- Joined
- Jun 26, 2014
- Messages
- 193
- Reaction score
- 160
I inherited a traditional IRA somewhat recently and need to begin taking my RMD soon, but I'm unsure how I should use the money. Right now, I could pay off nearly 80% of my loans if I withdrew all of the funds over the next two years. There is no penalty for withdrawing the money, except that however much I withdraw in a given year is considered income, so I'll have to pay taxes on it. I won't have any income for tax years 2017 and 2018, so withdrawals will put me in the 15% federal tax bracket and I'm certain I'll be able to pay the taxes I owe on them.
Other tidbits to consider:
Tl;dr: Use inherited IRA to pay off 80% of current student loan balance and pay ~12K maximum over the next two years OR invest some/all of the IRA while drawing RMD at higher tax brackets.
Other tidbits to consider:
- Taking the RMD will only add to my income as a resident and as an attending.
- I have a small traditional IRA from my job prior to medical school.
- I have enough in a high yield savings account to cover emergency expenses and residency-related expenses (aways, applications/interviews, and moving). I'd be using these funds to pay taxes as well.
- I plan on maxing out a Roth IRA throughout residency.
Tl;dr: Use inherited IRA to pay off 80% of current student loan balance and pay ~12K maximum over the next two years OR invest some/all of the IRA while drawing RMD at higher tax brackets.