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Grevious47 t1_iyeb5r5 wrote

You aren;t getting 16k out if you cash out. I think you are only considering the penalty and NOT the taxes you would owe. If you pull out 6.5k from a trad IRA you owe income tax on ALL of that. I dont know how much that is going to be as I dont know your tax bracket but it is going to be more than you are thinking. If you pull out of the Roth you dont get the tax shelter so you would owe capital gains on any gains in there as well.

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perfect_elbows OP t1_iyedhws wrote

Thank you. This is definitely why I came here- I was unaware of the tax implications on top of the penalties, which totally makes sense. And also explains why this is not a good solution to my temporary cashflow problem. Ugh. I appreciate your informative response.

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Grevious47 t1_iyee5pw wrote

I should qualify my answer to say you actually may well get 16k in cash out, but that will come with a hefty tax bill at the end of the year. IE you wouldnt pay the taxes on withdrawl, but you would OWE the taxes in your next filing.

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