I own an IRA rollover worth $82,700. I am 62½ years old. Can I pull all the money out to pay off my mortgage, which is $29,000, and use the rest for medical bills and living expenses for next 2½ years? I am unemployed with no medical insurance.
"The short answer is yes," said FPA member, John C. Stiglich, CPA, PFS, CFP®, of Clifton Gunderson Financial Services. "However, you will subject the entire balance of $82,700 to income taxes in one year. So you will end up losing some of your balance to income taxes.
"You probably would be better off by limiting your distributions to amounts up to the taxable threshold, which for a single individual is about $9,000 per year," said Stiglich. "So as long as you can afford it, just make monthly payments on your mortgage and use the balance for other expenses. If you need to draw out more than $9,000 per year, try to limit the excess. This will allow you to 'stretch' your IRA account for as long as possible."