You have the tax rate of the bracket you are in for that year (that cashout might even bump you into a higher bracket as its considered income). You would also have a 10% penalty. I assume this IRA was with PRETAX money because you don't have access to a employer provided 401K plan... (meaning its taxed at the back end when its withdrawn... and not a IRA where the money depostied after its taxed where there are no taxes on the back end.

Basicly...the answer is dependent on the type of IRA this is.

It also depends on your overall income AND the state where you live to determine the overall tax bite.

They are not going to reduce the balance except by payment. Unless you go to a credit counselor.

You would be better off trying to get a balance transfer at a lower rate.

BTW, I agree with Scott. Ignoring the tax consequences (which WILL be severe), most people who pay off credits cards this way just run the balances back up with a year, getting them back into the same predicament, but now their IRAs are gone.

Best your get the needed credit counseling and approach the problem AFTER you reform your spending habits.

I'm not worried about running up the credit cards, this is a credit card that I got after a divorce. I haven't managed the bills for aver 12 years but now I do so the spending habits is not the issue if you know what I mean. The credit card company has already informed me that getting it dropped in half is an option which is why I am considering it. The reason I am considering it is that the interest is at 23%, the payments are ridiculous so it would take me decades to pay it off and giving up one of my IRA's that is not in a good spot which I would move if I could. I would rather pay off the card and increase my contributions to another account. I am going to guess the tax rate would be around 25% so off the top that's about $2500 plus the 10% for the penalty another $1000. Then the 1099C for the relief of debt at another 25% which would be another $2500. So a total of $6000 to relieve $9000 in debt to me makes sense. Are my calculations off on this? Obviously with out knowing my tax it could be more it could be less and I understand that.

To do an accurate analysis of what the IRA distribution would cost tax-wise, I would need to know WHERE you live and what your overall income would be for 2014.

No, 66%, doesn't make sense to me.

I live in Wisconsin and income will be $95,000 per year. Status as of the end of year is Divorced so I will file single or if I can head of Household.

On the federal side, you are squarely in the 25% tax bracket, and for Wisconsin your tax bracket is 6.27%.

Add the 10% Early Withdrawal Penalty and you will pay $41.27 in tax for every $100 you withdraw from the IRA.

Your decision, but note that a traditional IRA is NOT subject to collection if you declare bankruptcy, so you may want to get the credit card company to do better on their offer, because the only way they can get the IRA funds is if you voluntarily access them for them.

Thank you for figuring out the tax portion. I looking at the monthly savings and the fact that I am paying the 23% interest. Unfortunately I am at this point with this bill, I thought things were getting taken care of before this. I know the tax is high but to get this done so I can start contriibuting to my own 401K is a better benefit in the long run in my opinion. As you can see I make a decent amount of money and this is just the highest of the bills I took over in the divorce. I guess the only other question I have is, is there a way that I can borrow against the IRA? Are there some you can borrow against and some you can't? If I can't with this one, which I will find out, could I roll it to another type that I could borrow against? I don't have a financial advisor right now and probably should to helkp with the rest of my finances to get on track but until I do, If you don't mind, I will just ask on here.

Thank you everyone for your input, it's sad but I haven't had to manage any typwe of finances for over 12 years.