When if ever is taking money out of IRA ok

[stats]

My daughter and her husband have $50k in debt and $50k in an IRA. They are moving from Denver to LA to take a new job paying $100k. Since they will be buying a new house, they are wondering if using the IRA to payout the debt is a smart thing. They plan on using the IRA money no to reduce their mortgage but to payoff their debt.

I say I would never do that. They say removing this burden would make it easier to put money in their new job 401k And build for retirement that way.

He has a small pension with old job that will roll into new jobs pension that they will not touch.

What do you think? Cancel debt or pay it down

Stats

[yogibearbull]

Bad idea to use IRA to pay down debt. It would take a long time to rebuild that IRA.

[Deleted]

What interest rate is the debt?


I agree with Yogi. Also IRA works on compounding, earlier one starts more one can potentially make. I started at 40, being an idiot in all things money,  and I am really struggling.

[retiredat48]

You haven't given us the interest rate on the debt.  Could be a factor.

But generally I WOULD NOT withdraw from any IRA to pay debts.

In fact, I encourage young folks to borrow to fund IRAs if needed. 

Once you lose an IRA year of contributions, it is lost forever.

I suggest she borrow from her Dad, at a reasonable rate, to pay down some debt.

Cummon stats!  Borrow from some of those 3% rate credit card bal xfer offers you get, give her the money, and have her make all payments.

R48

[Capital]

From my experience using money set aside for the future to pay for the sins of the past is almost always a bad idea.
Once the money comes out of the  IRA it will take ages to get it back in the IRA.

[stats]

Ok, that’s what I was thinking. I like to check if I am overlooking something.

BTW, these loans (with interest rates between 8% and 18%) were consolidated into one five-year loan to dad at 4%. I know son-in-law wants any loan to dad do away, so he is grasping a simple ways to pay for past indulgences. This is not “bad” debt per se, as they didn’t run up debt playing bingo, instead most comes from funding the starting a new business (a food truck that caters to mostly to physicians and nurses in local hospitals).

We chose in interest rate of 4% mutually, but mainly it gives the beautiful statsgal a small monthly income.

Thanks
Stats

[steadyeddy]

Let me get this straight. So, the creditor now is you stats?

Then the answer to liquidating IRA is heck no!!