Anyone Successfully Tap Into Ira To Pay For Surgery?

[SkinnyAnnie 4]

I am trying REALLY hard not to get discouraged on this journey... It's not easy, but I am pretty determined. Wondering if anyone had any success tapping into retirement savings to pay for surgery. I am a self pay and it's all gotta be done up front. I'm a little wary of medical credit cards because I've heard the interest is CRAZY.

Thanks in advance for your input.

[Pookeyism 1,143]

It should not be difficult. There is usually not an approval process because it is your Money, and you are the only one penalized if it isn't paid back. There may be a limit on how much you can withdraw. It often taps out at 50%, or a max total dollars, etc.

[Erin6573 10]

I tapped into my 401k for the surgery. Had them take the taxes out when I withdrew the money. I know that the money is for my retirement, but at the rate I was going, I wasn't going to make it to retirement. Yes, the taxes and penalties are crazy. I had them hold 20% for the feds and then they took whatever the state of Michigan was getting as well. Good luck to you.

[Erin6573 10]

Or, you could take a loan against the 401K and pay it back. I did not have that option because I am not currently working full time anymore and not for the same employer.

[Wheetsin 714]

I have not, but I know that you can borrow against 401k and 403b plans for surgery. I believe the cap is 50% of your vested balance not to exceed $50k. As long as you're taking a loan against your 401(k), the amount is not subject to penalties or taxes unless you default or leave your employment before the loan is repaid (I believe that covers both quitting and termination, but I'm not 100% on the termination). You will have to pay interest, IIRC at prime plus 1% - 2% (depends on the plan). You'll eventually get it back, and the interest you pay is tax-deductible. If you can't get a loan there are hardship withdrawls, but the IRS is really heavy-handed on what counts as a hardship and what you have to do to prove it. I don't know much at all about that route.

HTH.

[Randgalt 43]

My CPA told me that you have 60 days to repay the loan - and that means exactly 60 days. The money has to be back on the 59th day.

[Wheetsin 714]

I understand completely that's what your CPA told you, but I'm not sure that's correct. If _you_ are considering doing this, please have your CPA double check.

I believe the repayment term is 5 years unless you're using the money toward purchase of a residence, at which point (IIRC) it's something like 10 - 15 years.

The only 60 day repayment requirement that I know of with 401(k) loans is repayment if you quit work or change employers. Then it is 60 dayys from the date of effective termination or resignation.

HTH!

(OP, sounds like it's time to call your financial advisor - or get one!)

[Wheetsin 714]

Back to IRAs. You technically cannot borrow against an IRA or use it as collateral. Major no no.

(Ok, to comment above - this just hit me - IRAs have a 60 day loan term. For some reason I had 401(k) in my head. Doh!)

If people go that route, they usually use the IRA loan to buy them more time to obtain a more conventional loan.

This puts it better than I can:

To meet the 60-day rule, start counting on the day after you receive the check, and include the day you deposit the money into your IRA. For example, if you get the check on Sept. 1, you must get the money into your IRA on or before Oct. 31. Understand also that there are no extensions for weekends or holidays, and beware of the 12-month rule. The rollover provisions can only be applied once every twelve months. Essentially, you can only "borrow" from your IRA once in a 12-month period. If you have multiple IRA accounts, make sure that you don't get tripped up with these rules, since they can get complicated.

[Pookeyism 1,143]

It vary individualy - I just asked my HR and was told a loan can go up to 5 years - but if you leave before you pay it back you have 60 days to pay it back. My 401k with work is separate from the rest of my 401k, so yours may vary.

[keldolbeth 262]

I don't know much about the 401k/IRA thing but I do know a friend's parents did it for his RNY. But, like everyone says, the penalties and terms are ridiculous.

Your doctor doesn't offer financing? I was self pay and they had a specific credit union they financed with or you had the option of getting a personal loan from your bank. They also mentioned a Home Equity Loan (if you own). Can you put it on a regular credit card, Visa, AE? Luckily, my parents had an inheritance from my grandparents they were able to use. However, instead of transferring the money to me and going through all the legal and bank red tape, my dad charged it to his American Express then paid it off. Granted, he's an accountant and has a freakish credit score, I know not everyone can just charge $14k. lol

[lglavish 15]

We applied for a 25k line of credit with our bank. Although we are upside down in our mortgage we have good credit. Were approved in a few days with at 8.5% interest rate. I've paid the surgeon fees and will pay the surgery center on Monday. I'd never even thought of a line of credit initially so I wanted to mention it here. Good luck!

[Back~To~Amy 307]

I understand completely that's what your CPA told you' date=' but I'm not sure that's correct. If _you_ are considering doing this, please have your CPA double check.

I believe the repayment term is 5 years unless you're using the money toward purchase of a residence, at which point (IIRC) it's something like 10 - 15 years.

The only 60 day repayment requirement that I know of with 401(k) loans is repayment if you quit work or change employers. Then it is 60 dayys from the date of effective termination or resignation.

HTH!

(OP, sounds like it's time to call your financial advisor - or get one!) [/quote']

You sound like a financial adviser. This is correct, because I've taken a 401k loan before and took 5 years to pay it back.