Cash out ROTH IRA to pay off LOC??
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|Mon, 07-15-2013 - 4:32pm|
Help me think this through . . .
We owe $15,312.87 to a LOC. The interest rate on this loan goes up to 5.25% next month.
We have $11,000 in a ROTH IRA that we put in 1.5 years ago, and it is currently netting -.33% (basically breaking even). Obviously, I'm not happy with these results. We are earning closer to 5-6% on our other investments. This IRA is with an investment company associated with the bank where we have our LOC. I would NOT keep contributing to these accounts (but would rather open new accounts at a different place - I just don't really trust the guy managing the accounts).
I just can't help but notice, we are PAYING 5.25% (soon, it's lower now), but EARNING nothing with this bank.
(When we put this money in the IRA we didn't anticipate the expense we put on the LOC . . . the LOC is a student loan we co-signed for our dd . . . so in retrospect, we should have just paid toward the debt instead of making this investment.)
My understanding is that there is no penality for withdrawing the amount we put in to the IRA (you are only penalized on any earnings - which there are none).
If we did this, we could have the LOC paid off by Sept (which would make us debt free except for the mortgage on a house we are trying to sell). At that point, we'd start fully funding new ROTH IRAs with a different investment company.
Does this make sense? Am I missing anything??