Consider the tax consequences when you take money from these investments.
Before you make a decision, consider that you will paywhen you withdraw from the inherited IRA, said Bill Connington of Connington Wealth Management in Paramus.
“It would be important to find out how much in taxes you will have to pay which will reduce the amount of dollars you have to pay the debt,” he said. “Liquidating that inherited IRA may push you into the next tax bracket.” Taxes are also an issue as you decide whether to pay the loans in a lump sum or with monthly payments, he said.
“If you take it as a lump sum, you get to pay all the taxes up front and It could push you into a different tax bracket, whereas making monthly payments wouldBut the most important thing is to consider what this inherited IRA means to your retirement. While getting rid of student debt is admirable, you won’t be able to borrow money to fund your retirement. So make sure you can afford to make these payments for your son before you make any moves.
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