Paramount Investment Advisors, Inc.
Director of Planning and Investments
Chris D. Hardy, CFP®, EA, ChFC®, CLU® is the Founder and CEO of Paramount Investment Advisors, Inc. a firm that acknowledges and embraces their fiduciary responsibility to clients. Chris and his team accept the accountability of the recommendations that they provide to their clients.
Chris brings clarity to his clients financial vision by using his unique expertise in comprehensive wealth management and a disciplined process. Most people are not intentional with their finances beyond trying to pay down debt or set aside some money for a future event. He wants to help clients develop the plan that empowers them to live the life of their dreams, on their own terms.
Acting as the CFO of a clients' personal finances, Chris applies comprehensive strategies that help manage his clients' financial needs and goals. He has the experience and credentials to lead clients toward financial independence. Chris is a NAPFA Registered Financial Advisor and maintains the CFP®, EA, ChFC®, CLU® designations and certifications.
BS, Business Administration, Lee University
Pay off the credit card debt first until it is paid off. Then increase the amount going into her 401k by the amount of the raise and the amount you were putting towards the credit card debt. This will enable you to be debt free and reduce your AGI to continue with the IBR at a lower amount.
If you did what your CPA is advising, you would fire them the very next year since you would have a large tax bill for the conversion. I recommend for most people in a similar situation to keep it where it is mainly because you want to have funds in the different account to take advantage of your tax situation each year when you retire.
For example, if you were close to the next tax bracket in retirement, you could pull money from the Roth since it wouldn't be taxable. If you had some room before getting into the next tax bracket, you could pull from the Traditional IRA. Or if you had a decent amount of room before hitting the 22% rate, you could sell some of your brokerage holdings and reinvest in order to capture a step up in your basis without any tax consequences.
You should work with an advisor that understand both the investments and the tax consequences...most do not.
You would take the distribution immediately and file Form 5329 with your 2017 tax return showing that you missed it and that you already took it out in 2018. The actual income will go on the 2018 tax return and not 2017. You will also ask for the penalty to be abated on this form with your 2017 tax return.
Although this question has been answered multiple times...let me take a different angle.
The premise of your question leads me to believe that you would like to "borrow" instead of "withdraw" from you Roth IRA. Since you can't do this directly, let's see about how you can eventually get there.
First, if you have a small business or even a side business, you could set up a retirement plan for the business. A solo 401(k) is what many people establish for themselves as long as there weren't any employees besides yourself and/or your spouse. Next, instead of choosing the traditional solo 401(k), you would choose a Roth solo 401(k). Once that plan is established with the proper language, you would be able to roll your current Roth into the new Roth solo 401(k) plan. Once the money is in the plan and your plan allows for loans for its employees, you would be able to borrow 50% of the account balance up to $50,000.
So while technically correct that you can't borrow from your Roth IRA, you can still accomplish the same thing with a little work around.
If a stock has lost that much money in four years while everything else has done very well, then yes, sell the stock. But don't sell for only tax purposes. Sell it for a lesson that you should not purchase a single stock as part of your investment objectives. You should be diversified with at least 20 stocks, otherwise put the money in a mutual fund or ETF.