Updated over 6 years ago on . Most recent reply
Consolidating IRA funds
Hello all!
I am in the process of searching for a rental property and am getting my finances in order to be able to make cash offers. I have an IRA account from an old job. I no longer contribute to the account, so it just sits there. There is approximately $40k in the account which is not much nor will it make or break me. I believe I can put the money to better use now and understand I will pay about 20% in fees and taxes. This is not my only retirement vessel as I work a full-time job that I pay Into a pension for. So my question is, aside from the early withdraw fees, what's the downfall to using this money now to invest in my future?
Most Popular Reply
Your taxes and fees will be a higher than 20%. The early withdrawal penalty is 10% ($4,000) and depending on your tax brackets and where you are located you may pay 30% tax on top of that (24% fed and X% State tax). Using my numbers that would leave you roughly $24k after tax to invest which isn't a lot.
You could talk to @Dmitriy Fomichenko about investing your retirement funds into real estate. That wouldn't provide you access to the cash but you would be able to invest the entire $40k.