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Date:  Mon, 27 Sep 2004
From:  Ben

We lost $2 million in the stock market over the last two years.

I need money to pay bills.

I have money in my wife's Roth IRA, my Roth IRA, or my SEP IRA.

1. Can I take the money from the IRAs tax-free?
   
   
2. Would it be better to get a home equity line of credit?
   
   
3. Would it be better to get a home equity loan?

Answer

Date:  Fri, 08 Oct 2004

Hello Ben,

I don't have enough details to answer your questions. I am assuming you are under age 59 1/2.

The SEP-IRA is the worst candidate for funds, because withdrawals will be subject to income taxes plus penalties. There is an exception when the withdrawals are made as a series of substantially-equal payments over your life expectancy. (§ 72(t)(2)(A)(iv).)

The amounts contributed to the Roth accounts can be distributed tax-free. Amounts in excess of the contribution amounts are subject to regular tax plus the 10% early-distribution penalty.

The equity line of credit has the advantage of being able to take funds as you need them, but will probably have a higher interest rate and annual fees as compared to the equity loan.

I know you are short on funds, but you should seek more detailed help to solve your problem.

Good luck!
Mike Gray

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