How to structure SIMPLE IRA to pay off house mortgage?
I’m 64 & want to find a tax free way to use my SIMPLE IRA to pay off my house mortgage. It would take it all & some. I can’t liquidate because it is 100% taxable. Any tax professional that would know how to do that?
Permalink Submitted by Alan Spross on Tue, 2008-10-21 23:30
There is no way. If your IRA purchased the mortgage on a home you occupy even part time, it would be a prohibited transaction. The only way to use your IRA to pay off the mortgage is to distribute the funds in a taxable transaction and use them for that purpose.
Why would you want to do this anyway unless your interest rate is unduly high? It depletes your retirement funds, makes you less liquid and more likely to need a loan, and eliminates what may be a tax deduction for the mortage interest.