.

“Dear Steve,

I will be retiring soon. Will pay off mortgage with IRA money. Balance of mortgage about 59K. I am 63. For the situation I am in paying off my mortgage will make complete sense. Thank you

How do I figure what taxes will be owed and can I pay this tax with money from the IRA? I know they will withhold say 20% but can I request more to be withheld?

Robert”

Check out your debt relief options using The Amazing How to Get Out of Debt Calculator. It's free, easy, and anonymous.

Other Related Articles to Read

  • http://www.goodfinancialcents.com Jeff Rose

    @ Robert

    I know I don’t know the whole situation, but initially the thought of using IRA money to pay off a mortgage doesn’t sound like the best move. Freeing up your monthly mortgage payment might seem like the best option, but at what cost? Like you’ve said you’ll pay at least 20% in taxes and even more if you have any more income for the year. Not to mention the fact if you had the money invested in the market. If so, I would imagine your account would be down significantly and cashing out now would prevent you from getting it back. Like I stated, I don’t have all the facts, but wanted to share some my concerns.

    Now to answer your question….the institution that is the custodian of your IRA should require some sort of distribution paperwork to get your money. On that form is where you would indicate how much in federal and state taxes you would like withheld.
    I would suggest you consult with a tax advisor to make sure you withhold enough.

Google Plus Submit a Tip Ask the Debt Experts